Tobacco wholesaler and employee fined almost €26 million for tax evasion

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, from San Ġwann, 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 not to be paid by the wholesaler immediately upon delivery of the tobacco.

In 2009, then-Inspector Ian Abdilla (now Assistant Commissioner) 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 K&L Attard’s warehouses and offices and a “gross discrepancy” was noted between the amounts declared and 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, the court heard,

Representatives of British American Tobacco, Charles Grech, the Arrigo Group and Interbrand confirmed that the orders and deliveries could not have been made without Attard’s consent 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, while Carmelo Attard was not entirely aware of 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 that the company would stop benefiting from duty suspension and start paying taxes and SISA immediately.

Carmelo Attard died in the meantime. The court, with regard to Keith Attard and Marvin Mackay, said it was satisfied that the men had committed the crimes with which they were 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 was jailed for 15 months, suspended for three years, and fined €12,719,865, of which €4,239,955 were immediately payable as a civil debt to the Customs Director General.