Businessman Fined And Sentenced To House Arrest For Defrauding SARS Of Millions Of Rands

The Cape Town Regional Court has fineda Vredenburg businessman who defrauded the South African Revenue Services (SARS), of more than R17m toR256 000 and sentenced him to three years house arrest, with community service. Flip Roger Lambert was convicted of more than a thousand counts of the contravention of the Value Added Tax Act, failing to pay VAT to SARS, failure to provide VAT 201 returns within the prescribed period to SARS and failure to pay over VAT collected to SARS. He received various fines or prison sentences suspended for five years, on the condition that he was not convicted for the same offences during the period of the suspended sentences.

The court imposed the fine and house arrest sentence, after finding that Lambert badly ran his business, Ocean Security and that no money was spent on lavish gifts or overseas trips, neither was large amounts transferred nor disposed of for no good reasons. The VAT money was used to keep the business afloat until it collapsed. Lambert’s company supplied security services on the West Coast, starting in Vredenburg. He registered himself as a taxpayer in 1997, and also registered himself for VAT in the same year. He presented himself as the responsible person for VAT responsibilities.

He also registered as an employer in October 1997, collected the VAT under his name and paid it over to SARS. On 12 June 2000, he acquired a 75% stake in a CC which he renamed in August 2000, to Respect Security CC. It would however trade as Ocean Security, thus the same name he used trading as a sole proprietor. The remaining 25% interest in the CC was held by his then-wife, Dorina Johanna Lambert. The accused told the court that when he started his business, he had two mentors who told him that the salaries of the workers came first and after that came any other debts. His auditor told him numerous times that he needed to start paying VAT, but this never happened as there was no money left to pay VAT after the rest of the monthly expenses had been covered.

The business was surviving on the VAT money it was receiving. The auditor even made him sign documents as proof that he had been informed of the VAT problems, he was facing. A SARS investigator also warned him that the revenue services were investigating him for non-payment of VAT. The only effect this had, was that the accused stopped submitting VAT 201 returns until the business finally collapsed. The court found his then-wife not guilty, as it was clear he was the one making financial decisions. It was also proved that he was the only person who authorised payments and was always the person responsible for VAT.

The magistrate informed Lambert that his age, the fact that he was a first offender and that he was paying support for several children was all that kept him out of prison. The court accepted his version, that it was never his intention to defraud SARS, he had declared the VAT and always planned and hoped to pay it back. The court also accepted that what on face value appeared to be questionable actions, was just a business being run very badly by someone who was way over his head.

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Issued by:

Eric Ntabazalila

National Prosecuting Authority

Regional Communications Manager

Western Cape

Tel: (021) 487 7308Mobile: 073 062 1222

Email: entabazalila@npa.gov.za