VAT carousel fraud: millions in construction revenue undeclared over seven years

An FCID inspector has given a detailed account of how millions of euros from works carried out on behalf of 44 clients over a seven-year period were not declared to the authorities.

Inspector Joseph Xerri testified at length this morning, as the compilation of evidence against Martin Farrugia, 45, from Rabat and Henriette Cassar 49, who are accused of fraud and money laundering in connection with a €62 million VAT carousel, began before Magistrate Leonard Caruana.

The offences are alleged to have taken place between 2012 and 2019 and involved NCCF, MAM Construction LTD and MWF Construction Ltd.

Farrugia, who is registered as a builder and Cassar, a clerk working at Farrugia’s companies, are denying the charges.

Inspector Xerri told the court that the police FCID had noted large discrepancies between what was being declared to the VAT department, amongst them an undeclared €27 million in sales from just one of the companies. Police had found a €2.8 million discrepancy with respect to another one of the companies’ incomes that should have been subject to VAT, but was not declared.

The Inspector told the court how a long list of other individuals and companies were involved or affected by the alleged fraud through payment for construction works and sales of machinery, during his testimony. Some of the individuals and entities in question are still under investigation, the court was told.

Inspector Xerri told the court that the police FCID had noted large discrepancies between what was being declared to the VAT department, amongst them an undeclared €27 million in sales from just one of the companies. Police had found a €2.8 million discrepancy with respect to another one of the companies’ income that should have been subject to VAT, but was not declared.

The Inspector told the court how a long list of other individuals and companies were involved or affected by the alleged fraud through payment for construction works and sales of machinery,  during his testimony. Some of the individuals and entities in question are still under investigation, the court was told.

A taste for exotic cars and equally exotic wildlife 

During the sitting it also emerged that investigation revealed Farrugia to be the owner of a collection of big cats that most zoos could only dream of, with seven lions, 8 pumas, 2 leopards, 14 horses and a number of zebras being kept at two of his rural properties in Siggiewi and Rabat.

Unable to keep up with the weekly cost of feeding the big cats- some €1000 a week- Farrugia had resorted to feeding them poultry. At a point, the inspector said, Farrugia had also traded a zebra and some alpacas with Anton Charles Cutajar.

A number of luxury cars were also seized at the defendants’ properties. These included a Ferrari, two Lamborghinis, two Porsches, a Maserati, three Mercedes and two Land Rovers.

Lawyer Abigail Caruana Vella is prosecuting on behalf of the Office of the Attorney General, together with police Inspector Joseph Xerri.

Lawyers Franco Debono and Francesca Zarb represented Henriette Cassar, while lawyers Etienne Borg Ferrante and Dominic Micallef appeared on behalf of Martin Farrugia.

Lawyers Arthur Azzopardi, Jacob Magri and Rebecca Mercieca are representing a group of alleged victims, as is lawyer Stefano Filletti.