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‘Petrified’ businessman admits being frontman for massive VAT ‘carousel fraud’

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(stock photo)

(stock photo)

(stock photo)

A businessman has consented to being disqualified as a company director after admitting being the frontman for a massive VAT fraud involving the purchase of millions of euro worth of plant machinery.

But the High Court heard Kevin Rabbitte is claiming another person, who he is “petrified” of and refuses to name, directed him and was behind the illegal operation.

In an affidavit Mr Rabbitte (48), of Clonberne, Ballinasloe, Co Galway, claimed this person threatened “very serious consequences” for himself and his family and that his wife had recently been “run off the road”.

He also claimed he only received a commission of €10,000 for his role in the fraud, and that his company, Westman Plant and Civils Ltd, never benefited.

Mr Rabbitte’s firm was wound up in 2017 following an application by the Revenue Commissioners.

An investigation by official liquidator Myles Kirby, of Kirby Healy Chartered Accountants, found the company had been used as part of a major VAT carousel fraud.

This involved exploiting provisions between EU member states which facilitate trade by allowing a purchaser to pay VAT in their own country on goods purchased abroad.

Mr Rabbitte used his firm’s VAT number to purchase plant machinery at auctions in the UK and import them to Ireland, but no VAT was paid. Mr Rabbitte instructed his accountants to file nil VAT returns.

Mr Kirby found that between July 2014 and June 2015, the company’s VAT number was used to import nearly €8m worth of plant and machinery into Ireland, but some €3.2m in VAT payments were evaded.

The High Court heard Mr Rabbitte had “robustly denied fraud” until shortly before an application by the liquidator was due to be heard on Tuesday morning.

Mr Justice Brian O’Moore was informed the businessman was now admitting to attending 18 auctions where the value of machinery purchased was just over €4m. The court was told the loss to the Revenue due to unpaid VAT on these transactions was €1.2m.

The liquidator’s counsel, John Kennedy SC, instructed by Sam Saarsteiner of Clarke Hill Solicitors, said Mr Rabbitte had consented to his disqualification as a director and the only question for the court was how long the disqualification should be.

He said given the nature of the fraud and Mr Rabbitte’s behaviour as a company director, a lengthy disqualification was in order.

Mr Kennedy said Mr Rabbitte also consented to a declaration that while an officer of Westman Plant and Civils Ltd he was knowingly a party to the carrying on of the business of the company with intent to defraud creditors, including the Revenue Commissioners.

The barrister said Mr Rabbitte was also consenting to an order making him personally liable for the debts of the company, capped at €1.5m.

“There is now an acceptance of fraud on the part of Mr Rabbitte and that his actions warrant his disqualification as a director,” said Mr Kennedy.

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The barrister said the sole activity of the company in its life was “as a vehicle for fraud”.

Mr Kennedy said Mr Rabbitte’s actions made him “a wholly unsuitable person to act as a director in the long term”.

“Not alone has he committed fraud. You must look at how he has conducted himself in terms of his duties as a director to this company. There have been consistent, persistent and deliberate failings of his duties as a director of this company. There are no books and records,” he said.

Mr Kennedy said the company’s email records had been “wiped”, but Mr Rabbitte had denied doing this.

The barrister said Mr Rabbitte had also ignored court orders to file a statement of affairs and annual returns for the company and had hired a man called Michael Grimes to unsuccessfully “agitate” against its winding up.

Mr Rabbitte was not in court for the hearing, but his solicitor Robert Dore said his client “accepts the gravity of what is involved here”.

“He has put his hands up, but in circumstance where there is a particular background. I would ask you to take that into account,” he told Mr Justice O’Moore.

Mr Dore said the personal liability of €1.5m being accepted by Mr Rabbittee was “a very draconian relief”.

He urged the judge to give his client credit for making admissions and sparing the court a three-day hearing and to consider a disqualification “in the lower to middle level”.

The court heard Mr Rabbitte had filed an affidavit referring to an unnamed person who he claimed was behind the scheme.

“I stupidly committed myself to be the frontman for the purchase of machines by this third party, which were never paid for by the company and for which I received a very modest commission payment,” the affidavit said.

“Both myself and my wife are petrified of this third party who has threatened me in no uncertain terms. It is no coincidence my wife was driven off the road recently.

“I have been threatened with very serious consequences, both for myself and my family, in the event that I disclose this third party’s name.”

Mr Justice O’Moore will decide on the period of disqualification later this week.


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