A Geländewagen (Mercedes-AMG G63), a BMW 7 series sedan (M760Li) and an A Class Mercedes-Benz along with various pieces of modern art are among Johannesburg-based businessman Adriano Mazzotti’s property that were attached by the High Court Sheriff in order to pay the cigarette baron’s debt to the taxman.
The warrants, issued on Monday, 18 February, allow the Sheriffs to attach property to the value of almost R34-million in order to pay tax debt relating to a 2010 case that includes cigarette smuggling and falsifying export documents.
SARS says Mazzotti and his Close Corporation, Real Time Investments 535, owes it R71,986,191,56.
The Sheriff, accompanied by SARS officials and bodyguards, knocked on Mazzotti’s compound in the affluent suburb of Hyde Park at about 10am on Tuesday morning. Around the same time a second Sheriff, accompanied by more SARS officials and bodyguards, waited for a locksmith to open the Kya Sands warehouse owned by Mazotti’s company Real Time Investments 535 CC. Both groups were met by security personnel armed with assault rifles.
Mazzotti is liable for the tax debt in his personal capacity because he is a member of the Close Corporation. He was not home and is, according to his attorney, abroad. His attorney would not comment further and repeated attempts at gaining comment from Mazotti were unsuccessful.
The warrants were obtained by SARS’ newly established Illicit Economy Unit – the taxman’s answer to the investigative capacity former Commissioner Tom Moyane killed in his four year reign since September 2014. The Illicit Economy Unit will broadly focus on syndicated tax and customs tax evasion schemes, including the smuggling of cigarettes.
SARS Criminal Investigations team is also looking into the matter. According to SARS’ Customs Information System, Real Time Investments 535 was involved in a series of deals where cigarettes were imported from Botswana and alleged to have been exported again to the Democratic Republic of the Congo. Except that it was never exported, SARS argued.
Investigations at the Beit Bridge Border Post revealed that the exportation forms “were falsified”. The markings on the forms related to non-related goods being exported, and not the cigarettes as indicated. The clearing agent mentioned on these forms told SARS they had no record of the supposed transactions, and SARS officials said their names and details were “fraudulently used on the documentation”. Real Time Investments 535 could also not prove that the cigarettes were indeed exported to the DRC.
This is one of the most common schemes of smuggling and excise tax evasion on cigarettes – colloquially known as “ghost smuggling”. It allows the smuggler to evade all the taxes payable and push their product into the local market at an extremely low price.
Excise duty and VAT make up approximately 50% of the retail price of cigarettes. If a tax evasion scheme works, it ensures a handsome profit.
Cigarettes are particularly attractive to illicit traders as commodities because they have high value and are easy to transport. Smuggling narcotics, for example, holds a high risk because they are easier to detect.
Various SARS units are investigating further tax schemes relating to Mazzotti and his partners as well as Real Time Investments 535 and a second company, Carnilinx. DM