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News | Wednesday, 05 May 2010 Issue. 162

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Finance Ministry withdraws blacklisted company contract


The Finance Ministry yesterday ordered the suspension of a €48,000 contract awarded to S & R Handaq Ltd pending a “legal review,” after it transpired that the company was involved in the infamous VAT scam, and owes government more than double the amount it was awarded by tender.
A ministry spokesman confirmed to MaltaToday last night that “the contract has been suspended until further notice,” adding that it is also possible that the contract be cancelled as government will imminently publish a legal notice that will prevent people or companies found guilty of breaking the law from winning public tenders.
The issue was brought to light by Opposition leader Joseph Muscat in a speech he made on in Fgura Saturday to mark May Day. He stressed that the contract was awarded to a supposedly blacklisted company right under the Finance Minister’s nose.
Investigations carried out by MaltaToday reveal a note at the bottom of a circular issued by the Department of Contracts on 29 March, a month before Joseph Muscat actually announced the scandal.
The note by the Director General suggests that “payments to S&R Handaq Ltd are not to be effected until further notice.”
When contacted, the Director explained that this was due to the fact that S&R Handaq Ltd “failed to adhere to the contract conditions by securing a performance bond.”
Other governmental sources said that it was impossible for S&R Handaq to deposit the performance bond as their assets are frozen by the VAT Department, while technically no payments by government could be effected as it owes government more than double that amount.
Gregory Brincat, a former Nationalist Party deputy mayor of Swieqi and director of S&R Handaq, was arraigned with his brother and another 20 businessmen last year, charged over the VAT scam that shocked a nation as millions of euros were fraudulently siphoned from the VAT department.
Gregory and his brother Mario Brincat are the same men who had used to file sales of stock without VAT under the acronym NJC – ‘No Johnny Cash’.
According to police calculations, most of the company’s sales bore the NJC marking and they go back to 1996, soon after VAT was first introduced.
Johnny Cash refers to the nickname given to Social Policy Minister John Dalli who was Finance Minister when he introduced Value Added Tax in Malta in 1995.
According to receipt books taken by investigators from the company, it transpired that sales on which VAT was not charged amounted to Lm631,500 (€1.47 million) between 1996 and 2007.
But Finance Minister Tonio Fenech has since distanced himself from the award of the contract to S&R Handaq Ltd by not replying to any questions made to him about the matter.
Tonio Fenech last week had told Parliament he was not aware of any public contracts awarded to companies whose directors were involved in last year’s VAT fraud scandal.

 


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