Tax Authority Officials Suspected of Large-Scale Bribery for NIS 80 Million in False Refunds

Investigators have uncovered evidence of extensive bribery within the Tax Authority, leading to the fraudulent issuance of 80 million shekels in false tax refunds. The National Fraud Investigations Unit (LAHAV 433) and the Central District Tax Investigations Unit concluded that former deputy tax supervisor of Petah Tikva and a senior coordinator accepted bribes over several years from an accountant representing taxpayers. The investigation recommends indicting 11 suspects on charges including bribery, money laundering, fraud, and breach of trust. The case file has been transferred to the Tax and Economic Crimes Prosecution, which supervised the investigation.

Investigators suspect that businesspeople paid between 10 and 15 million shekels in cash and other benefits to the suspected tax authority employees. In return, these employees allegedly enabled the businesses to submit fraudulent refund requests. Most of the implicated employees have since retired, though some remain employed by the authority.

The public investigation began in July with the arrest of four suspects. A state witness has since been recruited to the case. Sources involved in the investigation identified the main suspect as a retired individual who previously held a very senior position at the Petah Tikva tax supervisor's office. The investigation focuses on actions taken in 2018-2019 and initially started as a fraud case handled by the Central District Police fraud unit before suspicions of bribery led to its transfer to the National Fraud Investigations Unit.

During the covert phase, investigators gathered significant evidence on the modus operandi. According to an investigation source, the bribery system operated individually with each public employee, but it was impossible not to know about the wider network, even if they didn't act as a unified group. Tax refunds are typically granted to self-employed individuals or companies when their annual tax reports show that advance payments exceed the total annual tax liability. False refunds are obtained by reporting lower-than-actual income and higher-than-actual expenses to the Tax Authority, creating a discrepancy between projected and actual income.