Financial investigators’ unlawful actions against sugar producer are halted

Subject of complaint: SFS, Investigative Unit for Financial Investigations at the SFS Large Taxpayer Office (IULTO)
Complaint in brief: In February 2018, a leading Ukrainian sugar producer turned to the BOC with a complaint about unlawful actions on the part of an IULTO officer.
In May 2017, the SFS conducted an inspection at the company. Its operations with multiple counterparties were treated by the SFS as fictitious. Accordingly, the company was ordered to pay an additional more than UAH 16 mn in corporate profit tax.
The Complainant did not agree with the conclusions of the tax audit and appealed them in the Lviv Circuit Administrative Court. However, the Complainant reported, the IULTO investigator tried to arrest the company’s bank accounts several times. In addition, the officer spread false information about the supposedly fictitious nature of the company’s business operations, among its counterparties, which hurt the Complainant’s business reputation. Feeling pressure on its business, the company turned to the BOC.
Action taken: The BOC investigator sent a letter to the Central Investigative Unit (CIU) with a request to examine the circumstances of the case and ensure a pre-trial investigation without unjustified interference in the company’s commercial activities. In addition, the case was discussed twice at meetings of the Expert Group with the CIU.
Result achieved: With the involvement of the Council, the CIU initiated an internal investigation of its officer’s actions. Once misconduct was confirmed, the officer was reprimanded. In addition, the CIU assured the Complainant that his case would be considered impartially, without improper interference in commercial activity. At the end of May, the Complainant reported that IULTO officers were no longer acting improperly.