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Petrol station racket's tax fraud 'would have funded 10 new schools'
By:
thinkSPAIN , Wednesday, January 11, 2017

A WIDE-SCALE tax fraud involving petrol stations in Spain uncovered through six major police operations saw enough money go astray to build 10 schools, repair 4,300 kilometres of roads, or fund a provincial council's annual budget.

The Central Operative Unit (UCO) of the Guardia Civil and the tax collection agency have so far recovered €139 million – around half of the sum laundered through front companies set up to avoid paying IVA and fuel tax.

Over five years, the UCO has just revealed, a total of 194 people have been arrested and 129 petrol stations and private properties raided.

The most recent of the six police swoops, known as Operation Burlao, saw 21 suspects taken into custody after €24m in tax was found to have been deliberately unpaid.

Officers say the organisation set up a company which legally purchased fuel from fiscal deposits, meaning they were exempt from IVA, to sell to service stations, applying IVA to the sale at 21%.

These transactions are legal so far, but the IVA was never paid to the tax authorities as similar amounts for fictitious commercial activities were offset against it, leaving only very small amounts payable to avoid suspicion.

During the Operation Burlao inquiry, an Italian gold-dealing racket used to launder the money was uncovered and their wares found to be made of copper, which has a significantly lower value than that of gold.

The dealers had set up two other companies which were not yet in function but which intended to buy up petrol stations – a total of 100 in two years – to expand their illicit trade.

As their own clients would have been running the service stations, they would have been able to drop petrol prices to such low levels that they would have taken most of their rivals' business away.

Within the same fraud network, Operation Reata led to the arrest of nine individuals accused of €11m in tax fraud.

This time, they did not try to offset the IVA, but simply did not declare it and, when sent letters requesting they do so, provided applications to postpone their declarations as well as forged papers – or, in some cases, disappeared off the radar.

Meanwhile, the con-artists set up other companies with different names, passing on their clients from the non-paying firm, but ensuring there was no other way of linking the new corporations with the old ones.

The accused parties even doctored petrol and diesel to eke it out, potentially causing serious harm to vehicle engines.

They sold Diesel B as Diesel A and mixed fuel with water, which led to numerous complaints after cars became irreparably damaged, over 100 people arrested in 23 provinces and a total of €10m defrauded from customers and the tax authority.

Other tax-avoidance scams the UCO has linked to the petrol stations in question include Operation Bashnya in 2012, with €120m in unpaid duties; Operation Walkers in 2013, worth €100m, and Operation Zelote in 2015, totalling €15m.

Most of the illegal cash from the latest operation and those of the past five years was stashed in bank accounts abroad, making it harder to trace, especially as some countries' authorities refused to supply information under their data protection laws.

The UCO says it is still working on the long-running case and attempting to find a way to recover the remaining €141m.

 

 

 
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