14 arrested – and hundreds of Portuguese bank accounts frozen – in massive IVA corruption probe

Operation Admiral takes in at least 16 European countries, along with 3rd countries

PJ police have taken part today in a massive pan-European crackdown on suspicions of corruption, fiscal fraud and money laundering in at least 16 countries, as well as 3rd countries.

Here, 14 people have been arrested, along with the judicial seizure of 600 bank accounts, 50 vehicles, 47 properties and sundry goods and cash.

Roughly 100 searches, of homes and offices, were undertaken in the municipalities of Porto, Matosinhos, Vila Nova de Gaia, Braga, Guimarães, Vila do Conde, Póvoa de Varzim, Coimbra, Figueira da Foz, Lisbon, Corroios, Vila Franca de Xira, Sintra and Funchal, while elsewhere similar operations took place in Germany, France, Italy, Spain, Belgium, the Netherlands, Luxembourg, the Czech Republic, Hungary, Greece, Romania, Slovakia, Austria, Lithuania, and Cyprus.

In all countries, people were arrested and property/ vehicles/ IT material/ documentation and cash seized.

According to a statement by the PJ, at issue are “fraudulent transactions superior to €2.2 billion”.

The 14 arrested in Portugal are under suspicion of the practice of “crimes of criminal association, fiscal fraud and money laundering”, said the statement.

“The criminal activity was based on the successive formation of a complex chain of companies, most of them with the social purpose of selling computer equipment on online platforms, which actually operated by performing necessary acts to profit from the amounts of IVA (VAT) received from the sale of these products to end customers, in a typical scheme of Missing Trader Intra-Community (MTIC) Fraud, which damages the coffers of the European Union,” the statement continues.

Operation Admiral, as this probe is called, goes back well over a year. 

According to noticiasaominuto online Coimbra tax inspectors began investigating a company selling cell phones, tablets, headsets and other electronic devices, for suspected VAT fraud in April 2021. They then communicated the situation to the European Public Prosecutor – and then, slowly but surely “links between the suspect company in Portugal and about 9000 other legal entities and more than 600 individuals located in different countries” were established.

Eighteen months after receiving the initial report, the European Public Prosecutor’s Office (EPPO) has been able to expose “what is believed to be the largest IVA carousel fraud ever investigated in the EU.”

Criminal activities are believed to be spread across the European Prosecution Office’s 22 member states, says noticiasaominuto, identifying “Hungary, Ireland, Sweden and Poland, along with third countries including Albania, China, Mauritius, Serbia, Singapore, Switzerland, Turkey, the United Arab Emirates, the United Kingdom and the United States”.

In addition to the size of the losses, what highlights this fraud, according to the Prosecutor’s Office, “is the extraordinary complexity of the chain of companies

“From companies acting as seemingly clean suppliers of electronic devices and claiming VAT refunds from national tax authorities while selling these devices online to individual customers – and subsequently channeling the proceeds of these sales abroad before disappearing – to companies that launder the proceeds of this criminal activity”.

These activities would not have been possible “without the involvement of several highly skilled organized crime groups, each of which has specific roles in the overall scheme. Working transnationally, almost with an industrial logic, they have been avoiding detection for year”, explains the EPPO.

More of Operation Admiral will appear as the courts begin questioning of suspects which now has to take place, before bail conditions are set.

In Luxembourg, European Chief Prosecutor Laura Kövesi has told Euronews that this kind of fraud is the most profitable crime in the bloc. It is estimated to cost EU states €50 billion annually in tax losses.

“Operation Admiral is a clear demonstration of the advantages of a transnational prosecution office,” she said. “When it comes to VAT fraud, from a national perspective, the damages can be assessed as relatively small or non-existent, or even remain undetected. You need a helicopter view, to see the whole picture.”

natasha.donn@portugalresident.com