Memsolve directors in VAT fraud investigation

Exclusive Customs & Excise swoops on distributor's premises as part of wider enquiries.

HM Customs & Excise has raided distributor Memsolve, arresting itst of wider enquiries. directors over alleged VAT fraud, as part of a wider investigation worth between #6 million and #10 million.

Customs investigators and representatives from Microsoft and Intel raided Memsolve on 4 November. Five directors were arrested and questioned before three were bailed to return and two released unconditionally. None of the Memsolve directors were available for comment.

Chris Walmsley, marketing manager at Memsolve, maintained the company had been caught in the fallout from the investigation. 'We've been told we are the third tier, two steps from the source of the fraud. We paid VAT for goods from (company X) and charged VAT when selling on. We were told this is an ongoing investigation and will be interviewed again in the next six months.'

He stated that 'only a couple of boxes of software, a small amount of processors and some mice' were confiscated, although sources at Customs countered that the volume of goods seized was 'considerably more'.

Insurers Euler Trade Indemnity suspended cover for the company following the swoop. A meeting was held between Trade Indemnity and Memsolve's board of directors on 10 November to discuss reinstating cover. A representative for Trade Indemnity stated it was in 'very active discussions' with Memsolve. A decision has not been made.

The raid comes at a crucial period as Memsolve is to partner with another manufacturer, Bootle-based Future Solutions, to provide PCs for Asda's Christmas PC sales promotion.

The PCs were to be manufactured at Memsolve's Port Talbot plant, acquired along with the Atlantic PC brand from defunct system builder Electro-wide when it entered into administration (PC Dealer, 25 February).

Andrew Davies, managing director of Future Solutions, said: 'Obviously it's a concern for us and people will say there's no smoke without fire, but you've also got to think innocent until proven guilty and we've received assurances from Memsolve.'

An Asda representative said its contract was with Future Solutions and it had no direct dealings with Memsolve.

GOVERNMENT OPERATION SPANS THREE COUNTIES

Customs & Excise is tightening the noose around a #10 million computer components VAT fraud ring, following a series of dawn raids in Staffordshire, Cheshire and Merseyside.

In one of the largest investigations of its kind, 150 Customs officers, backed up by armed police, swooped on 26 premises in the early hours of 4 November. Computer chips, five tonnes of paperwork and a small number of firearms were recovered. A total of 18 arrests were made, although officials refused to rule out the possibility of making more.

An investigating officer from the National Investigation Service said the enquiries centred around the activities of a North West-based computer components company with a turnover in excess of #25 million.

Customs and Excise believe that the company is linked to at least 26 other businesses, many of them bogus. It is alleged that they are involved in the evasion of about #10 million in VAT through false repayment claims, suppression of sales and dealing in counterfeit computer chips.

'Fraudsters are making a killing in areas such as computer chips and mobile phones because of the massive amounts of money involved,' said the officer. 'It is very easy to do and the deterrent is small. As a result, we are seeing a lot of criminals moving into white collar fraud.'

George O' Connor, analyst at Granville research, added: 'Some "bad apple" distributors may resort to this kind of thing. It's unfortunate but not surprising. To be a successful distributor today you need to be either big or niche. Even the large distributors are lucky to make net margin north of one per cent.'