NAV releases internal VAT fraud audit report

November 27, 2014

Horvath
“The report published by NAV is a completely random series of data queries conducted over the course of two weeks. It says nothing about what I claimed regarding specific companies’ fraudulant activities, let alone anything that would refute my claims, even though the Tax Authority should have been well aware of my findings by that time.”
– András Horváth (pictured), tax inspector-turned-whistleblower

Under court order, Hungary’s beleaguered National Tax and Duty Authority (NAV) has released a 1200-page report presenting the findings of an internal investigation conducted in November 2013.   Previously, only the report’s conclusion had been released.

The original investigation was conducted over the course of a weekend in response to allegations made by former tax inspector András Horváth that high-ranking tax officials repeatedly “turned a blind eye” to tax fraud on the part of multinational companies at a cost to Hungarian taxpayers of some HUF 1 trillion (USD 4 billion).  Horváth claimed senior NAV officials routinely interfered in investigations.   His claims were subsequently corroborated by another former tax inspector.

The report was released under court order as a result of a lawsuit concerning freedom of information that was initiated by András Schiffer, co-chair of Green-leftist Politics Can Be Different (LMP).  The report concludes that Horváth’s claims are “unfounded” and “NAV’s risk-handling mechanism puts a special emphasis on primary taxpayer-case risks expanding beyond borders.”

According to Horváth, the report is nothing but a “randomly generated collection of statistics” that did not take his suggestions into consideration. He said the “green dossier” compiled by him includes information on specific multinational  networks engaged in VAT fraud schemes, but the NAV report makes no reference to the data in question.  According to Horváth “the whole report is aimed to discredit me and others who are willing to speak about NAV’s involvement in not investigating the VAT fraud cases.”

Horváth reported suspicion of tax fraud directly to the police in December 2013. According to the national headquarters of the Hungarian police, their investigation is still ongoing but they have managed to “identify some suspects”.

Horváth, who ran unsuccessfully for public office in April 2014, recently announced the joint formation of the Anti-Corruption Alliance (Korrupcióellenes Szövetség) together with former LMP MP Gábor Vágó and others.

Horváth recently told the Beacon:

The government has seemingly initiated a larger, coordinated effort to discredit our work at the outset. (Pro-government investgative blog) PestiSrácok requested an interview from me, and later published a manipulated version of it in a video file. The journalist from the blog who interviewed me also lied about what I said on live television. These are serious cases and I am even considering a lawsuit against them at the moment.

The offending interview was published on Tuesday. In the article the interviewer, Szilveszter Szarvas, claims Horváth “admitted to having no evidence about the VAT frauds.” Later, on a political TV program, PestiSrácok editor-in-chief Gergély Huth alleged that the tax inspector-turned-whistleblower had handed his evidence over directly to the US Embassy. According to Horváth, both the interview and the later comment are deliberate falsifications.

In October it was revealed that the US State Department had temporarily suspended the right of six Hungarians to travel to the US, including senior NAV officials suspected of engaging in or benefitting from corruption.  It is believed the officials were involved in an attempt to solicit bribes from American grain wholesalers by offering them beneficial tax treatment in return for large “donations” to a pro-Fidesz foundation.

NAV president Ildikó Vida has publicly acknowledged being on the US travel ban list but categorically denies any involvement in corruption.

Despite calls for Vida’s resignation, Minister for National Economy Mihály Varga has refused to so much as temporarily suspend her pending the outcome of an independent investigation.  Nor is the government likely to give in to protester demands that the European Commission be asked to perform a full internal audit of NAV, preferring instead to allow Vida to conduct her own internal investigation in an attempt to clear her name.

Referenced in this article:

http://index.hu/gazdasag/2014/11/26/vida_ildikoek_nyilvanossagra_hozzak_horvath_andras_aktajat/

http://m.napi.hu/ado/komolytalan_rohejes_horvath_is_reagalt_a_nav-vizsgalatra.590107.html

http://index.hu/belfold/2014/03/18/ki_kell_adnia_a_nav-nak_a_horvath-vizsgalat_anyagat/

http://www.nav.gov.hu/nav/sajtoszoba/hirek/_Jelentes_vizsgalatro20141125.html

http://index.hu/gazdasag/2014/11/26/vida_ildikoek_nyilvanossagra_hozzak_horvath_andras_aktajat/

http://budapestbeacon.com/economics/nav-director-ildiko-vida-admits-barred-entering-us/

http://pestisracok.hu/horvath-andras-elismerte-korrupciorol-nincsenek-bizonyitekai-csak-az-afacsalokat-tudna-megnevezni-videoval/

http://www.atv.hu/videok/video-20141124-havas-a-palyan-1-resz-2014-11-22