Three arrested for alleged value-added tax fraud

Tian Shengjie
According to prosecutors, the scheme involved fake invoices related to precious metal processing, totalling over 4.6 billion yuan.
Tian Shengjie

Minhang District procuratorate has approved the arrest of three men who are accused of writing false value-added tax invoices, involving over 4.6 billion yuan (US$700.6 million).

In 2018, Zhou and Hou were introduced to each other by Zhou’s cousin, according to prosecutors. Hou wanted to get involved in gold processing with a state-owned enterprise, and he allegedly requested Zhou to act as a go-between and introduce him to a leader whom Zhou knew.

After being briefed by Zhou, the leader was said to have agreed to his business proposal. Not being aware of Hou, the leader asked Zhou, as a deputy general manager of the SOE, to be in charge of the operation.

In February 2019, the business started. For each transaction, Zhou allegedly only needed to stamp contracts after Hou matched buyers and sellers.

Zhou doubted the huge contracts but remained silent in order to receive a 230,000-yuan commission, say prosecutors.

Within four months, Zhou allegedly bought 15 tons of gold and 133 tons of electrolytic copper in the name of the SOE and signed fake processing contracts with over ten companies for false invoices and dodging taxes.

In June last year, Zhou washed his hands off this illegal business. His work was taken over by Xie, a legal adviser of the SOE, say authorities.

A year later, the tax fraud case started to raise suspicions and the economic police of Minhang began an investigation.

Zhou, Xie and the other related man were approved to be arrested and further investigation is underway, the Minhang procuratorate said on Tuesday.

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