Regional cases may unravel mafia ring

Rendi A. Witular and Aditya Suharmoko, The Jakarta Post, Bandung | Tue, 05/04/2010 9:28 AM

A string of exposed tax crimes in several regions may be linked to a tax-dodging syndicate jointly run by high-ranking tax officials currently holding strategic posts, retired tax officials, businessmen and tax consultants.

Investigations by the tax office into separate cases in Jakarta, Bandung in West Java, Surabaya in East Java, and Medan in North Sumatra may suggest an existence of an organized network operating a similar pattern of tax crimes by taking advantage of loopholes in the system at the tax office headquarters.

The loopholes have allowed the syndicate, which is believed to have been in business for at least five years, to dodge tax payments and claim fictitious tax returns.

“I believe the string of tax crimes in several cities may not be isolated incidents,” said chairman of the tax and customs supervision commission Anwar Suprijadi recently.

“There are loopholes, maybe by design, in the tax system that should be closed immediately,” said Anwar.

The former reform-minded customs and excise chief also said he could not dismiss the possible role of high-ranking tax officials, retired tax officials, tax consultants, and businessmen in helping active officials dodge tax.

“We are monitoring the investigation into the cases to ensure the big shots are also netted, not just the small ones”.

Finance Minister Sri Mulyani Indrawati confirmed Monday systematic tax plundering involving a “tax mafia” in claiming for fictitious tax returns of value-added tax (VAT).

She said the cases in Medan, Jakarta, Bandung and Surabaya might be related.

“An investigation is currently underway into tax officials, including those at the highest level,” she said.

Suspended tax official Andri Hardukadi, now facing trial in Bandung, West Java, for allegedly stealing tax documents, said it was impossible for tax officials to “play” alone in tax crime without dragging higher-ranking officials at the strategic level.

“The methods are the same anywhere. It’s a syndicate involving not only senior tax officials but also tax consultants, and notaries,” said Andri in a recent interview at Bandung’s Kebon Waru penitentiary.

Andri was apprehended in April last year by the tax office’s internal supervision for allegedly being involved in making fictitious tax invoices.

However, it was not until March the case found its way to trial, with the police and prosecutors charging Andri merely with stealing tax documents.

“A case was made against me because [the rival syndicate] accused me of being the operator of a network linked to the ‘previous regime’,” said Andri.

Andri refused to specify the regime, but sources at the tax office said Andri was known to be part of Madura-connected syndicate largely led by several high-ranking active and retired officials from Madura Island, East Java.

Andri said he ended up at trial as collateral damage in a turf war between syndicates at the tax office.

“I am not part of any syndicate. And I’m not Hadi Purnomo’s [the former tax chief] guy,”

“I’m trying to prevent graft at the Bandung tax office. But my efforts eventually disturbed the interests of a rival syndicate,” said Andri, adding that loyalists of tax chief Tjiptardjo were behind his trial.

Tax officials are currently divided into three groups; those of Hadi‘s (chairman of the Supreme Audit Agency), those of Tjiptardjo’s, and those who are neutral.

Corruption at the tax office remains deep-rooted as most of its top officials are already tainted with decades of graft.

Tax revenue accounts for around 70 percent of state budget revenue.