Corruption, bribes and two IRD officials – A Special Investigation

by Stephen Cook

CORRUPTION ALLEGATIONS have been levelled against two rogue Inland Revenue staff involved in investigating the tax affairs of an Auckland company at the centre of a messy bribery scandal.

The department is refusing to confirm or deny claims the two forensic investigators were part of an elaborate plot to defraud the taxman out of nearly $200,000.

The bribery allegations form part of the murky backdrop to a complex web of betrayal and deception implicating liquidators, an Auckland lawyer, the two IRD staff along with another man, who for legal reasons cannot be named.

Whaleoil understands complaints have now been filed with the Police, IRD and the Law Society over the actions of various parties involved in the scandal.

An IRD spokesman said due to taxpayer secrecy provisions in the Tax Administration Act it was unable to comment ?on matters relating to the tax affairs of individuals, organisations or businesses?.

Even in cases involving Inland Revenue and high-profile customers, the department could not comment on a customer’s affairs, the spokesperson said.

The comments do nothing to shed any light on claims two staff conspired with an Auckland man posing as a lawyer to rip off the tax department to the tune of almost $200,000. ??

Whaleoil understands the business assets of the company in question were sold in June 2013 for the sum of $385,000.

At the time the company owed IRD $214,000.

On the instructions of a man purporting to be a lawyer, the proceeds from the sale were then transferred into the trust account of an Auckland solicitor who agreed to oversee the liquidation of the company.

From there, it is alleged the man masquerading as a lawyer convinced the business owner he could significantly reduce the company?s tax bill by bribing ?liquidators and friends in the police and IRD?.

The business owner agreed to the deal, meeting the man in a car park where he handed over the sum of $27,000 in $100 bills.

Shortly after handing over the cash the business owner began to have second thoughts. He was unfamiliar with the liquidation process so spoke to friends who warned him ?it?s going to be a f****** nightmare?. The liquidators would be relentless, he was told, in fulfilling their obligations to the creditors and wouldn?t let up until they knew where every dollar from the sale of the business went.

Or so the business owner was led to believe.

He claims when he met the liquidator, who works for a high-profile Auckland firm, he didn?t ask one question.

The business owner assumed the man purporting to be a lawyer had been good to his word and had paid the liquidator off.

Similarly, no questions were asked by the tax department who settled with the man?s company for just $30,000.

A veil of secrecy surrounds the reasons why IRD agreed to settle for just 15 per cent of what was owed when it was fully aware $385,000 was available from the sale of the business to pay the taxman.

Whaleoil understands the letter of complaint lodged with IRD over the matter alleges two rogue staff members were either paid off ?to cover things up? or were complicit in some other way.

If these allegations are true, it wouldn?t be the first time rogue IRD staff were involved in corrupt practices.

In 2013 a Hamilton woman was jailed for two years and five months after admitting charges of corruption and tax fraud.

Anita Gail O?Connor, a former Inland Revenue staff member, was sentenced on 163 charges, including 24 charges of corrupt use of official information.

At the time Inland Revenue Deputy Commissioner, Mary Craig, said the sentence showed how seriously this type of offending was treated.

O?Connor worked at Inland Revenue from 1992 until 2009. An investigation began almost a year after she left after a customer advised Inland Revenue that an incorrect bank account was associated with her account.

Inland Revenue found that O’Connor had used both the names and details of other people and false identities to gain Working for Families Tax Credits and to access child support refunds. She set up bank accounts under two false names.

A total of just over $222,000 was paid into those accounts by Inland Revenue between June 2007 and November 2010.

During subsequent interviews, O?Connor admitted her offending. She said some of the money was paid to her associates and other money was used to buy cars, goods and groceries and for gambling.

In another case back in 2008 Alex Song pleaded guilty after attempting to extort payments from a Chinese couple who had been running a business buying and selling goods on auction website TradeMe.

Song, who was an?Inland Revenue investigator at the time,?told the couple a tax case against them would be dropped if?they paid him $120,000.

In the end they agreed to pay $60,000 into a Chinese bank account.

The investigation continues…