The South African Revenue Service has been hit by a massive scam, costing it at least R51m. VAT refunds due to some prominent companies, including Sun Microsystems (South Africa), were diverted to the accounts of phony duplicate companies. Investigators are trying to unravel the full reach of the syndicate - which was able to penetrate at least four state institutions.
One suspect, Aliraza Syed Naqvi, 29, a Pakistani national was arrested in June this year on fraud and theft charges relating to the scam. He is due to appear in the Wynberg Magistrates Court (Johannesburg) for a bail hearing on August 8. His older brother, Asad Abbas Naqvi was murdered in December last year in an apparent assassination.
According to court documents in Moneyweb's possession the way the scam worked was as follows: Duplicates of well-known companies were set up on the CIPRO system. Bank accounts were then set up in the duplicates' names by individuals using fraudulent company and identity documents.
Members of the syndicate then somehow accessed the central SARS system. The bank account details of the legitimate companies were changed to those of the duplicates. When SARS paid out tax refunds these went to the accounts of the duplicate companies, not the real ones.
