Investigation into mega tax frauds: high-powered body formed to monitor cases

The Federal Board of Revenue (FBR) has constituted a high-powered 'Integrity Management Steering Committee' (IMSC) to ensure speedy investigation of mega tax fraud cases through regularly monitoring of investigators engaged in probing such big scams, involving billions of rupees.
Sources told Business Recorder on Tuesday that the IMSC would not be directly involved in investigation of mega tax fraud cases but would strictly monitor the performance of officials investigating scams.
It has been observed that biggest tax fraud cases like Bawan Shah Group of Companies; Sheikh Noor-Uddin; sales tax refund frauds; payphone scam and fake exports to Afghanistan have never reached their logical conclusion. All these scams have caused massive loss to the national exchequer, but no final action has been witnessed against the culprits.
The IMSC has been empowered to seek regular reports from the investigators of mega tax fraud cases and provide necessary funding and support to them to ensure speedy processing of such cases. The IMSC would also bring transparency in the system being adopted for investigating of such cases.
The FBR has also given mandate to the IMSC for taking disciplinary action against the tax officials involved in mega tax fraud cases. According to sources, the FBR has recently convened a meeting to discuss the terms of reference of IMSC for devising a new integrity action plan with focus on anti-corruption strategy. One of the important mandates of the IMSC is to expedite investigation in big tax fraud cases.
The committee has given due importance to speedy investigation of such cases through proper monitoring mechanism. It would not intervene into the investigation, but constantly review the progress of the investigators. The IMSC comprising senior FBR members would take necessary action in cases where tax officials deliberately adopt delaying tactics in big cases of tax fraud.
In the next meeting of the IMSC, the FBR would exclusively discuss the mega tax fraud cases and review their progress. It is important to mention that the FBR has never completed investigation in biggest tax fraud cases. Secondly, no action has been taken against the officials involved in such big scams.
A few months back, Directorate-General of Intelligence and Investigation had provided a list of 60 corrupt tax officials to FBR for completion of disciplinary proceedings. These officials of customs, excise and income tax groups, who had indulged in corrupt practices, committed tax frauds, concealed property and issued illegal refunds in different cases.
The list also contains the names of income tax officials of Karachi who were part of the racket involved in issuance of bogus refunds in various scams. It is not yet clear whether the IMSC has the authority and courage to take action against these officials as recommended by the DG Intelligence.
An FBR internal investigation also confirmed that the tax officials operating 'Sales Tax Automated Refund Repository Computer System' (STARR) in Islamabad and Lahore had tampered the record to issue illegal refunds of billions to the exporters. Some STARR managers were primarily responsible for diverting the system merely to issue huge amounts of illegal refunds.
The internal inspection and audit had disclosed some astonishing facts about the modus operandi of the sales tax officials to bypass the checks in the system. The investigation was being conducted to check the involvement of STARR officials in mega-refund scams particularly in 37 tax fraud cases referred by the National Accountability Bureau (NAB) to the FBR.
A large chunk of money was fraudulently withdrawn as sales tax refund at the time when STARR was fully operational. The modus operandi was to flash incorrect particulars of the suppliers on STARR window at the time of refund sanctioning. This technique was used to show that the supplies had actually taken place even in non-existent cases. The refunds were generated on the basis of wrong data of suppliers using STARR system, it added.
The said report was finalised many months ago. It is hoped that the IMSC would take serious notice of such visible violations by the tax officials committed in the past or direct investigators to verify such loopholes in the systems, sources added.