Anthonia Ogbemudia, a director of Globalex Ltd (Globalex), a mobile phone and computer component wholesaler based in Wembley, Brent has been disqualified as a director by the High Court for 13 years for involving the company in a scheme linked to VAT fraud and making wrongful VAT reclaims against HM Revenue & Customs, resulting in a claim in the liquidation proceedings by HM Revenue & Customs of over 91 million.
Anthonia Ogbemudias disqualification from 29 July 2014 means that she cannot promote, manage, or be a director of a limited company until 2027.
The disqualification follows investigations by a specialist team of the Insolvency Service, whose involvement commenced with the winding up of the company, for debts owed to a supplier to Globalex. .
Commenting on this case Paul Titherington, Official Receiver in the Public Interest Unit, said:
Globalex was involved in trading and making wrongful reclaims in a fraudulent VAT scheme which had been costing the UK Exchequer significant amounts of money at the time the fraud was perpetrated.
This is not a victimless crime, the main impact being on honest tax payers and their families who as a result suffered the effects of funding shortages in healthcare, education and other front line services.
Regulatory changes, investigative action and legal proceedings have reduced the scale of this fraud from 2007 onwards.
The Insolvency Service will not hesitate to use its enforcement powers to investigate and disqualify directors whose companies defraud the public purse.
The investigation uncovered that between 29 July 2005 and 30 June 2006, Globalex bought and sold wholesale mobile phones and computer components both in the UK and other EU countries, then filed quarterly returns with HMRC reclaiming UK VAT monies that defaulting missing traders in its supply chains had failed to pay. The court heard that this was part of a Missing Trader Intra-Community (MTIC) fraudulent scheme that has taken advantage of VAT zero rating as goods move between EC countries.
This MTIC fraud is more commonly known as Carousel fraud, as large consignments of electrical or other small item size high value goods are invoiced rapidly and repeatedly around trading chains, but with actual movement of goods only taking place as they enter or leave the UK.
As well as making wrongful reclaims Globalex also acted as a contratrader obscuring the MTIC fraud for other traders making such claims. Globalex matched and offset VAT amounts from different trading chains, so that its customers could make the wrongful reclaims into a separate apparently clean trading chain, from the dirty chain containing the defaulting missing trader.
The court heard that Globalex entered into trading arrangements which were too good to be true, and against which the company had been expressly and repeatedly warned by HMRC. Globalex achieved a turnover of over 1.1 billion within 13 months of trading with relevant experience and little initial finance in place.
MTIC trader fraud indicators included: the rapid succession of same day trades without deliveries of goods sitting at a shared UK freight forwarder, the common use of the same offshore bank, and entering into payment arrangements involving third parties who were neither suppliers nor customers. All traders banked with the First Curacao International Bank which was shut down by the Netherlands Antilles authorities in September 2006 in order to prevent money laundering.
Anthonia Ogbemudia allowed Globalex to make payments to unconnected third parties totalling at least 11.9 million.
The court also heard that as the sole director with responsibility for all aspects of the companys trading, Anthonia Ogbemudia was involved in pricing decisions which ran against any commercial logic and could only be explained in terms of this fraudulent scheme.
The court heard that checks on trading partners were undertaken as a window dressing exercise. Globalex had already started trades without making VAT registration checks, and when HMRC advised of failed verifications, Globalex continued trading regardless.