Arising from a complaint made by the South African Revenue Service (SARS) to the South African Police Service (SAPS), and subsequent collaboration with Directorate for Special Operations (DSO), four people connected to a multi-million rand scam have been arrested today by the Scorpions.
Three of the arrested persons are employed by Mastermind Tobacco SA (Pty) Ltd, an East London based cigarette manufacturing company, manufacturing brands such as "Yes" and "Forum".
The company itself, together with the arrested employees, stand accused of having allegedly defrauded SARS of at least R48 million.
The fraud is alleged to have been committed by means of falsely representing to SARS, that certain consignments of cigarettes were exported, whereas in reality this was not the case.
Products manufactured in South Africa destined for export are VAT zero-rated. This means no VAT is payable to SARS in respect of sales of cigarettes to foreign customers.
The manufacturer is however obliged to present SARS with documentary proof that the products were indeed exported.
Following a joint investigation by SARS and the DSO, it has been established that the documents presented by Mastermind to the customs office in East London since October 2003, supposedly proving that the cigarettes were exported, were actually false.
Whereas the criminal charges at this stage are limited to R48 million, SARS is investigating the possibility that Mastermind's alleged false declarations are significantly bigger.
The three arrested officials of Mastermind are Ms Jennifer Nanette Putter, Ms Pascal Wiehahn and Ms Carmen Daniels. The fourth person, a related party to Mastermind but not in their employ, was arrested and will appear in court tomorrow.
SARS has been informed that warrants for the arrest of other, more senior officials of the company have been issued. SARS has also been informed by the Asset Forfeiture Unit that forfeiture proceedings against the company and individuals involved will be instituted shortly.
Evading VAT and excise duties on the manufacture and import of cigarettes is a multi-billion rand scam affecting customs and revenue agencies worldwide.
By deepening our collaboration with the Scorpions and other law enforcement agencies, SARS will continue to clamp down on tax evading criminal syndicates that perpetrate this kind of fraud in our country.
For further media enquiries, please contact Adrian Lackay on 012 422 4000 or 083 388 2580
ISSUED BY THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE