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SCOTS CROOK BEHIND THE Pounds 30m MONEY-GO-ROUND; We expose millionaire who makes a fortune in `carousel' VAT scam.

Byline: RUSSELL FINDLAY & NICOLA TALLANT

THE sharp-suited crook behind an international Pounds 30million swindle stands exposed by the Sunday Mail today.

Multi-millionaire Mohammed Nawaz Sattar, 33, masterminded the complex, big- money fraud from his lavish Scottish base.

The scam has been dubbed `carousel fraud', as it involves crooks claiming back VAT that was never really paid on goods being `sold' around a merry-go- round of their own firms.

The massive profit is made when one of the companies in the circle vanishes - owing a fortune in VAT. Sattar, the most successful Scot working the scam, was ordered last week to pay back Pounds 400,000.

But police say that is a drop in the ocean - since he stole Pounds 30million.

His elaborate fraud involved bogus companies buying and selling expensive computer components.

Stunned investigators found Pounds 6.7million passed through just one Bank of Ireland account belonging to one of the companies in a single month.

Sattar was dealt a major blow last week when Irish investigators named him at the High Court in Dublin.

He is the first of a long line of criminals to be stripped of assets in a major crackdown on carousel crooks.

Sattar lives with brother Mohammed Sarfraz Sattar in a Pounds 1million mansion on exclusive Newlands Road in the south side of Glasgow.

He hired a high-powered legal team to fight a bid by Ireland's Criminal Assets Bureau (CAB) to seize funds in an account in Dublin.

Sattar travelled to Ireland to attend an appeal the brothers had launched against the powerful CAB's attempt to seize Pounds 557,000 in an Ulster Bank account.

Wearing a Pounds 1000 suit, he spent hours in talks with his legal team, demanding initially that the CAB drop their freezing order.

A senior CAB insider revealed that the Bureau has been forced to negotiate in many cases in recent years because a settlement nets more money for the state than a costly legal battle.

After lengthy talks between the two legal teams, it was agreed that a total of Pounds 382,000 would be forfeited to the Irish state while the remaining Pounds 175,000 would be left with Kittwood Holdings, Sattar's company.

Sattar was nabbed after a major investigation into VAT fraud in Scotland.

The Irish CAB were told of suspicions that he was running a carousel fraud which was netting millions.

Chief Superintendent Felix McKenna, who heads the CAB, explained: "He has three companies in operation, two in Scotland and one in Ireland.

"He buys a consignment of computer processing units, which are very expensive. One box of these things could contain 200 and could be worth up to Pounds 1million.

"He sets up a business in Ireland and starts from here at a zero tax rate.

"He sells it to a VAT- registered dealer in the UK, - their Scottish company, Hollymill Limited.

"They get it at the zero rate but go on to create false invoices and sell the products to another `missing' Scottish company. This is where they claim the 17.5 per cent VAT back - even though it was never paid.

"Our investigations found that the company which was supposed to have such a huge turnover in Ireland was an eight-metre-square room with just a phone.

"The Scottish companies were similar-sized units.

"We found the companies were usually controlled by Sattar, who had some sort of a `gofer' or van driver supposedly working for him.

"It is called VAT carousel fraud and was very popular until recently, when police forces really closed in on it and closed the loop.

"One of his consignments did the merry-go-round 15 times and he collected the VAT each time."

A 200-unit consignment would net Pounds 175,000 each time VAT was claimed.

In an affidavit submitted to the High Court in Dublin last week, Mr McKenna revealed that VAT carousel frauds have been costing the UK Pounds 2.2billion annually.

He said: "An essential aspect is for the persons perpetrating the fraud to trade in high- value, high-volume, easy-to-trade commodities.

"So far, investigations have established that in the main, carousel fraudsters operate in the purported trading of computer accessories and mobile phones."

The affidavit went on to describe how, following information supplied from UK authorities in Edinburgh, the CAB discovered a freight company in Dublin and one in the UK were involved in the carousels.

An undercover operation found that Pounds 25million in computer components were arriving at the Irish premises every day during the probe, which began in 2000.

At one point, the court was told, an attempt was made to move cash from an Irish bank account to a NatWest account in Glasgow. The affidavit read: "The remittance was there to be changed into cash and given to Mohammed Nawaz Sattar in large notes."

However, due to the unusual request, the money was never paid out.

The Bank of Ireland account which showed the Pounds 6.7million turnover was closed after the bank raised concerns.

Despite assets being moved out of Ireland before the CAB could pounce, the Bureau were able to freeze the Ulster Bank Account.

In the affidavit, Chief Superintendent McKenna stated: "I believe the monies passing in and out of these accounts are proceeds of VAT fraud.

"I say Mohammed Nawaz Sattar may well have committed money laundering offences in this jurisdiction."

Investigations in Ireland have discovered a number of similar carousel operations.

One businessman is facing charges of defrauding the state of Pounds 84million and Pounds 15million of his assets have been frozen.

Mr McKenna said: "Most of this business has now been closed up.

"It is down to a trickle between the UK and Ireland and we will soon have no carousel frauds at all."

How the scam works

CAROUSEL fraud is cheating the taxman out of more than Pounds 2billion per year.

It is based on trade rules that mean no VAT is paid on goods sold between European countries.

In the scam's purest form, non-existent goods can be `sold' from firm to firm to firm - all owned by the same person.

The taxman is presented with bogus VAT receipts and asked to refund the tax that was `paid' on every transaction - but in reality never was.

The carousel crook usually `deals' in small, high-price goods, usually computer components or mobile phones.

He buys consignments from other European countries, paying no VAT to the continental seller.

He then sells the goods on to a `buyer' in Britain and charges - on paper - VAT at 17.5 per cent, netting him Pounds 175,000 on every Pounds 1million deal.

It should be paid to the taxman - but isn't.

Greedier crooks set up a whole chain of firms using fake paperwork to claim back VAT that was never paid, as the money-making merry-go-round continues. They then claim VAT refunds on the goods, which were never sold with VAT added in the first place - if they ever existed.

The goods are exported between Britain and Ireland over and over again, hence the name carousel.

Police chasing carousel fraudsters spend more time on accountancy skills than on detection.
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Publication:Sunday Mail (Glasgow, Scotland)
Geographic Code:4EUIR
Date:Jul 27, 2003
Words:1184
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