Tuesday, February 19, 2008

Corrupt Interim Minister's Foreign Money Links

It's Chaudhry: FIRCA sought source of $1.6million
Saturday, February 23, 2008-www.fijitimes.com

Labour leader Mahendra Chaudhry is the interim Minister who is the subject of accusations of not paying his taxes when due.

Documents supplied to The Fiji Times suggest that the Fiji Islands Revenue and Customs Authority wants to establish the source of about $AUD1.6m paid into Australian bank accounts in Mr Chaudhry's name between September 2000 and December 2003.

Numerous photocopied documents have been delivered to The Fiji Times which suggest that:

At least one payment to the account $AUD514,148.50 on April 15 2002 was made by the Sydney Consulate-General of a country, believed to be India.

- The account was also fed $AUD503,000 on November 1 2000 and $AUD486,890 on February 22, 2001.

- The persons making the payments are not identified.

- Most of the deposits were shifted to investment accounts and earned substantial interest. After a year the money was transferred back to Mr Chaudhry's account and withdrawn.

- FIRCA investigators want to know what happened to the money once it was withdrawn from Mr Chaudhry's account.

On Thursday The Fiji Times put a number of questions in writing to Mr Chaudhry about the disclosures in the documents, asking, if the documents were correct, where the money was from.

The documents also suggest that:

- Mr Chaudhry earned more than $105,000 in interest income over three years.

- An account in his name at the Commonwealth Bank of Australia branch in Ryde, Sydney, earned more than $AUD35,000 in interest between September 2000 and December 2003. The account was opened with $AUD58 in August 1997, rising to almost $AUD510,000 in November 2000.

- In the same period Mr Chaudhry also earned $AUD32,000 in an account with Commonwealth Balanced Fund and $NZD4000 on an ANZ account in Wellington.

- In the same period Mr Chaudhry earned nearly $AUD38,000 with Perpetual Investment Management Limited, $AUD25,000 with Colonial First State Managed Investment Fund and nearly $AUD35,000 at First Choice Investments in Australia.

- Australian withholding tax was deducted on all these amounts.

- The different accounts use a number of different addresses, some in Australia and some in Fiji

- Tax officials want to know whether relevant declarations on this income were made to FIRCA and whether Fiji taxes were paid.

- Mr Chaudhry made a gift of $AUD50,000 to his daughter.

- FIRCA auditors recommended to management that Mr Chaudhry's account be thoroughly analysed to determine whether any exchange control laws had been breached.

They also recommended that an audit of the accounts be carried out to determine Mr Chaudhry's true financial wealth

Chaudhry received dividends
Saturday, February 23, 2008

THE Commonwealth Balanced Fund paid interim Finance Minister Mahendra Chaudhry $32,580 in dividends between April 2001 and July 2002.

This money was earned on close to $400,000 held by the fund in Mr Chaudhry's name.

But, at the same time, he incurred more than $20,000 in losses on his investment.

Details of the funds released to the Fiji Islands Revenue and Customs Authority by the Commonwealth Balanced Fund show that Mr Chaudhry initially invested $400,000 held in account number 39920061.

This investment was made on February 23, 2001 and involved the purchase of 252,979.946 units at a price of $1.581153.

The movement of funds was made the same day $400,000 was withdrawn from Mr Chaudhry's Commonwealth Bank account in Ryde, Sydney.

The account was closed on September 19, 2002 with the investment fund paying $378,979.18 to Mr Chaudhry.

A corresponding deposit appeared in his Commonwealth Bank account the same day. On the day the investment fund account was closed, the value of shares had dropped to $1.422777.

During the term of the account, all income less withholding taxes was reinvested.

The net loss Mr Chaudhry made on the investment was $21,020.82.

Notes made by auditors at FIRCA call for an audit to determine Mr Chaudhry's real wealth and to establish whether money from the investment has been transferred to Fiji.

More from Victor Lal
February 18, 2008 by solivakasama

Strange, the moment we published Tui Savu’s unpublished letter, it shows up on the Fiji Times. Anyway, keep up the pressure because Chaudary will crack soon, his name has finally been linked publicly to the Tax Evasion Saga in the mainstream media.

Mean while, here’s more from Victor.

By Victor Lal, Fiji SUN, 16/2/07

The Government of India’s Consulate General in Sydney acted as a conduit to secretly channel more than $700,000 into an interim Cabinet minister’s private bank account in Australia in 2002.
The money had been collected by political sympathisers in India, according to the minister’s tax file.
The same political sympathisers also, separately, on two different occasions, in 2000 and 2001, transacted $1million into the minister’s same bank account in Australia.
The transaction linking the consulate to the movement of funds from India to Australia was confirmed by the minister’s own delegated tax agent, a Suva based chartered accountancy firm, who notified the Fiji Islands Revenue and Customs Authority, on November 15, 2004 that: “The taxpayer (the minister) received funds amounting to A$514,148.50 on 15 April 2002 from Consulate General which was deposited in a cash management call account maintained by him with the Commonwealth Bank, Australia (Refer statement 31 in attached Schedule 4).”
An Indian parliamentarian of a leading political party also confirmed the role of the Indian Consulate-General in a letter to the minister on 9 September 2004, in response to the minister’s letter of enquiry about “the details of the funds”.
The Indian parliamentarian had written to the minister in Hindi (later translated for FIRCA into English): “The total amounting to nearly AUD fifteen lakhs was sent to you with the help of the Government of India through its Consulate General in Sydney. We sent AUD 503,000 as first instalment in the year 2000. In 2001, AUD 486,890 was sent and then in 2002 AUD 514,148 was sent”.
The statements provided by the Commonwealth Bank of Australia do confirm that $503,000 was deposited into the minister’s private bank account on November 1, 2000; $486,890 on February 22, 2001; and $514,148.50 by the Indian Consulate-General on April 15, 2002.
The funds had been collected, according to the Indian parliamentarian’s letter, for the minister’s settlement in Australia. A committee formed on his behalf by the parliamentarian and others in India had wanted the minister to leave Fiji because it was not safe for him (the minister) in the country.
FIRCA, therefore, found there was no evidence that the money was intended for the minister’s community in Fiji, and he was therefore told to pay his tax. The minister had claimed that the money was kept for his community. He could not also furnish a trust deed to back up his claim, and the bank account was solely held in his name.
In 2004, FIRCA found that the minister had not submitted his tax returns for the years 2001, 2002, and 2003. He was later assessed and slapped with a $120,000 tax bill. He was also found not to have disclosed interest of $A25,233 that he had earned on his Australian bank balance.
In the course of its investigation, FIRCA’s Income Matching Unit (IMU) became aware of his bank accounts in Australia and New Zealand and, on May 11, 2004, wrote to him advising him that they had received information from surveys and banks and financial institutions that he was in receipt of income, which had either not been declared or under declared.
In accordance with the provisions of Section 50(5) of the Income Tax Act Cap 201, he was asked to furnish details of:
(a) interest earned on all private bank accounts operated by him and his family both in Fiji and overseas from the year ending December 31, 1998 up until December 31, 2002;
(b) copies of rental agreement from year 1998 to 2002;
(c) copies of any certificate of dividends received from 1998 to 2002;
(d) a copy of the trust deed.
He was given 14 days to make representation to FIRCA on receipt of the letter.
On May 18, 2004, the minister wrote to IMU informing that interest on bank accounts earned in Fiji had been declared in his tax returns.
Members of his family who were taxpayers filed their own returns and he invited FIRCA to enquire from them.
He said he did not have any rental agreements with any person or organisation that earned him any income.
He did not receive any dividends as he was not a shareholder in any company and he did not hold any trust deeds.
What about the monies abroad? The Minister replied: “In so far as interest from monies held in accounts abroad are concerned, please be advised that these have not been brought to Fiji but remain re-invested in the accounts there.”
On June 3, 2004, the IMU pointed out to the minister that he had amassed interest and dividends for the year ending 2002 of $29,606.84 and there was a discrepancy of the same amount.
On the margins of the minister’s May 18, 2004 letter, certain questions were raised, and the same were later repeated in a letter to the minister on June 15, 2004.
The letter re-iterated that he was required to clarify queries with copies of documentary evidence:
(a) the source of funds invested offshore;
(b) when did he first invest these monies; (c) details of interest earned from when he first invested;
(d) copies of bank statements and documentary evidences of any tax deducted at source.
The next day, June 16, the minister wrote asking for an extension of time to provide the information because “old records will need to be looked up to obtain the details”, and that the banks had requested more time be given.
He also disclosed that he had some commitments and therefore asked if he could be given until August 15, 2004 to furnish the details. FIRCA granted him the requested extension.
On August 14, the chartered accountancy firm wrote to FIRCA notifying it that the minister had appointed the firm to act as his tax agent.
The firm asked for further extension till September 15, 2004, which was granted.
On September 3, 2004, representatives from the accountancy firm visited FIRCA and wanted to know the information that was needed by the tax organisation.
They were referred to the letter of June 16, and informed that FIRCA was after the most important detail, and that was “the source of the income”.
The accountancy firm stated that the information would be submitted by September 15, 2004.
But on September 13, it again wrote to FIRCA asking for further extension until October 15, prompting FIRCA to warn the firm that no further extension would be granted.
However, considering that the firm was still awaiting confirmations from the minister, it agreed to the extension but stressed that, “Please be advised that information gathered and “on hand” by your client should be submitted by that date”.
On 4 October, 2004 the accountancy firm wrote to FIRCA enclosing details of the income earned by the minister for the periods based on the documents provided by the banks together with summary of income and withholding taxes deducted at source including:
(a) dividend income from Perpetual Investments, Australia;
(b) interest income from ANZ, New Zealand:
(c) income received from Commonwealth Balanced Fund:
(d) interest income from Commonwealth Bank, Australia;
(e) income from Colonial First State Investments Limited.
On behalf of the Minister, they stated that, “We advise that above income was not included in the tax returns as these contributions and income therefrom were sourced and earned overseas and the relevant withholding taxes on the income are deducted at source”.
The capital contributions being the deposits in the bank account in the form of donations, they argued, were received from non-residents and attached were the relevant confirmations - the Indian parliamentarian’s letter to the minister about the transfer of funds.
On October 5, 2004, FIRCA officials met with one of the accountants and according to FIRCA’s office memo they identified details of bank accounts, confirmation of the letter from the parliamentarian that the money was raised in India for the minister, and the A$500,000 that was transacted through the Indian Consulate-General in Sydney.
One FIRCA officer observed on the office memo: “Transmitted to Australia - How?” and regarding the parliamentarian’s letter: “More substantive evidence to support the lttr.”
On October 22, 2004, FIRCA wrote to the accountancy firm regarding the October 5 meeting and for the submission of information the firm had “on hand” at the meeting.
FIRCA informed them that they (FIRCA) had examined the documents and would amend the income tax returns for the respective years. However, they would not allow the tax credits due to lack of documentary evidence.
FIRCA also emphasised that despite it amending the returns, the tax organisation would still pursue the “source of the funds” issue.
“The document submitted explaining the source of the funds is not sufficient enough for our purposes,” it stressed.
It, therefore, requested the chartered accountancy firm to forward documentary evidences:
(a) details of remittances from India to Australia;
(b) details of withholding tax deducted;
(c) as requested in our letter of 15 June 2004, the copies of bank statements. A copy of the letter was also forward to the minister.
On November 10, 2004, he paid $86,069.02 in outstanding income tax for 2000.
On November 22, 2004, one of the partners in the accountancy firm replied to the letter, confirming the payment of $86,069.02, noting that, “The tax paid by our client includes 2004 provisional tax amounting to F$34,962,”
He also pointed out: “We note that credit for non-resident withholding tax deducted at source amounting to $22,858.03 has not been considered by Inland Revenue.”
The accountant also enclosed summary details of the non-resident withholding tax deducted by banks and institutions in Australia and New Zealand together with copies of the bank statements evidencing the deduction of tax at sources for the years 2000 to 2003 in relation to investment companies etc.
In the same letter, the accountant also admitted the payment by the Indian Consulate General of $514,148.50 into the minister’s cash management call account in the Commonwealth Bank of Australia.
He also requested FIRCA to make the necessary amendments for the years 2000 to 2003 and the statement of tax account to include credits for the non-resident withholding tax amounting to $22,858.03.
The documents provided by the accountancy firm to FIRCA reveal that the minister had opened the cash management call account in the Commonwealth Bank of Sydney branch at Ryde.
On August 8, 1997, he had an opening balance of $A58.16 in his name. Three years later, on August 10, 2000, he made a deposit of $13,001into that account, and four days later, on August 12, $502.80.
Between 2000 and 2003 he made further deposits as follows: $503,000 (fund from India), $486,890 (fund from India), $8,461.00 (possibly also fund from India for it has the same transfer code), $79,330.89, $10,000, $6,000, $514,148.50 (through Consulate-General), $378,978.18, $46,000, $50,000, $10,00 and $47,398.37.
Naturally, between October 10, 2000 and March 20, 2003, the minister also made a series of small and large withdrawals towards property and other expenses such as spending money in camera, hardware, electrical, shoe and food shops, the purchase of airline tickets from Qantas and at Sydney’s international duty free shop.
Between October 10, 2000 and March 20, 2003, he withdrew as follows: $6000, $6,800, $400,000, $400,00, $55,000, $10,000, $6,000, $7,266.10, $38,000, $100,000, $25,825.89, $30,030, $469,000, $380,000, $46,000, $50,000, $6,000, $8,000, and $5,000.
In June 2001, the minister gave a home in Sydney as his contact address but in October 2001 he changed it to a relative’s address in another part of a Sydney suburb as his home and correspondence address.
He also gave his daughter $50,000 as a gift, and it has also emerged that a relative of his also bought a house for $300,000, paying cash for the property.
Meanwhile, on receipt of information from different sources, FIRCA’s investigating officers were instructed to verify the original sources of all investment deposits into the minister’s Australian bank account, details of bank withdrawals, a thorough analysis of some withdrawals below $5000, confirmation of all assets of the minister in Australia, a check to establish whether there were any violations of the Fiji Foreign Exchange Act, and finally to audit his tax file to ascertain the true financial wealth of the interim Cabinet minister.
The December 5, 2006, coup carried out to stamp out rampant corruption, cut short FIRCA’s investigation into establishing the truth about the real financial worth of the minister.
There is no evidence that the community in Fiji benefited from the money that was collected in India and secretly channelled into his private bank account through the Indian Consulate-General in Sydney.
And in June 2007, the Interim Cabinet Minister had still owed $57,672.09 in taxes to FIRCA

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