China-based director sentenced and fined nearly S$2 million for GST and money laundering offences

SINGAPORE: An Indonesian director overseeing two companies orchestrated a scheme involving fabricated invoices and false documentation, resulting in illegitimate Goods and Services Tax (GST) refunds totalling about S$660,100 (US$495,600).

Notably, this deception occurred while he resided in China, devoid of any genuine business operations.

Adi Djusman, who is also a Singapore permanent resident, faced the consequences of his actions with a three-year jail sentence for his involvement in GST and money laundering offences, the verdict being pronounced on Monday (18 Dec).

Additionally, the 59-year-old was mandated to pay a penalty of S$1,980,345 to the Inland Revenue Authority of Singapore (IRAS).

This sum, threefold the amount of GST he fraudulently obtained in refunds, reflects the severity of his financial malpractice.

In a joint statement issued by the Singapore Police Force and IRAS on Tuesday, it was revealed that Adi serves as the sole director for both Multi-Eka Trading Pte Ltd (“MTPL”) and Sui Jaya Pte Ltd (“SJPL”).

Despite the absence of any operational activities, Adi resorted to fabricating invoices and listings, leading to the submission of 20 GST returns for MTPL between January 1, 2015, and December 31, 2019, and 21 GST returns for SJPL between January 1, 2015, and January 31, 2020.

This resulted in IRAS making payments to MTLP and SJPL, which should not have been made.

Subsequent tax investigations unveiled that neither company conducted any business during the periods for which refunds were claimed.

All GST returns filed during these timeframes were counterfeit, involving Adi’s submission of false documents to IRAS officers during the initial inquiry phase.

Further investigations revealed Adi’s residency in China during the commission of the offences and his absence of any documented sources of income.

S$523,460 of fraudulent GST refunds transferred overseas

The fraudulent GST refunds were systematically credited to his companies’ Singapore bank accounts quarterly from January 2015 to January 2020.

Adi periodically returned to Singapore towards the end of each quarter and employed cross-border money transfer services to redirect the illicitly obtained GST refunds to bank accounts in China, jointly owned by him and his wife.

This elaborate scheme saw approximately S$523,460 of fraudulent GST refunds transferred overseas.

A segment of these fraudulent refunds was diverted to contribute to his Central Provident Fund (CPF) account under one of his company’s names, aiming to fabricate the appearance of genuine business activities.

This action constituted a money laundering offence, as Adi manoeuvred to move and conceal illicit proceeds derived from GST evasion in Singapore.

The IRAS discovered this case through routine compliance programs, employing data analytics and “advanced statistical tools” to detect irregularities across various industries, as mentioned in their statement.

IRAS emphasized the severity of the offence involving the intentional submission of false GST returns, whether through overstating input tax, understating output tax, or making fictitious claims.

In the event of conviction, offenders are subject to a penalty amounting to three times the undercharged tax, alongside a fine not surpassing S$10,000, imprisonment for a maximum of seven years, or both.

For those found guilty of money laundering, the repercussions include imprisonment for up to 10 years, a fine reaching S$500,000, or both.

“Singapore takes a serious view on fraudulent GST refund claims and related money laundering activities and will not hesitate to take stern enforcement action against any individuals who commit these offences and persons who facilitate them,” said IRAS.