MORE than 240 law enforcement officers, including members of the Hungarian anti-terrorism unit, participated in a raid on January 7 in three Hungarian regions on a criminal operation responsible for organising an international scrap metal scam. The activities of the group, run by a family in Györ in north-west Hungary, resulted in more than €21 million in unpaid VAT in Slovakia and €2.8 million in the Czech Republic. An international team consisting of Slovak, Hungarian and Czech crime experts have been running the investigation, coordinated by The European Union’s judicial cooperation unit Eurojust, the Slovak Police said in a press release.
The Györ Prosecution Office found out that a criminal organisation exported scrap metal to Slovakia and the Czech Republic in order to exploit the differences in VAT regulations in the affected countries.
The organisation took advantage of the fact that goods in the European Union free trade area are free of VAT. Companies in Hungary exported copper scrap metal to iron mills in Slovakia and the Czech Republic, according to the Slovak Police. The organisation set up a network of at least 14 companies which were managed by so-called ‘white horses’ (people who are used for or duped into carrying out someone else’s typically fraudulent schemes), which they used to sell the scrap metal. The Slovak companies sold the metal without paying taxes, while Hungarian companies deducted unauthorised sums from their VAT, according to press release.
“This is a really sophisticated crime, which means that there are companies [which have been] foisted onto Slovak territory and established in the names of legal representatives who are typically ‘white horses’,” Slovak Police Corps President Tibor Gašpar said, as quoted by public-service broadcaster Radio and Television of Slovakia (RTVS).
During the police operation financial investigators in Hungary detained 14 suspects, according to a press release, and seized 18 cars worth €800,000, 17 properties, €500,000 in cash and six kilos of gold. The seized property is worth more than €3.5 million, RTVS reported. Hungarian authorities accused 19 people, one of whom is already in custody, the TASR newswire reported and issued an international arrest warrant for two of them, according to Sme daily.
“We [the police] believe that the criminal activity occurred on Slovak territory from 2006 to 2008, but we presume that conditions for this activity were created by the entry of both countries to the European Union, when the free movement of goods started,” Gašpar said in an official press release.
Suspicions first arose in Slovakia four years ago when tax offices attempted to contact the ‘white horse’ firms after discovering problems with their tax payments and received no response. Realising that the offenders were Hungarian citizens, Slovak police contacted Hungarian authorities, and after discovering that the organisation was also operating in the Czech Republic, the Czech Republic’s police anti-corruption division joined the investigation. It took at least one year to organise the whole tax evasion scam, according to RTVS.
The perpetrators could face up to 16 years in prison for being members of a criminal organisation involved in large-scale VAT fraud, according to the European law enforcement agency Europol’s website.
