- July 23 2014
- By Romana Puiuleț, Daniel Bojin and Cristi Ciupercă
On the morning of June 17, 2013, a judge in the Ilfov County Courthouse just outside of Bucharest began trying the case of a Swedish citizen of Iranian origin.
AB, who has asked to remain anonymous, was to be tried in absentia on charges of evading €16 million (US$20.8 million) in taxes. The Romanian prosecutors say that two of his commercial companies imported vegetables from Turkey into Romania without paying taxes owed to the Romanian government.
On paper, AB is the owner of no fewer than 80 Romanian companies and many of these have huge debts to the Romanian state in unpaid taxes.
Yet AB had never imported vegetables, never set up companies and never evaded taxes. In fact, he had never been to Romania. However, his identity had been used by fraudsters to commit crimes without his knowledge.
He is not alone.
AB says he that while he has been working in Sweden, the past five years have been hell for him, culminating in his trial, in a foreign country, for crimes he had nothing to do with.
For more than a year, the Organized Crime and Corruption Reporting Project (OCCRP) has investigated a network that is providing dishonest businessmen with illegal means to evade paying taxes.
The network started taking shape in war-torn Iraq and its technique was simple: take debt-riddled companies in Romania and other Eastern European countries which haven’t paid taxes in years and transfer ownership to people whose identities were stolen or who didn't know their names were being used to commit fraud.
Some of those involved in the network are allegedly connected to Al Qaeda, some claim to be victims of the terrorist organization and some are involved in large-scale tax evasion and trafficking of migrants.
Between 2008-2009 the network defrauded the state of at least € 50 million (US$ 68 million), and probably much more. It’s hard to put an exact number on the loss, as the companies involved paid scant attention to bookkeeping.
A Stolen Passport Surfaces in Frauds
"My passport was stolen in Sweden, in 2006,” AB told OCCRP reporters. “I reported it to the police and the document was cancelled in November 2006." Four years later, the Swedish Iranian was in for an unpleasant surprise.
"In 2010, I received a formal letter from Romania, informing me that my passport was used in fraudulent businesses,” he says. “I sent a letter back through the Swedish authorities, explaining the situation." For almost three years there was silence but, in February 2013, he got another notification. "I was asked to go to court in Romania on January 28, 2013.” But since the letter did not arrive until February, “it was impossible to get there."
June 17, 2013. Iraqi Morad Ahmed crossing the street in front of Ilfov County Court just before his testimony.
AB hired a lawyer and proved to the court that the passport used in Romania was not valid. "I asked them to reject the accusations against me but nothing happened. Me and my family were extremely concerned; this story bothered us a lot." It was not until the end of December 2013 that the court in Ilfov acquitted AB and certified that he had not committed fraud.
AB was tried in the Romanian tax evasion case together with an Iraqi citizen, Morad Ahmed. Morad Ahmed is also the co-owner of no fewer than 150 commercial enterprises in Romania. Many of these owe huge amounts of tax to the Romanian state.
Ahmed was also acquitted in the tax evasion case, but his story is a little different than AB's.
According to documents seen by OCCRP reporters, Morad Ahmed's cousin, Omar Farid Ahmed, was behind the takeover of many of the companies used in the tax evasion.
A Romanian secret service letter attached to the tax evasion file says that Omar Farid Ahmed used AB's stolen passport to take over the debt-riddled Romanian companies. The same letter says that AB's passport was brought to Bucharest by another Iraqi who found refuge in Sweden, the Ahmed cousins’ uncle, Fwad Hossein.
The Romanian tax evasion case provides a glimpse into a world of deception where nothing is what it seems.
Tip of the Iceberg
The € 16 million tax evasion is only a piece of a much bigger cross-border puzzle involving numerous Iraqis. Many of these were brought into Europe by one man: