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China's Biggest Tax Fraud Comes to Light, 19 Sentenced to Death
October 30 saw the intermediate people's courts of Shantou City and Jieyang City of Guangdong Province passed sentences respectively on 16 cases of writing false value added tax (VAT) invoices, in which 20 defendants and 7 units were involved. By now, of known criminals brought to justice in the two cases of Chaoyang and Puning 30 have been given life sentence with 19 of them receiving capital punishment.
Initial investigations proved that false VAT invoices made reached a worth of 32.3 billion yuan, involving 4.2 billion yuan of illegal gains by 150 criminal gangs, as the most frenzied and biggest-ever criminal case of tax fraud uncovered in China.
Crackdown on tax fraud sweeping over east GuangdongExport tax refunding is a supportive state policy aimed at encouraging exports. However, with the lift of the ceiling of tax refunding rate criminals smelled benefit from it and cheats on export tax rebates again ran amuck in the two places of Chaoyang and Puning.
On August 7, 2000, the State Council ordered a nationwide sweep of export tax refunding frauds as those of smuggling and obtaining foreign currency under false pretenses. A crack force formed of 13 departments as of the State Administration of Taxation and ministries of public security, supervision and finance, was summarily mobilized to organize a crackdown under a "807" working committee on illegal tax activities in east Guangdong.
On September 4, 2000, 64 groups were sent out by the committee for a check on hundreds of false enterprises, an action carried out by as many as 1200 cadres and local policemen.
Working groups directly swooped down on those pseudo-enterprises according to registered addresses, and found that former so-called "industrial boulevards" were no more than barren slivers of wasteland, some "factories" were merely locals' housing estates and some "companies" were but makeshifts built on garbage heaps and toilets. Just a single day brought 231 false "enterprises" into daylight, and 65 of them were involved in tax frauds.
On September 12, 2000, the mid-autumn night, a batch of suspects was rounded up, including those in governmental departments and judicial organs. Some criminals had copped a heel and the big tax case of Chaoyang and Puning finally surfaced.
Shocking facts of behind-the-scene dealsHere making and selling false VAT invoices are rampant. On August 25, through a "Tornado" sweep 18 underground printing shops showed true color, and the confiscated invoices could load more than six trucks. Later examination showed that some 80 percent of them were false invoices.
Here tax fraud and evasion are most frenzied. Among the 1,142 enterprises checked 827 were fake and 98.33 percent of these have tax fraud problems. Altogether 172,000 VAT copies of invoices were made out false and 88,000 copies forged, involving 4.2 billion yuan of taxes in their totality.
Here officials were found hand and glove with "businessmen" to fabricate tax frauds. Some grassroots-level leaders directly ordered finance and tax collectors to serve those fake enterprises. Some tax cadres even opened false "enterprises" to rake in tens of millions yuan of illegal gains. On criminals' notebooks were huge amounts of money for buying Customs officials. Over tens of billions yuan in underground banks were easily transferred or drew out in foreign currencies during a very short period of time.
At the same time, investigations were conducted in ferreting out 328 culprits working in governmental departments, judicial organs and other institutions, with some of them having been turned over to judicial departments.
By PD Online Staff Li Heng
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