Tobacco merchants fined €26 million for tax evasion, given suspended sentences

A tobacco wholesaler and his employee have been fined almost €26 million and handed suspended sentences for tax evasion.

Carmel Attard, 77 from Sliema, Keith Attard, 44, San Gwann and Marvin Mackay, 34, from Swieqi were accused of fraud, misappropriation and tax evasion.

The case relates to the period between March and December 2007 when the men were allegedly involved in a racket which abused a duty suspension scheme which allowed excise duty and tax to not be paid by the wholesaler immediately upon delivery of the tobacco.

In 2009, Inspector (now Assistant Commissioner) Ian Abdilla had testified. He explained how there were four tobacco importers in Malta who sold to everyone else. The customs database had flagged the company K&L Attard which had not paid customs and excise duties for over nine months.

An inspection was carried out at the K&L Attard warehouses and offices and a “gross discrepancy” was noted between the amounts declared and the actual payments.

Investigators examined Internal Administrative Accompany Document (IAAD) forms which would be filled in whenever an order was made from a supplier to a wholesaler. The majority of these forms were signed by Mackay who was an employee of K&L Attard ltd.

Representatives of BAT, Charles Grech, Arrigo Group and Interbrand confirmed that the orders and deliveries could not have been made without the consent of Attard and had been made by Mackay alone for several reasons. It emerged that Keith Attard was aware of the problem and pending amounts but not the full amount, whilst Carmelo Attard was not aware of exactly what was happening in the running of the company.

They were arrested after the orders made by the accused doubled between March and December 2007.

It was calculated on the basis of the documentation presented that there should have been 40 million cigarettes in the warehouse when in fact there were just a few thousand.

In view of this discrepancy, the decision was taken to notify all the importers of cigarettes and tobacco so the company stops benefiting from Duty suspension and start to pay the taxes and SISA excise duty immediately.

Carmelo Attard died in the meantime.

The court, with regards to Keith Attard and Marvin Mackay, said it was satisfied that the men had committed the crimes with which they were being charged. Attard was knowingly involved in tax evasion on a quantity of cigarettes and tobacco and the same applied to Mackay who was an employee of the company K&L Attard Co Ltd, a close associate of Keith Attard.

They were cleared of misappropriation and found guilty of fraud.

Keith Attard was jailed for 15 months suspended for three years and fined €13,025,0538, of which €4,341,846 were payable immediately to the Director General of Customs

Marvin Mackay jailed for 15 months suspended for three years and fined €12,719,865 of which €4,239955 were immediately payable as a civil debt to the Customs Director General.