UK Trade for 2007 - Exports down 10% - Imports up , Carousel VAT fraud stopped rising as well

Stop Press : The Official Champagne trade body CIVC report that Britain imported 39 million bottles of Champagne last year - more than Spain, Japan and the United States put together - rising by 5.9 % last year.

UK Regional Trade in Goods have been released today ;

EXPORTS

Total value of UK exports for the 12 months to Dec 2007 was £219 Bn and fell by £ 24 Bn (10%)
UK exports to the EU decreased by £25,595m (17 %) in the same period. Northern Ireland was the only country of the UK that had an increase.

UK exports to countries outside the EU increased by £693m (1%).

IMPORTS

The total value of UK imports for the 12 months to Dec 2007 was £308.6 Bn. and rose by £ 6 Bn. (2%)

UK Imports from the EU increased by £4 Bn. (2.5 %) in the same period.

UK Imports from countries outside the EU increased by £2.6 Bn (2 %).

Trade Gap/Deficit = a Record £88 Bn. it was £55.8Bn in 2006 and £44.6 Bn in 2005

NB : Comparison of Exports and Imports between 2006 and 2007 are affected by changes in trade associated with VAT carousel fraud (MTIC) and by EU enlargement in January 2007

Sandra Tudor of the Trade in Goods Branch Statistics and Analysis of Trade Unit Balance Of Payments Division Knowledge, Analysis and Intelligence in a document accompanying the Trade Statistics released today says that the impact on the trade statistics associated with Missing Trader Intra-Community VAT fraud is currently growing again – estimated at over £8 billion in Q1 2006 (13 billion euros or 14 billion US dollars).

Substantial adjustments (now up to £8 billion in a quarter) are being made to the trade figures to account for missing trade declarations associated with MTIC fraud.

She says in the same document ..."It is essential that it is made clear that the estimates are of missing trade declarations associated with carousel fraud, NOT of the fraud itself. The level of tax at risk is substantially lower. On a simplistic basis the level of tax at risk is 17.5% of the trade (the UK VAT rate). However, this will overestimate the level of VAT loss and we have explained to the Press that the estimate of the impact of MTIC fraud on trade should not be used in this way."

If adjustments are being made of £8Bn of trade transactions in 1 Quarter are being made then at a generous 10% = $800 Mn. of VAT per Qtr = £3.2 Bn. a year is still going missing in VAT payments.

Sandra Tudor explains how Carousel Fraud works ...



More posts on Carousel Fraud here and also "Lord Houghton" , law lecturer, lay preacher in £51 Mn VAT carousel fraud jailed for 61/2 years - 8 Mr Bigs free due to botched investigation by HMRC 29-11-2007 and ...Another fucking thieving VAT carousel fraudster locked up - Harjit Singh Takkar, he stole £4.5 Mn. in 3 months from taxpayer. 28-9-2007 also Raymond John Cox , Big fish caught in Carousel fraud (MITC) and £85 Million of taxpayers money which has gone AWOL 12-6-2007 also Massive Europe wide raids to tackle huge VAT fraud 12-12-2006 and how most of them used a certain bank ...VAT scams used Bermuda based Transworld Payment Solutions to move money 11-22-2006

Pic of lady called Stacy Haber-Hofberg, DOB 25/01/62 a former environmental judge in New York , who had moved to Liphook, Hampshire with her English husband and their three young children , received six years in September 2005 along with 3 others for her part (total 22 years in jail) in a £40Mn. VAT fraud. In passing sentence, Her Honour Judge Williams said, "It was an audacious and outrageous fraud... all defendants showed a shameless dishonesty."The highly organised scam, operated over 2 years, involved buying mobile phones from twelve fictitious companies (they were clones of legitimate UK firms, set up in Hong Kong with names and letter-heads identical to British firms dealing legitimately in telephones and computer chips) and using false receipts to charge VAT on the transactions, resulting in a loss to HM Revenue & Customs of more than £40 million.

Dawn Primarolo fiddles whilst the Treasury is looted

Carousel Fraud is massive. Criminals are taking over £400 Mn each month from the Treasury by fraudulent claims - Lord Patel has regularly posted on cases which appear before the courts. In December in the Pre Budget Statement the updated figures for MITC fraud were promised but did not appear (Footnote). This week the Liberal Democrats sought better and further particulars about the criminal elements unvolved the scale of theft and of the efforts to stop this fraud.

In answer to questions about Carousel Fraud by Simon Hughes, gorgeous, pouting, clever, highly educated Dawn Primarolo ( Hansard 18th January Col. 1338W ) did her best not to be helpful. She said approximately 1,000 extra staff were allocated to HM Revenue and Customs as part of the overall VAT Compliance Strategy (VCS) in 2002-03 (5/4 years ago) which included VAT Missing Trade Intra-Community Fraud (MTIC = Carousel Fraud) as one of its priorities.

A total of 1,500 staff are now engaged in countering MTIC fraud across the Department following an additional redeployment of 700 compliance staff since Budget 2006 - (an update was expected by Gordie in the December Budget Statement but nothing was said.)

Simon Hughes also asked that for the last 12 months, how many
1, companies were investigated
2, prosecutions for carousel fraud were started
3, prosecutions for carousel fraud were completed

Dr Vincent Cable asked for each of the last 5 years for which records were available ;

1. How many prosecutions were there for carousel fraud
2. How many of the defendants in cases of carousel fraud were known to be part of organised crime gangs

To which the delightful hard working mum Dawn 52, (pic with friend) replied : "Details of the investigations and prosecutions conducted each year by HM Revenue and Customs are published in the departmental annual report and, prior to the creation of HM Revenue and Customs, was published each year in the annual reports of both the Inland Revenue and HM Customs and Excise. Where the specific information requested is not published, it is not collated in that format" - ie who the gangsters, para militaries are.

On the same day the Asset Recovery Agency acting under the Proceeds of Crime Act in a High Court Action served Property Freezing Orders (PFOs) on individuals and companies connected with and /or controlled by Paul Dermot Craven and Brian Pepper as they held assets which were obtained through the proceeds of unlawful conduct, including money laundering, tax evasion, false accounting, mortgage fraud and benefit fraud.

In this case, which is said to be connected to well known Republicans in Northern Ireland have frozen 77 further properties around Greater Manchester , now making a total of 92 properties valued at £13m which have been seized and investigations continue. The equity value is however much lower (presumably because the properties are mortgaged) and is about £4.7Mn.

"There are people in groups across society who are not engaged in further paramilitary activity - but will engage in organised crime because it funds their lifestyle," says Northern Ireland security minister Paul Goggins. In 2005-6 in England, Wales and Northern Ireland, ARA managed to convert £4.1m in assets into hard, recovered cash. On 11th January 2007, the Home Office laid a Written Ministerial Statement before Parliament setting out Government proposals to merge the Assets Recovery Agency (ARA) with the Serious Organised Crime Agency (SOCA) from next year it will disappear as the ARA and be absorbed into the Serious Organised Crime Agency early in 2008.

The Orders name ; Dermot Craven Developments Ltd, Craven House, Britannia Road, Sale,
Manchester and company directors Brian Pepper of Bridgewater Street, Sale,
Manchester and Dawn Craven;
* Avenue Holdings Ltd, Craven House, Britannia Road, Sale, Manchester, and
company directors Paul Dermot Craven of South Downs Road, Hale, Altrincham,
Cheshire, Brian Pepper and Gerald Joseph Nightingale;
* DC&BP (2004) Ltd, Craven House, Britannia Road, Sale, Manchester, and
company directors Dermot Craven and Brian Pepper.

The Agency has not alleged any criminal conduct by Dawn Craven or Gerald Joseph
Nightingale but has frozen property held by them, or by companies of which they
are directors, because it alleges that the property held is the proceeds of crime.

One is left with the smell that lots of very worthy hard working people are working very hard ... and ...er.. not getting very far ... and Dawn doesn't really want anyone to see how little they have acheived so far. Anyway the ARA will disappear next year so comparisons cannot be made blah. blah..... making itn look like the criminals have got away with approaching £5Bn a year for the last 3 years AT LEAST.

Footnote
"The correct figures will be available in the PBR, as they are every year following the application of the strategy for reducing MTIC fraud."

Chancellor announces 92% drop in VAT carousel fraud (MTIC) ..... Street festivals, joy is unconfined... medals and knighthoods all round

Alastair Darling introduced his 2007 Pre-Budget report today, (286 pages) coyly entitled "Meeting the aspirations of the British people" . The Office of national Statistics also produced simultaneously, "UK Trade 1st Release " from which the adjacent table is extracted from page 8 showing the MTIC fraud trade adjustment = Carousel VAT fraud as calculated by the Office National Statistics - NB this is the first time these figures have been accumulated, displayed and published in this form.

On Page 3 (instead of a picture of big tits) there is a note ...

Changes in trade associated with VAT MTIC fraud mean that comparisons of volume and prices (both including and excluding trade associated with VAT MTIC fraud) should be treated with a great deal of caution.

In the Chancellors statement / Document it is worth pondering on Page 27 ...

2.26 The deficit on the current balance in 2006-07 is £4.7 Bn. lower than expected at the Budget, as shown in Table 2.2. This is lower in 2006-07 due to continued success in tackling MTIC fraud and growth in consumer expenditure feeding through to higher-than-expected VAT payments. The deficit is also reduced by lower government expenditure than expected at the Budget, in particular spending by local authorities. The 2006-07 outturn for net borrowing is £3.9 Bn. lower than the Budget 2007 estimate.

At Page 98 we have ....

5.104 New estimates of Missing Trader Intra Community (MTIC) fraud, published today,show that the scale of attempted fraud fell by up to £1.5 Bn.in 2006-07, to between £2.25 Bn. and £3.25 Bn. The estimated impact on VAT receipts fell to between £1 Bn. and £2 Bn. These reduced estimates demonstrate the success of the Government’s strategy for tackling MTIC fraud. HMRC will take further steps to apply both criminal and civil sanctions to those who are found to be knowingly involved in fraudulent trading.

At Page 174 we can note that ....

B.47 Cash receipts of VAT in 2007-08 are expected to be £1.4 Bn. above the Budget 2007 forecast, helped by the continuing success of the government's strategy for tackling Missing Trader Intra-Community (MTIC) fraud and a stronger-than-expected rise in nominal consumer spending in the first half of 2007. Consumer spending accounts for around two thirds of the VAT base and the stronger growth reflected both higher inflation and real spending growth, above the Budget 2007 forecast range.

Finally on Page 154

A.62 As set out in Budget 2007, annual growth in recorded exports and imports and services has been distorted by activity related to missing trader intra-community (MTIC), which significantly inflated the value of measured goods trade in the first half Since the second half of 2006, Government measures to tackle MTIC fraud have led to fall in estimated MTIC-related activity, to a low level. In view of inevitable measurement difficulties involved in estimating MTIC-related activity, the ONS advises that comparisons trade volumes and prices “should be treated with a great deal of caution”. The abstracts from MTIC effects by assuming that beyond the latest quarter of data, export import volumes grow in line with underlying trade, excluding MTIC-related activity.The forecast is therefore based on the neutral assumption that the level of MTIC-related remains constant throughout the forecast at the latest quarterly estimate.

So the assault on MTIC fraud has been cut back in 2006 from the VAT on an estimated Total of £ 22.6 Bn. in 2006 to £800 Mn. in the first 8 months of 2007 ! Extraordinary. Something there to trumpet about ...if ...er ...true.... but Cave ! "Changes in trade associated with VAT MTIC fraud ...blah ...blah ... should be treated with a great deal of caution." Too fucking right pal.

Special notes to the ONS figures Page 7 are lengthy and one might just extract....

" ...Changes to the pattern of trading associated with MTIC fraud can make it difficult to analyse trade by commodity group and by country as changes in the impact of activity associated with this fraud affect both imports and exports. Originally, most carousel chains only involved EU member states. From 2004 in particular, some carousel chains have included non-EU countries, for example, Dubai and Switzerland...."

Now VAT at 17.5% on £22 Bbn. worth of goods is ...say £3.8 Bn. so that means VAT receipts should rise for the 8 months of 2007 by say ... £3 Bn.

But the Chancellor says B 47 Page 174 ...

"Cash receipts of VAT in 2007-08 are expected to be £1.4 Bn. above the Budget 2007 forecast, helped by the continuing success of the government's strategy for tackling Missing Trader Intra-Community (MTIC) fraud and a stronger-than-expected rise in nominal consumer spending in the first half of 2007. Consumer spending accounts for around two thirds of the VAT base and the stronger growth reflected both higher inflation and real spending growth, above the Budget 2007 forecast range."

So 2/3 rds of the £1.4 Bn rise is ...say .. £1 Bn. leaving a rise due to the "continuing success of the government's strategy for tackling Missing Trader Intra-Community (MTIC) fraud " of ..er.... £400 Mn.

So VAT receipts should rise this year by £3 Bn. because of the "continuing success of the government's strategy for tackling Missing Trader Intra-Community (MTIC) fraud " but the best estimate is that it will actually be only £400 Mn!!!!

.....Hmmmm. Well they did warn you.

Changes in trade associated with VAT MTIC fraud mean that comparisons of volume and prices (both including and excluding trade associated with VAT MTIC fraud) should be treated with a great deal of caution.

Apologies for the detailed and lengthy explanation, there is no way to reduce it regrettably... When the Gubment set out to confuse and obfuscate they do it in style. But you have to say that the claimed success in controlling MTIC fraud is stunning and the unwillngness to broadcast and publicise their success is really quite startling.... in fact it must count as one of the most successful criminal investigation successes of all time.

Mr Murphy at tax report calculates loss of uncollected Taxes / VAT etc., at £80 BN. (ish)

Record UK Trade Deficit in 2006 - VAT / Duty Black Hole Mystery deepens

The Office for National Statistics announced today that Britain's goods trade gap grew to £7.142 Bn. December 2006 , from £6.871 Bn. in November 2006. December's figures added to the largest annual trade deficit since records began in 1697, with the total trade gap for 2006 widening to £55.8 billion pounds in 2006 from £44.6 billion in 2005. ( A rise of 25%)

Records were set last year for both exports and imports but , excluding oil and erratic items, the volume of exports rose by 1 % between November and December and the volume of imports rose by 3%. (Nota Bene No-one has said yet the economy has been "blown off course". Yet.)

Very significantly the Press release states (verbatim)

"Following a change in the pattern of trading associated with Missing Trader Intra-Community (MTIC) fraud, identified by Her Majesty’s Revenue and Customs, interpretation of the breakdown between EU and non-EU trade is more difficult. Originally, most carousel chains only involved EU member states. More recently, some carousel chains have included non-EU countries, for example, Dubai and Switzerland. However, the import adjustment is applied only to EU imports as the goods return to the UK via the EU - but it is this part of the trading chain that is not recorded." (i.e the gangsters are one step ahead)

A report was issued in March 2005 Report on impact of MTIC on UK Trade statistics
Report on further research into the impact of Missing Trader Fraud on UK Trade Statistics, Balance of Payments and National Accounts. by David Ruffles & Tricia Williams... (Download PDF 9 pages ) which baldy concluded that it was not possible to extend or refine the estimates for the impact of fraud on the statistics using the currently available sources. Page 1.

On Page 9 they add ..."There are also concerns about asymmetries in Intrastat data, in particular issues about possible fraud in other Member States, inconsistencies between Member States in the calculation of statistical value, estimation of Below Threshold Trade and late/partial response. The UK will continue to be active in the European meetings at which these issues are addressed.

While further research by HMCE into the various data sources is possible, it is very resource
intensive. In addition, because of concerns about the overall quality of those data sources, in the
judgement of the HMCE/ONS team it is unlikely to yield robust estimates for the impact on the
trade statistics of either carousel fraud in other goods or of acquisition fraud."

A report from Reuters suggested that VAT fraud cost the UK government at least £ 8.5 Bn. (yes Billion) in the year to June 2006, whic HMRC disputes burt cannot provide any precise figures - which the Chancellor was slated to produce in his December 2006 statement ...but didn't. (But.See Below in BBC report)

Intriguingly the BBC report today (although the source of the figures is not given and is certainly not in the monthly statistics) ...

"The latest trade figures also reveal a continuing slump in the amount of trade associated with VAT "carousel fraud", which has been a factor in the volatility of the figures."

In December the volume of dishonest trade dropped to just £100m. "

They continue to say, despite the caveat about dealing with non EU fraud trails noted above ...

In the whole of 2006 there was £28.7bn worth of trade associated with this fraud, far and away the worst year on record and twice as much as in 2005. Most of this was in the 1st half , .... with just £600m of it in the last quarter of 2006.

In last December's pre-budget report (unseen by anyone else) Gordon Brown revealed that the Treasury lost between £2bn and £3bn in 2005-06 because of this activity. (For statisticians that is a variance of 100% = in this case £100,000,000 - which is a fair margin for error)

Meanwhile 5 arrests were made today in Surrey by HMRC, of a gang believed to have smuggled more than 85 tonnes of hand rolling tobacco (say 5 container loads) into the UK since July 2006 which involves the evasion of tobacco duty in the region of £12.5million.

John David WRIGHT, DOB 04/08/66 of Ruxbury End, St Ann's Hill Road, Chertsey, Surrey, KT16 9NL remanded in Custody.

Andrew Jeffrey GREEN, DOB 12/01/62 of 22 Camellia Court, West End, Woking, Surrey, GU24 9XQ Bailed
Christopher William SHEARD, DOB 26/11/48 of 6 Monks Way, Staines, Middlesex, TW18 1QU Bailed.

Bali Shag is the only true European hand-rolling tobacco sold in the United States... do John Prescott and Jack Straw share the odd packet, Lord Patel wonders.

Raymond John Cox , Big fish caught in Carousel fraud (MITC) and £85 Million of taxpayers money which has gone AWOL

HM Revenue & Customs (HMRC), have finally banged up 6 serious VAT fraudsters (1 acquitted) at Liverpool Crown Court today after a 5 year enquiry. £85 million was stolen from the tax payer in only 19 months (= VAT on sales of approx £600Mn) - 98 businesses based in the UK, Germany, Belgium, Spain and the Netherlands were involved and the 6 jailed men were directors and executives of seven of the companies identified during the trial.

Raymond John Cox (dob14/04/70) from Staffordshire, Cox had two companies in Germany - Signal Telecom GmbH and Crystal Telekom GmbH. He also had control of two companies in Spain - Zeption Telecom SL and Nauti-Parts SL and was the director of Cortage Investments Ltd based in Stoke-on-Trent. The trader which Cox predominately used was Powertone BV, in Holland, a company run by Issitt, McNeill and Sweeney.(Photographs of Cox's house and performance car collection available on request to HMRC)

Brett Simon Issitt (dob 13/12/74) 3 Manor Close, Todmorden, Lancashire. Sentenced to 10 years for his part and disqualified as a company director for 10 years.

Michael Henry McNeill (dob 30/04/71) Rossendale, Lancashire. He was sentenced to 7.5 years for his part and disqualified as a director for 8 years. McNeill, was responsible for the setting up of a template for carousel fraud entitled 'The Bible according to Mike @ Powertone' discovered during the HMRC investigation.

Paul Brian Sweeney (dob 28/11/70) resident at some time in Amsterdam, sentenced to 7.5 years for the fraud and disqualified as a director for 8 years.

Issitt and McNeill were sales executives in and Sweeney was the director of Powertone BV. This is the Dutch registered company based in Amsterdam but with the use of offices rented by Issitt in Manchester. Between April / September 2001 Powertone's turnover amounted to £49.5 million. Although Powertone was based in Amsterdam, its entire mobile phone trade was conducted from an office in John Dalton Street, Manchester.

Peter Kevin Glover (dob 21/04/55) 29 Furze Hill Road, Shipston on Stour, Warwickshire. Sentenced to 5 years for his part and disqualified as a director for 5 years. Glover was the director of Cellphone Europe BV, a company based in Brussels, Belgium, its entire mobile phone trade was conducted from Whitley Bay. Cellphone Europe 'bought' all their phones (with a few exceptions) from Powertone and then supplied the phones exclusively to missing traders in the UK. From October 2001/March 2002, Cellphone Europe sold into the UK over £81 million worth of mobile telephones. At the time of his arrest Glover was in the process of registering Cellphone Europe for Belgian VAT.


Colin Daniel Jones (dob 04/12/65) Wilmslow, Cheshire. He was jailed for 5 years for his part in the fraud and disqualified as a director for 5 years. Jones was responsible for the running of Datacell Ltd. registered in the Republic of Ireland an address in Gorey, County Wexford, Irelandand therefore was an EU supplier into the UK. Its entire mobile phone trade was conducted from an office above a shop in Northenden Road, Sale, Manchester. Prior to Glover's arrest, Datacell had made 13 purchases of mobile phones from Powertone to the value of £4.6 million. In the next four months in 117 Invoices the company purchased £38Mn.
Mobile telephones were purportedly imported into the UK, (and hence VAT free) by various companies set up by the fraudsters, who then sold the phones on, charging VAT that was then never paid over to HMRC - these companies then simply disappeared. The telephones were then 'sold' down the line to various 'buffer' traders before they were exported again often to be repurchased by the original companies at a trading loss. As the accomplices got more confident the transactions grew in number and value and it was clear from handwritten records found that those involved had difficulty themselves keeping a track of the transactions as the scale escalated.

In sentencing, the Judge said, "I am satisfied there was a hierarchy with Cox at the top. From his involvement throughout, and that all his companies were involved. He had all the trappings of wealth. The fact that the phones returned to Cox's companies in my opinion is no coincidence."

The case against a seventh defendant, Sarah Louise Smith, aged 34 from Wilmslow, Cheshire, was left on file following the failure of the jury to reach a verdict in her case. Smith is the partner of Jones and was involved in the running of Jones's company.

Proceedings can now start to confiscate the assets of those convicted.

According to the National Statistical Office Missing Trader Fraud (MTIC) or carousel fraud continues at the rate of £400Mn per months and in the whole of Europe probably exceeds Euros 4Bn.

The House of Lords recently published a report about the problem and said

Forward (inter alia)

"We conclude that existing measures to tackle Missing Trader Fraud do not prevent its occurrence and are unsustainable."

Conclusions. Para 80. It is generally accepted that the broad phenomenon of MTIC fraud is out of control; we expect it to continue to mutate into other sectors.

Pics are of Lord Patel's staff who have recently caught some big fish.

UK Customs - success in their war on VAT carousel fraud

The French Connection

UK citizen Mark Selby (39) ran Maple Link France (SARL) in the period May to May 2003/4. £326.5 Mn. (!) was credited to Mr Selby's company account , as payment for telephones sold to twelve UK companies and to Spanish traders who in turn supplied the same 12 UK companies.

These UK companies then failed to pay the VAT due to HMRC resulting in the theft of VAT ( and money from the taxpayer) of approximately £57 million.

Selby was extradited from France in November 2004 and pleaded guilty on Friday 16th June 2006 at the Royal Courts of Justice and sentenced to 5 years for cheating the Revenue, 6 months for money laundering offences and 6 months each for 5 cases of contempt of court to run concurrently but consecutive to the other sentences .. a total of 6 years.

The Weybridge Three

Alexander Bell (4 1/2 years) and his brother Jonathan ( 2 years) of Walton-on-Thames, and John Palmer ( 3 years) of Weybridge, were imprisoned this week (Nov 16th), and banned from holding company directorships for their part in a £3.7 Mn VAT carousel fraud.

As well as running carousel fraud, the men were trading in pirated copies of Microsoft products.

HM Revenue and Customs raided Alexander Bell's offices during a the carousel investigation and found hundreds of counterfeit Microsoft disks and certificates and only missed prosecution by Microsoft because HMRC got their first.

The four Virgini's

Durgesh Mehta, 51, was a director of Virgini Ltd, of Chalfont St Peter a company he operated in 2003 with ;

Gerald Reardon, 55, of Molash, near Canterbury
Matthew Sharman, 43, of Langdon Hills, Essex.
Peter Ratcliff, 54, of Ashtead, Surrey.

They ran the company to apparently trade in the sale and export of mobile phones to Kiev in the Ukraine.

Virgini Ltd, claimed £10m in VAT payments during that period.Customs uncovered the fraud when it intercepted just under £1m in cash being delivered to two of the gang and found that VAT of over £10Mn pounds had been stolen.They were variously found guilty at Canterbury Crown Court on October 26th 2006 of cheating the public revenue, and conspiracy to transfer criminal property under the Proceeds of Crime Act.

Mehta got 10 years and the others 8 years each and all were forbidden to become Company Direrctors for 10 years.

SOCA - Happy 2nd Birthday

The Serious Organised Crime Agency (SOCA) is celebrating it's second birthday and has produced a 2nd Annual Report. It received from the Home Office, Her Majesty’s Revenue & Customs, the Northern Ireland Office and the Scottish Executive totals of nearly £407m in resource funding and about £45m in capital funding and has approximately 4,000 staff in post.(page 7)

Overall the impression is of an organisation absorbed in process rather than practice. The Home Secretary in her Forward says, "The social and economic harms caused by organised crime cost the UK more than £20bn a year " (Which a footnote on Page 11 says "Home Office estimate). This is further explained on Page 18 "The organised crimes that most affect the UK (drugs trafficking, organised immigration crime, fraud and firearms trafficking). Highlighting how the annual figure for serious crime of £20 Bn is hopelessly understated, the level of Carousel fraud (MITC) that has been detected is of the order of £20 Bn annually ...for several years.. see Tuesday, April 04, 2006 SOCA the UK's FBI ?

There is not a single reference in the whole of the report to Carousel fraud - although on Page 34 the rpeort says on the subject "Collaboration with Partners" -joint work with partners to build the success of the Control Strategy -"achieved. Positive engagement by partners
including ACPO, Cabinet Office, Home Office, Scottish Crime & Drugs Enforcement Agency
(SCDEA), Police Service of Northern Ireland (PSNI), Foreign and Commonwealth Office
(F&CO), HMRC, etc., etc., etc.,

On Page 44 we are told that the 4000 staff took delivery of 1,364 courses with a total of 11,232 attendees trained - one may set this against for example the success claimed on Page 6 ..."the issue of 46 warnings to more than 2,500 businesses throughout the UK about crime threats that might affect them, leading, for example in one case to one bank alone reporting an estimated saving of £500,000" or the Government Target or on Page 18 ..."SOCA had this year Government targets for cash forfeiture of (£5m)" . The Times was critical which has led to the SOCA boss Bill Hughes to write a letter published today which reveals that Of the 148 former police officers who have left since SOCA was formed, 46 of them retired,

At Page 46 of the 54 page report we get the information about how effort is allocated ... no mention of carousel fraud.

It would be churlish not to point to successes, but whilst there have been successful seizures of drugs, the street price is low and declining and usage increases. None of the 13 "Mr Bigs" is cooling is heels at Her Majesty's pleasure .

89 tonnes of Class A drugs were seized (0% up on 06/07), 30 tonnes of cannabis plus 60 tonnes of precursor chemicals principally in Colombia and Afghanistan - what they call "upsream operations" .More than 2,000 arrests made in the UK and around the world flowing from SOCA work including under European Arrest Warrant arrangements.

Exotically named operations are listed, curiously anonymous and generalised about "successful" operations but vague on details. Go look but here is one nice one with a fascinating moniker ..

Operation HORNBLOWER, focussed on the criminal activities of an organised crime group involved in both the international facilitation of illegal immigrants into the UK from Afghanistan and Pakistan and the exploitation of migrants once here. Outcomes from intelligence development included the identification of routes from Afghanistan used by the gang, with Greece being identified as the EU entry point. (Wow!)

A series of joint actions overseas resulted in the interdiction of some 128 illegal migrants and the
seizure of a ship. Separately, action within the UK by SOCA, supported by the BIA, resulted in the arrest of two individuals on suspicion of conspiracy to facilitate the entry of illegal immigrants and the seizure of £8,500 cash.

Slim pickings for 4,000 staff and expenditure of nearly half a billion pounds. Funky logo though.

See Daily Mail today Head of British FBI attacks 'Spanish practises of his own 'disgraceful' officers -- luvly jubbly all that overtime sarge

"The report boasts of seizures of more than 89 tonnes of Class A last year - but states only that these seizures "flowed from" SOCA's work, with no details of where in the world they took place, which countries carried out the operations, what SOCA's involvement was or what proportion of the drugs were ever destined for Britain.

Separate Government figures reveal that seizures of cocaine and heroin being smuggled into Britain have plummeted since SOCA took over the fight against drug trafficking two years ago, from a peak of 23 tonnes of cocaine seized in 2003-4 to barely a tenth of that amount last year."

VAT Carousel fraud to be tackled by new Accounting procedures

The Government have obtained permission for de-rogation for a new VAT accounting system (introduced into last years Finance Act) from the EU for handling of two categories of goods, mobile telephones and computer chips/microprocessors/central processing units which have been involved in massive Missing Trader Intra-Community (MTIC) fraud.

This so called 'reverse charge' system will help prevent fraud by reversing the standard accounting system for VAT used in the UK.

With this new system , which will apply from July 1st the supplier of the specified goods does not account for the VAT on their sales when selling to other VAT-registered businesses.

The purchaser of the goods will be responsible for payment and accounting of the VAT.
Provided that the purchaser has correctly done so, they can recover this VAT in the normal way.

This means that HM Revenue & Customs (HMRC) is not put in a position where it may have to make repayments of VAT where the corresponding tax on the sale has not been paid to it - it also places a massive burden and extra costs on legitimate traders of these items and disrupts their cash flow.

Self evidently, dishonest traders - alerted by the lengthy delay caused by the EU in introducing this system, will already have switched to other high value, low weight and volume items to perpetuate the fraud.

The HMRC claims the level of trading associated with attempted fraud has fallen significantly in recent months - it has been running for over 3 years at the level of £400 Mn. a month. They claim (rather disingenuously) "statistics published by the ONS, using estimates produced by HMRC, show that the trend of reduced levels of trading associated with MTIC fraud is continuing, with a substantial reduction in recent months."

Although their last pronouncment on producing the January 2007 Trade Statistics was alittle confusing

"Following a change in the pattern of trading associated with Missing Trader Intra-Community (MTIC) fraud, identified by Her Majesty's Revenue and Customs, interpretation of the breakdown between EU and non-EU trade is more difficult. Originally, most carousel chains only involved EU member states. More recently, some carousel chains have included non-EU countries, for example, Dubai and Switzerland. However, the import adjustment is applied only to EU imports as the goods return to the UK via the EU - but it is this part of the trading chain that is not recorded."

Which might sound to some folks that the devious crooks have already made the necessary re-arrangements... if not they will migrate again to other areas of criminality .......

........ Stephen Crisp, 49, had hidden 52.49 kilos of cocaine and 5.7 kilos of heroin (calculated at 100% purity) in 81 brown taped packages under the bunk on the passenger side of his German registered lorry which were discovered at Folkestone last August. The drugs were said to have an estimated street value of £2.7 million. He got 20 years at Canturbury Crown Court on Friday.

UPDATE Budget 22nd March 2007

Reverse Accounting has been extended to Sat Nav equipment.

Massive Europe wide raids to tackle huge VAT fraud

VAT fraudsters , who are extremely successful and resourceful organised criminals steal £400 MN a month from the UK Treasury, more than the combined cost of the illegal Iraqi invasion and occupation force and sending ill equipped,and under resourced soldiers to a certain death in Afghanistan ...

As part of a massive integrated operation,targeting multi million pound VAT fraud, 300 HM Revenue and Customs staff (HMRC) have been deployed across France, Spain, Germany and the UK in the early hours of today.

A total of 50 search warrants were executed at business and domestic addresses in London, Glasgow, the Midlands, Manchester, Dover, Bristol and South Wales. A total of 13 people were arrested in the operation - further arrests are expected.

Whilst organised criminals steal £400Mn a month (at least - no one knows the true figure) HMRC have had some success, in 2005 - 06, there were six successful prosecutions for carousel fraud, resulting in 18 convictions and total prison sentences of 67 years.

A further nine successful prosecutions have concluded since April this year, resulting in 35 convictions and jail sentences totalling 165 years. - there have also been successful proceedings for asset recovery in one case a recovery of £13 Mn , plus a Marbella villa and 3 racehorses, even after the alleged criminal was found inoccent of VAT fraud.

Total assets recovered so far do not exceeed £20 Mn, 2 days take for the fraudsters...each day ... every day... all day.

Assets recovered in Edinburgh

Michael Voudouri, (pic) from Alloa in Clackmannanshire, got 4 years in 2004 after pleading guilty to or operating a major VAT fraud involving £3Mn VAT evasion by three companies he operated. Fairwood Trading and Cortec Management, textile traders and also £20Mn of turnover with - Computer Technics, who acquired computer chips from Denmark, Luxembourg and the Republic of Ireland.

He is now out of prison and at the High Court in Edinburgh, on 28th November, assets of his were seized and he was given 6 months to pay £1.3m, the single biggest seizure under Proceeds of Crime legislation. The proceeds from the sale of a £600,000 Bridge of Allan house will be added to that of other addresses in Alloa and London.

Music industry group involved in mobile phone fraud of £40Mn.

In September 2005 4 people received jail sentences totalling 22 years forma £40MN VAT fraud. In passing sentence, Her Honour Judge Williams said, "It was an audacious and outrageous fraud... all defendants showed a shameless dishonesty."

The highly organised scam, operated over 2 years, involved buying mobile phones from twelve fictitious companies (they were clones of legitimate UK firms, set up in Hong Kong with names and letter-heads identical to British firms dealing legitimately in telephones and computer chips) and using false receipts to charge VAT on the transactions, resulting in a loss to HM Revenue & Customs of more than £40 million. The proceeds from this crime were then sent to the Hong Kong bank accounts of a number of companies created to perpetrate the fraud.

All four defendants faced two charges, Cheating the Public Revenue with intent to defraud, contrary to Common Law and (Money Laundering) Assisting another to retain benefit of criminal conduct contrary to s93A(1) (a) CJA 1988.of cheating the public revenue with intent to defraud, and money laundering.

Musician Stephen Pigott, DOB 27/12/62. A musician/ music producer of Dubai, UAE. Was sentenced to nine years on both counts to run concurrently. His work invloved star names such as Celine Dion, Rod Stewart,The Pet Shop Boys and Mike and the Mechanics and had a string of song-writing awards to his name.

As part of the fraud Pigott had emplyed a trick lifted from the Frederick Forsyth novel The Day of the Jackal, Pigott got a passport in the name of David Roy Chapman after finding the name on a child's gravestone in a churchyard near his birthplace in Yorkshire.

Stacy Haber-Hofberg, DOB 25/01/62 a former environmental judge in New York , who had moved to Liphook, Hampshire with her English husband and their three young children , received six years on each count to run concurrently.(pic) She is also a songwriter, producer (of countless music videos, documentaries, the Off-Broadway play The Man From Verona, and the feature films "Def By Temptation" and "Rockabilly Vampire", the latter two often cited [she insists by design!] as being amongst the worst horror films ever made).

In addition both Pigott and Haber-Hofberg were both disqualified from holding the position of company director for the next fifteen years.

Joanna Harris DOB 24/02/69. A fitness instructor of London SE26. She was sentenced to three and a half years on both counts to run concurrently.

Theresa Igbanugo (38) a record label director of Sydenham, she had a reputation as a very good pioneering music entrepreneur, talent-spotting young acts. London SE26 received three and a half year sentences on each count to run concurrently. Harris and Igbanugo were also both disqualified from being a company director for ten years.

Recovery of assets proceedings are underway.... but ... Mr Big got away , Piggott refused to identify a man he called "Matt" whom he met in a bar ... he is thought now to be in Dubai from where he cannot be extradited. To HMRC he was John Andrew Shaw (code Z111), 52, a businessman and father of two from Sheffield. HNRC had a 67-page dossier on him. Another codename, Mauve 111, is a code given to his former home, a converted farmhouse in a South Yorkshire village.

The dossier identifies a lengthy series of suspicious transactions via banks in Dublin, Hong Kong, Ghana and the Isle of Man, as money was harvested from the HMRC frusdulently and then washed by banks around the world ... who know nothing about the fraud.

VAT Carousel fraudster Craig Johnson must pay £28 Mn. or face 10 more years in jail

We first posted about how 37 year old Craig Johnson who was one 7 members of a gang ... and claimed "mastermind" ...who were involved in a highly successful £68 million VAT fraud (probably part of a greater £138 Mn. fraud resulting in 21 people jailed for up to 130 years) . He pleaded guilty to conspiracy to laundering £6.3 million from the proceeds of crime and was given a two year jail sentence at Birmingham Crown Court - VAT fraud - launder £6 Mn get 2 years Saturday, September 27, 2008 which was added to 10 years for fraud in 2006 when after Operation Emersed, 12 people – including Johnson – were jailed for a total of 75 years..

Yesterday, at a confiscation hearing at Wolverhampton Crown Court he was handed down a repayment order for £28 Mn - £8m within the next 12 months and the remainder within a further 12 months. If Johnson does not repay the money he could face another 10 years in prison. The largest issued in UK courts. BBC photos of siezed assets, homes, helicopter, yacht, cars, watches, diamonds etc,

Johnson lived at his 300-year-old Meaford House with wife Amanda — now in Dubai with their children - where there is also suspected to be further property — and mistress Kim, who also took his surname.

The confiscation hearing, also involved 2 other defendants from the 12 strong gang – Linda Wragg, 44, of Hanchurch, Stoke-on-Trent, who previously got six-and-a-half years, (UPDATE - Wragg ordered to re-pay £88,685 to the public purse or face an extra 21 months in prison Nov 24th) and 28-year-old Steven Lipinski, from Essex, jailed for 6 years.

A second confiscation hearing is set for the beginning of January 2009, for 6 other criminal associates – Christopher Sanders, Robert Capewell, Gwyn Jones, Stephen Hancock, Nicholas Shipley, Anthony Trickett-Smith.

A third confiscation hearing is set for next March for the remaining three criminals – Charles McWhinnie, Catherine Temple and Sharon Hawcroft.

The total level of such VAT "carousel fraud" is unknown, but it was running at £400 Mn. monthly for several years - Current levels of such fraud have not been published but some official estimates say that Europe wide it costing European taxpayers up to £170bn a year - twice the European Union's annual budget.

VAT Carousel Fraud - HMRC still don't know how much is going on... That's OFFICIAL

Thursday, March 06, 2008 UK Trade for 2007 - Exports down 10% - Imports up , Carousel VAT fraud stopped rising as well

When writing the piece about the Trade Statistics published that day , we took, as usual , the precaution to check any data we use. So on 6th March we e-mailed Jan Marszewski /Press Officer, Business Desk /HM Revenue & Customs jan.marszewski@hmrc.gsi.gov.uk

Could you please advise me as to the reasonableness / unreasonablness of the statement :

"However if adjustments are being made of £8Bn of trade transactions in 1 Quarter are being made then at a generous 10% = $800 Mn. of VAT per Qtr = £3.2 Bn. a year is still going missing in VAT payments. "

We received a reply from Jan just minutes ago ...

I have been asked to reply to you on behalf of my colleagues in the Trade Statistics team.

In answer to your questions:
A comparison of of 2007 data with 2006 data totals at this stage could lead to miscalculations, as the 2007 data is provisional until August 2008.

The 2006 figures quoted have been revised and the missing declarations were not the same for each subsequent quarter. You cannot extrapolate in this way, the figures for all of 2006 have been published (not now provisional). Does this refer to 2006 or 2007?

The estimates of missing trade declarations associated with MTIC fraud have since been revised. The figures are available on our Web site http://www.uktradeinfo.com/ or from the ONS site http://www.statistics.gov.uk/pdfdir/trd0208.pdf .
This will also include figures for 2007, but they are provisional ,

As stated in the article quoted, you cannot estimate VAT loss from these figures, as there is not a direct relationship.

No mention if it reasonable, but we stick to a VERY conservative estimate of 10% of the gross MITC declarations. ...to be fair they DIDN't say it WAS unreasonable.

Taking up the link offered below (HOUSE OF LORDS OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT IN THE CAUSE ---- Total Network SL (a company incorporated in Spain) (Original Respondents and Cross-appellants) v Her Majesty’s Revenue and Customs (suing as Commissioners of Customs and Excise) (Original Appellants and Cross-respondents)
[2008] UKHL 19) will take some reading however this became apparent


"As the Court of Appeal observed in para 3 of its judgment, this type of fraud is not confined to the United Kingdom. It is common in other countries within the EU. It has been described as a sophisticated attack on the VAT system. It was estimated to have cost in excess of £1bn in the year 2004/2005 to the United Kingdom by way of lost revenue. The Commissioners refer in their written case to estimates that show that this figure was exceeded substantially in the succeeding financial years. There is no doubt that this is a pernicious stratagem, and that member states are justified in making use of every means at their disposal within the scope of the Sixth Directive to eradicate it."

To those unfailiar with how this fraud is perpetrated ..


"7. It is sufficient for the purposes of this case to summarise the details of the first of the thirteen conspiracies alleged in the Statement of Claim. It has been treated as representative of all of them. On or about 15 October 2002 Total sold 3,780 Nokia mobile phones to Redlaw Ltd, a company incorporated in England and Wales, for £1,672,224.75. On the same day Redlaw sold the mobile phones to Lockparts Ltd for £1,423,170 plus £249,054.75 as VAT, amounting in total to £1,672,224.75. On the same day Lockparts sold them to GAK Ltd, for £1,428,840 plus £250,047 as VAT, amounting in total to £1,678,887.

Both Redlaw and Lockparts thereafter ceased to trade and did not pay the VAT due on these transactions. On the same day GAK sold the mobile telephones to The Accessory People plc, for £1,436,400 plus £251,370 as VAT, amounting in total to £1,687,770. On the same day The Accessory People sold them to Alldech Ltd, the broker, for £1,447,740 plus £253,345.50 as VAT, amounting in total to £1,701,094.50. In due course GAK and The Accessory People paid
VAT on the transactions which they had entered into. Finally, on the same day Alldech sold the mobile telephones to Total for £1,508,220.

That sale, being a sale out of the United Kingdom, was zero-rated.Alldech claimed and was paid a refund of input tax from the Commissioners which included the sum of £253,345.50 of VAT which it had paid to The Accessory People."

Which is not bad pay for day's work shuffling Invoices about....or as one of the learned Judges remarked..

"
…”The telephones, if they existed, did not physically move from the place or custody in which they were in the morning of 15 October 2002, when the carousel began, to anywhere else or anyone else’s custody by midnight."

VAT scams used Bermuda based Transworld Payment Solutions to move money

Dutch mult-imillionaire businessman Johannes Christiaan Martinus "John" Deuss (64), who has a taste for Tattinger champagne and exceptionally pretty girls in bikinis, is/was the owner of Caribbean based First Curaçao International BankN.V(FCIB) (now in a form of administration from Sept 13th 2006 and not to be confused with First Caribbean International Bank) and was arrested in his Bermuda haven (Shore Lane, Tucker’s Town,for 30 years) -Former Bermuda Premier Sir John Swan & Bermuda businessman Ward Young posted bail of US$10Mn : "He [Deuss] is a good friend of mine. He'd do the same for me.") and transferred to prison in Holland last month , he agreed to the extradition(October 2006) .(Pic(c) Heat magazine)

It is reported his offshore bank allegedly aided UK and European VAT carousel (MITC) fraudsters, and is to be held in custody in the Netherlands for another 3 months.

The Guradian report that EU tax commissioner Laszlo Kovacs told them that EU governments were losing an estimated €50bn (£33.7bn) to these VAT frauds.

His bank was apparently popular with British VAT fraudsters, and also Russian and Dutch companies involved with EU based VAT fraud. HMRC reckons every individual it has arrested for carousel fraud in the last 2 years held an account at FCIB. They suspect 2,500 + UK citizens of using the bank - it is a fair bet they also had one or two other bank accounts.

The Dutch arrest warrant listed allegations of habitual or deliberate money laundering, handling of stolen property and being in charge of a criminal organisation. Duess has hired the best and is currently engaging the services of the engaging and beautiful UK lawyer, Clare Montgomery QC (of Cherie Blair's Matrix chambers - see pic ) who successfully represented the former Chilean dictator Augusto Pinochet who fought Spanish attempts to extradite him from the UK 8 years ago. She also very recently acted to stop the launch of a share issue in Rosneft equity which it was calimed would amount to money laundering under the Proceeds of Crime Act 2002 (Poca) because 70% of the company's value came from the "unlawful seizure" of Yukos's main business, Yuganskneftegaz.

Claire famously succeeded at the appeal for solicitor Sally Clarke of murdering her two babies.

John D's lawyers are appealing (so far without success) his detention in custody.

His 60 year old sister Martina "Tineke", 60, a former director of BCB who is on the board of FCIB, was arrested in September and though she has since been released , it is understood she remains a suspect in the investigation being carried out by Dutch and British authorities.

John D. has a history of fraud in the 80's, started a life of fraud by stripping money from the Russian State oil company. The Kremlin are said to have chased him through the courts for more than 10 years before giving up - it is not known if they have had any hand in him being arrested.

Stephen Curtis, who mysteriously died in an unusual helicopter accident and had connections to UK based Russian oil oligarchs was also a director of Bermuda Commercial Bank (Total assets $754 million at April 30, 2002), Deuss's principal bank, which owned 33% of FCIB . Mayfair based Curtis had replaced Platon Lebedev late last year as Menatep director when Lebedev was arrested on tax evasion and fraud charges. and he was named in a US lawsuit brought by investors who say they lost up to $1billion after Russian oil giant Yukos collapsed.


Duess stepped down as chairman and chief executive officer of Bermuda Commercial Bank (BCB) in September when news broke that First Curacao International Bank, was being investigated for money laundering in the Netherlands and the Netherland Antilles Dutch island of Curacao.

BCB rented premises in Sir John Swan’s wonderful, shiny Bermuda Commercial Bank Building - he who so kindly posted his bail.

Deuss has some very interesting connections, in the world of international trade and commerce, for example, Vietnam spymeister Theodore G "Ted" Shackley (of Research Associates International) co-ordinated anti-Castro attacks on Cuba prior to the Bay of Pigs. He also ran Nobel Peace Prize Winner and War Criminal Harold Kissinger's secretive and undeclared wars in Laos and Cambodia , the secondary and bloody sideshows to the Vietnam war.

Shackley, AKA "The Blonde Ghost", was hired by Deuss after he left (do they ever?) the CIA 1979 to organise shipments of oil to South Africa. SA was then under a global oil embargo that Deuss's Transworld Oil cheerfully flouted, as did US tax exile Marc Rich (Clintonian pardonee - on the request of his ex-wife) who worked with Duess selling North Sea Brent Crude to the apartheid South African regime liberally spreading commissions, bribes and kickbacks as required.

This activity earned him a firebombing of his Dutch place at Berg en Dal near his birthplace in Nijmegen in the 1980's by anti-apartheid activists who called themselves, rather dramatically Pyromaniacs Against Apartheid .

It was at this time that Duess struck up a very close connection with the flamboyantly homosexual , sado-masochistic and secretive ruler of Oman, Sultan Qaboos.

No mean operator he featured on the front page of the WSJ in 1995 ,"Is John Deuss a Visionary or a Slick Operator? He Holds Key to the Project." , a fascinating discussion about his brainchild, the (now complete) Caspian Pipeline Consortium and the crude attempts by Chevron to push him out.

Stunning model and journalist Suzan Mazur who knows John D. @ scoop ponders (October 18th 2006) " Why Has John Deuss' Offshore Bank Been Singled Out?" and has some fascinating tales to tell.

FCIB also featured as the bankers at the collapse last year of Oz fraudster Gregory James Kennedy whose Virtual Games Global (VGG) = Pacific Delta International = World Games Incorporated (201 -2005 Canda, Sweden UK pyramid scheme with up to 450,000 members) = Aspiritus N.V.

What appears to be the basis of the case against John D is a business which started out as First Ecommerce Data Services (FEDS) a wholly owned subsidiary of First Ecom.com Inc a NASDAQ hot dot.com stock (NASDAQ: FECC,) which was described as, "FEDS is one of the first offshore credit card transaction processing companies to offer multi-currency processing and settlement .... a global, multi-currency e-payment processing solution " "FEDS provides banks and financial institutions in the Asia Pacific, Americas and Caribbean region with universal, secure, cost efficient electronic payment solutions.".. it was also a fraudsters dream banking system. So successful that it eventually became totally unecessary to physically move any goods and simply issue bits of paper and handle the TPS account accordingly.

FEDS seems to have gone the way of many dot.coms but became through Transworld Oil, Transworld Payment Solutions (TPS), a very powerful, online, global payments mechanism, for their own trading use. TPS apparently worked with FCIB clients in Europe giving them the highly desirable facility move money between accounts in real-time, 24 hours a day, and in multiple currencies.

These book transfers in the records of TPS enable EU (or anywhere else) customers to get their money out of the system, without travelling to Curaçao or Bermuda.

Notably FCIB had correspondent banking arrangements with Barclays Bank in the UK and Rabobank in Holland, and even more recently (probably coinciding with the extension of these carousel frauds involving EU / Swiss transfers) , Union Bank of Switzerland.

As HMRC activity (which only became possible under UK legislation in April 2005)started turning over some stones eachof these banks in turn shut the door on FCIB. Naturally warning FCIB clients and so FCIB had to warn many of its clients that it was being forced to shut their accounts, as without a correspondent bank in Britain, it would no longer be able to move funds for them.

It is fascinating to see that Mantas a Herndon, Va.,a banking software company and partner of Safeguard Scientifics, Inc. (NYSE: SFE) with offices in London, New York, and Singapore. Mantas is a Safeguard Scientifics, Inc. (NYSE: SFE) announced in May 2006 that they had installed their Mantas Anti-Money Laundering at FCIB, this they claim ...

" .. mitigates risk with comprehensive, enterprise-wide surveillance of customer, account and transaction information to alert supervisors to suspicious behaviors. The system’s unique ability to analyze every transaction and generate risk-based alerts of suspected money laundering activities allows Anti Money Laundering and compliance officers to distinguish fraudulent from legitimate transactions. "

No doubt someone, somewhere has been able to provide similiar such services to FCIB / TWP - Lord Patel says you might start looking here and cop a look at this video about how easy it is here or if you like Mexican food here

Fuck it! Simply Google "global, multi-currency e-payment processing ".... HMCR have got their work cut out.

Voice Stress Analysis - Junk Science used by Government to frighten and intimidate benefit claimants

Harrow Council Communications Management Strategy 2003 - 2006 - Successful communications are at the heart of any successful enterprise...... Harrow Council tries to be open and honest in its dealings.

Independent observers therefore might find it difficult to reconcile this worthy objective with the details of the London Borough of Harrow - The introduction of Voice Risk Analysis to Housing Benfits and Council Tax assessments - which is a nominee for the e-Government National Awards 2007.

Public technology.net provides an effusive and excited review of this exciting initiative ;

"Harrow's Housing Benefit Service is already a national benchmark of excellence, with a four star CPA rating and fastest assessment times in the country. The recent implementation of Voice Risk Assessment (VRA) has further improved performance, secured a DWP easement on checking claimants' details, and saved money. VRA does not deter benefits claimants - Harrow's caseload is the highest it has ever been but helps to drive out fraud or error and to target resources faster. The use of this technology in the public sector is a national 'first' for Harrow. Following its success both Lambeth and Birmingham councils have adopted the package."

Apparently Mike Carney (Head of Assessments) consulted with Capita in January 2007 and decided to use VRA within its contact centre , " to innovate the review process "(?) Capita are the Council's strategic partner. Harrow worked with them to apply their general VRA technology to a Local Government assessments environment. They have provided technical expertise and supported Harrow's project manager in implementing the system.

As a national 'first' implementing VRA required courage (?). But the DWP's confidence in the project was such that it funded the pilot. By February operators were being trained and the scripts developed by the Council.

1.VRA went live on May 21 for Housing and Council Tax Benefits interventions.
2. The system was extended in June for review of single person discounts
3. It was further extended in August for new claims for Housing and Council Tax Benefits.
4. We have worked with Job Centre Plus who plan to pilot VRA from September.
5.Plans are also in place to extend the service to cover a range of other assessment based Council services, such as Blue Badges and Freedom Passes."
6. We are on track to achieve the Government's PI (?) within 2007.

John Hutton, who was then the Secretary for Work and Pensions (eGov monitor 10 April 2007) said , "Harrow Council is already recognised as providing one of the best Housing Benefit services in the UK and I welcome its willingness to pilot this innovative technique to make further improvements." What he failed to mention was that no surrogate marker of deception has yet proved reliable enough to be admitted as evidence in a court of law in the UK.

Benefits ? - well they claim ..." So far we have reviewed 588 cases and fast-tracked processing for 402 of them. Of these 135 declared a change, and 73 are being followed up further. This has resulted in a saving in this area alone of £98,192, and £140,000 in total. The one year trial costs only £63,000 and has saved £140,000 in the first four months. "

Recent figures from the DWP are said to show that Benefit fraud in the UK is estimated to run to a total of £800m in 2006/7, and that there were more than 52,000 prosecutions in 2005/6. The Fraud Act 2001 gave fraud investigators more powers to catch and punish offenders, including greater powers to check records with other organisations.

Curiously in the Guradian December 2nd they say ... "In the first three months Harrow council saved £300,000, suggesting levels of benefit fraud may be higher than government estimates." ...the Monbiot Calculus at work again, think of a number ...er.. then make it bigger. In the Economist on May 8th 2008 they report ..."This week the council said that in the ten months from May 2007, when the system was installed, it had saved £420,000 ($828,000).

A press report in the Birmingham Post May 8th 2008 , "Phone lie detector led to 160 Birmingham benefit cheat investigations" , reports that of 2,656 calls subject to checking, 6%, around 160, were classified as "high risk", leading to further inquiries. It refrains from saying how many of those investigated then proved to be cheating the system or lying. See also BBC video report posted at the same time...."Fifteen councils across Britain are to be offered lie detectors to help catch out benefit cheats who cost taxpayers up to £400m a year. "

As recently as November 20th the BBC reported that the technology will be used for the first time on telephone calls of unemployment benefit claimants in Lincoln and Nottingham.

Harrow, partnered with Capita, are one of the 68 Finalists and are included in Section 9) Local e-Government excellence: Team - they will hear their fate at an exclusive black-tie e-Government National Awards dinner which takes place 6.45pm - 11.15pm on 20th January 2009 at the prestigious Guildhall in the City of London.(details)

What exactly is Harrow's / Capita's magical Voice Risk Assessment (VRA) system

Here we have to thank the Yorkshire Ranter - Dr. Benway strikes again, with Venture Capital who with sound knowledge and experience and with a wry literary touch provides a detailed and lethal de-bunking and also The Ministry of Truth for the Government Bullshit Risk Detector .

Briefly ..

Voice stress analysis (VSA), is not new and , works it is claimed, by detecting involuntary psychophysiological modulations in a subsonic and inaudible component of the voice called the ‘Lippold Tremor’ at a frequency of between 8Hz and 12Hz. As far as can be ascertained the original research was undertaken on live voice recording and computer analysis - not on digitally transmitted voice data over telephone networks.

Within the world of Detection Of Deception (DOD) this issue is hotly debated with polygraphists (Lie Detectors) and few independent research studies have been undertaken. A study by VThe State of Virginia in 2003, (35 page pdf) at which time the technique was in widespread use, concluded that

"Because there have been no independent scientific studies conducted on the reliability of the computer voice analyzer to detect deception, the Board recommends to the Director of the Department of Professional and Occupational Regulation that computer voice analyzer equipment should not be approved in Virginia at this time."

The technique used by Harrow is a proprietary, patented (only in Canada it appears - registrant is Amir Liberman, an Israeli - 16th Dec. 1998) system utilising a subset of VSA called Layered Voise Analysis which is peddled by a company called Nemesysco Ltd. a privately held security-oriented company founded in 2000, and headquartered in Netanya, Israel and sold through Digilog UK.

The suppliers do not claim that their devices detect lies; rather, they claim that VSA detects microtremors, which are caused by the stress of trying to conceal or deceive. hence it's usefulness in their personal use product ... the PC based Love Detector - The Love Detector technology is capable of detecting love-like feelings and other emotions via the telephone or a microphone.

There is little experimental or independent evidence of the utility of this technique but the Natonal Institute of Justice - a section of the US Department of Justice published a report by Kelly R. Damphousse, Ph.D. in their Journal dated March 17, 2008 - entitled , "Voice Stress Analysis: Only 15 Percent of Lies About Drug Use Detected in Field Test" in which they address the question ...Can VSA Accurately Detect Deception? and they conclude ;

Our findings suggest that these VSA software programs were no better in
determining deception about recent drug use among arrestees than flipping a
coin.

The Yorkshire Ranter however points to a fatal weakness in that the original work on VSA relies upon

... a change in a signal in your voice between 8 and 12Hz, but even the highest-quality voice codecs used for public telephony filter out everything below 50Hz, so a VSA system based on - well - science couldn't possibly work.

All this is of course to some extent an academic and amusing diversion - but it isn't.

In the Queen's Speech debate the Guradian reports ;

The government also highlighted a pilot covering 25 local councils administering housing benefit to 500,000 claimants, saying "voice risk analysis technology" will be used to test whether a claimant is providing false information. The government first introduced the technology in Harrow in north London last year, but now says it plans to make the technology available nationwide.

The Government have of course anticipated resistance to the system and response is outlined here by Department for Work & Pensions Anti-Fraud Minister, James Plaskitt yesterday during their media blitz on May 8th 2008.

His ad hominem is remarkable (or not in the circumstances) in that it justifies the use of such systems by their results, not by any attempt to validate the techniques.

This is because, by simply telling the caller such a system is in use acts as a deterrant to continue with the application. This may be because they are attempting to commit fraud, but it may not be.

The use of this technology is merely to cow and frighten, the guilty and the inoccent will fall foul of this technique unsupported by any rigorous scientific studies. Furthermore no surrogate marker of deception has yet proved reliable enough to be admitted as evidence in a court of law in the UK.

So the state is using a technique which is fraudulent to possibly identify the fraudsters.... but... but ... Harrow Council tries to be open and honest in its dealings.

Recent figures from the DWP are said to show that Benefit fraud in the UK is estimated to run to a total of £800m in 2006/7 - equivalent to the loss to the HMRC of 2 months carousel fraud.

UK Manufacturing output slumps 4.9% year on year - Trade gap widens in October - MITC fraud still an unknown quantity

The seasonally adjusted volume index for the output of the production industries fell by an astonishing and unprecedented 1.8 % cent compared with the previous three months. (Base 2003 =100) Output has fallen for 8 straight months even though the pound has continually weakened and has fallen 4.9% year-on-year .

Between September and October output of UK manufacturing industries fell by 1.4 %. There were widespread falls in manufacturing the most significant decreases in output were 3.6 % in the paper,printing and publishing industries, 4.2 % in the basic metals and metal products industries and 2.8 % in the transport equipment industries - last week figures for new car sales in November were 37% down on a year ago.

The chemicals and man-made fibres industries grew by 1.6% .

Mining and quarrying output decreased by 0.7 % and output of the electricity, gas and water supply industries decreased by 0.5 % compared with the previous three months.

In the last 3 months , output of the consumer durable goods industries fell by 3.6 % compared with the previous three months and was 8.1 % lower than the same period a year ago.




In the last 3 months, output of the capital goods industries fell by 2.7 % compared with the previous three months and was 4.4 % lower than the same period a year ago.


Following this news the pound fell against the euro and the dollar dropping by over 1% to US $1.4742. The euro rose to 87.25p, near its recent record high of 87.38p.


The goods trade gap with the rest of the world widened slightly to £7.8bn in October, (£7.4 billion in September) mainly due to a drop in oil exports because of North Sea production problems. The balance on trade in oil was in deficit by £0.4 billion, compared with a surplus of less than £0.1 billion in September.

In October, total exports of goods fell by 3.5% to £21.2 billion and total imports of goods fell by 1% to £28.9 billion.

The ONS add this cautionary note without further explanation - Changes in trade associated with VAT MTIC (carousel) fraud mean that comparisons of volume and prices (both including and excluding trade associated with VAT MTIC fraud) should be treated with a great deal of
caution. (ie : we haven't a **** clue what the level of fraud is, where it happens and .. well ... er.. that's it)

The UK's surplus on trade in services was £3.9 billion, unchanged from September and in the last 3 months , the surplus on trade in services was £11.7 billion, compared with £10.9 billion in the previous three months. (Exports £40.3 Bn. - Imports £28.6 Bn. )