'Internal collusion' suspected in diversion of R51m to counterfeit companies
JOHANNESBURG - The South African Revenue Service (SARS) on Friday confirmed it had been hit by a massive scam costing R51m (see article).
In an e-mailed statement SARS said: "With regards to your enquiry SARS confirms that fraud has been committed and that R51m involving two companies has been paid into a different account.
"We have been investigating the matter since January 2009 when our warning systems indentified the risk. We immediately handed the matter to the SAPS. SARS' investigations is focussing on internal collusion and we have already suspended an official as part of the investigation.
"An arrest has been made and a foreign national has appeared in court on 12 June 2009. In January when SARS detected the fraud, we immediately took corrective measures on the systems and no other associated fraud or risks have been detected.
"We must state clearly that the SARS systems are secure. It is th[r]ough our warning systems that we picked the fraud and we will pursue all that is need[ed] to deal with the matter."
VAT refunds due to these two companies were diverted to the accounts of phony duplicate companies.
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 accessed SARS's central 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.
SARS has not taken this matter lying down, it has made it incredibly difficult for companies to receive VAT refunds. A special investigation unit of SARS, called the Business Intelligent Unit, has been auditing cases where the vendor is mostly in a refund position. It has also called on companies to update their banking details before paying out refunds even if the vendor's banking details have not changed.
I was expecting a longer process or maybe an audit.
