A Maltese food importer was remanded in custody on Thursday after refusing to consent to his extradition to Sweden where he is wanted in connection with a Europe-wide investigation into a €195 million VAT fraud case.
Mohan Bharwani, 57, from Sliema, was one of 14 individuals who are believed to have orchestrated the massive VAT fraud, spanning across 17 countries.
According to Europol, the arrests were the result of an investigation led by the European Public Prosecutor’s Office (EPPO) in Munich and Cologne, with Europol’s support.
It said that among the arrested are some of the most high-profile criminal actors, who have been on Europol's radar in recent years, in the area of VAT fraud.
Over 180 searches were carried out simultaneously in Albania, Austria, Cyprus, Croatia, Czechia, Estonia, Germany, Hungary, Italy, Malta, the Netherlands, Poland, Portugal, Slovakia, Slovenia, Sweden and the United Kingdom.
Bharwani was arrested on Wednesday, while the police were searching his property in San Ġwann, Magistrate Abigail Critien heard.
Superintendent Mario Cuschieri explained that when he arrested Bharwani, he told him that he was a consultant to a Swedish company.
His first reaction was one of total shock but then eventually calmed down and cooperated with the police.
Defence lawyers Stefano Filletti, Giannella de Marco and Maurice Meli contested the validity of the arrest, arguing that an arrest warrant must be issued by a judicial authority. In their client’s case, the issuing authority of the European Arrest Warrant was the Swedish Economic Crimes Authority, which is part of the Swedish police force, and was therefore not a judicial authority.
They also argued that an arrest warrant had to be signed by a Maltese magistrate.
Magistrate Critien, however, disagreed with these arguments and declared the arrest valid.
The defence also requested that their client be released on bail, with his wife and youngest son offering to serve as third-party guarantors.
The prosecution, led by Police inspectors Roderick Spiteri and Shaun Friggieri objected to the request for bail, insisting that Bharwani posed a flight risk and they had doubts on whether he would obey bail conditions.
The court upheld this argument and refused the request for bail. Bharwani was remanded in custody.
According to a Europol statement, during the searches in different countries, law enforcement seized vast quantities of smartphones, worth more than €15.3 million, as well as a yacht worth €3 million, and €1.2 million in cash and cryptocurrency.
Several cars were seized, including a Rolls Royce, a BMW and a Range Rover. Jewellery, luxury watches and 2.5 kilograms of gold were also found in the suspects’ residences.
Europol said the investigation revealed that the suspected organisers of the VAT fraud scheme created a complex criminal ecosystem, which allowed them to defraud up to €195 million through several criminal schemes involving the sale of small electronic devices, such as smartphones.
It is understood that the suspects used fraudulent chains of missing traders, who would vanish without fulfilling their tax obligations.
In 2020, the same organisers of these VAT fraud schemes are believed to have entered the market for protective face masks.
The company managed by the suspects is understood to have bought them from a missing trader, and channelled them through several buffer companies to disguise their final destination.
On paper, their company was based in Hong Kong, but the face masks were actually in a warehouse in Germany, and remained there until the German Federal Ministry of Health purchased them from the company ostensibly based in Hong Kong.
According to the investigation, neither the company at the beginning of the supply chain, nor the Hong Kong-based company, reimbursed the VAT they had received upon the sale of the face masks to the Ministry.