Tax fraud: 7 to pay back the money

AMUSGRAVE man, the alleged mastermind behind a labyrinthine tax fraud scheme, is accused of defrauding Sars of more than R20 million.

Mohamed Shabir Ismail, 49, is alleged to have used details of several people, including his wife and brotherin-law, to siphon funds from the revenue agency.

Six people, who admitted in partnering with Ismail, have since pleaded guilty to fraud in the Durban Magistrate’s Court and were subsequently ordered to collectively pay back Sars more than R7m.

Businessmen Akthar Ali Rashid, Sudhir Lakan, Dawood Mall, Anwar Vanker, Naushaad Hamid and Shalendra Ramruthan were each given suspended prison sentences of between two and eight years.

Ismail’s wife and brotherin-law, who were also accused, have both denied knowledge of and involvement in the scheme.

Ismail admitted he had misused their details and submitted false tax returns to the total value of R2.4m.

He said he had set up Jan Enterprises and made his wife the sole proprietor of the business, without her knowledge, and interacted with SARS.

He admitted to registering himself as a representative of the company, in charge of the bookkeeping, and submitting false VAT claims to the value of R1 124 299.

“She (his wife) was merely a front and had no knowledge whatsoever of what I was doing,” he said. “I plead guilty to the alternative counts of VAT evasion and did unlawfully and with intent to obtain an undue refund under the Tax Act. These offences were committed specifically by me for the benefit of accused 1 (his wife), which benefit I usurped.”

Ismail was subsequently ordered to repay the total amount by July 2021.

In his brother-in-law’s case, Ismail said he opened a company called Burglar Bar and Gate Factory Shop under his brother-in-law’s name and made him the sole proprietor.

He admitted to also making himself the accountant, in charge of bookkeeping for the company, and admitted to submitting false tax returns to the total value of R1 359 306.

“I now understand the nature and severity of my actions and I am extremely remorseful for allowing the entity that I have been solely entrusted with, to be used for unlawful gain by misrepresenting turnovers and purchases for the benefit of an increased tax claim,” he said.

Relating to his wife and brother-in-law’s charges, Ismail was sentenced to three years imprisonment or a fine of R1.5m, which was wholly suspended for a period of five years on a condition that he is not convicted of the same charges and repays Sars the full amount by July 2021.

Overport businessman Naushaad Hamid, who pleaded guilty to tax fraud on Thursday, has to pay back SARS R3m.

Scheming

In his plea, Hamid, who owns Linings by Naushaad and Cerulean Cloud t/a Razatex, said he entered into the scheme with a Mr Lakan and Ismail, which he initially resisted.

He said Lakan and Ismail were undeterred and continued to encourage him to be part of the scheme.

“Eventually I succumbed to the temptation when it was made clear to me that if I cooperated with the operation, any proceeds would be split on a 50-50 basis.”

VAT returns for the periods February 2013 and June 2013 were submitted to Sars by e-filing on March 18, 2013, and July 2, 2013.

Although Hamid did not do this personally, he agreed he was part of the scheme.

The first VAT refund was valued at R3.6m and the second was R2.4m and was paid by Sars into Cerulean Cloud t/a Razatex bank account.

The father of five admitted that in April 2013, he transferred R1.2m and then R270 000 to Ismail’s bank account.

In July 2013, he then paid R1.3m on three different occasions into Ismail’s account.

Senior state advocate Meera Naidu deemed his actions a “serious offence”.

“It affects the lives of every man on the street. Taxes are used for housing, for the well-being of the public, for proper medical facilities.”

Naidu said by Hamid admitting to his part in the offence and by being compliant in investigations, he had seen the light.

Magistrate Anand Maharaj sentenced him to a non-custodial sentence and ordered him to pay back the money that would be used to benefit the country.

Each plea has implicated Ismail as the mastermind. His case will be finalised once all related matters are finalised.