Tsumeb ‘sugar king’ arrested on massive tax fraud charges

A WELL-KNOWN businessman in the Tsumeb community, Kallie Grunschloss, on Friday posted bail of N$1 million – the highest in recent Namibian legal history – after he was arrested late last week and charged with tax fraud and evasion of excise duties of more than N$125 million.

Grunschloss (47), who posted his bail in cash shortly after making a first appearance in the Tsumeb Magistrate’s Court, also faces charges of alleged bribery in a widening investigation into irregularities in the Oshakati and Rundu Revenue offices, Finance Permanent Secretary Calle Schlettwein has confirmed. Grunschloss was arrested on Thursday on the basis of an arrest warrant issued from Windhoek, a Police spokesperson, Chief Inspector Angula Amulungu, said on Friday.Grunschloss owns the Family Choice sugar plant at Tsumeb.He appeared in court before Magistrate LK Amutse on Friday afternoon, after he had spent the previous night in Police custody.He was granted bail of N$1 million by agreement between Public Prosecutor Zenobia Barry and his defence lawyer, Danie Kotze.Barry also asked the court to order that his case be transferred to Windhoek, where he is set to make a second court appearance on December 1.In the meantime, he has to report to the Police at Tsumeb each Monday, had to surrender his passport to the Police, and will be restricted from leaving the Tsumeb district or travelling outside Namibia without the knowledge and permission of the Police, in terms of the bail conditions.A task force comprised of Ministry of Finance officials, special investigators attached to auditing firm Ernst & Young’s forensic auditing unit and the Police swooped on 12 of Grunschloss’s premises on Thursday.Computers and all forms of documentation were impounded in the search for more evidence, it was reported at the weekend.Grunschloss is just one of at least four businessmen in northern Namibia who were presented with new tax assessments some two weeks ago.His arrest comes as a result of wide-ranging audit, contracted to Ernst &Young’s forensic auditing unit, that was commissioned by Schlettwein late last year in the wake of the sudden financial collapse of the Santa Clara bonded warehouse complex a year ago.The bankruptcy of Jacques Fobian’s trading empire alerted the Finance Ministry to the prevalence of the illegal practice of “round-tripping” – the false declaration of exports and fraudulent claiming of rebates and VAT inputs.Gross irregularities in terms of non-payment of income tax, as well as under-declaration of goods imported and then exported again, were also picked up.In the early stages of the forensic audit ordered by Schlettwein, the Rundu Receiver of Revenue, Wietz Ilze, his wife, as well as Oshakati Receiver of Revenue Hans Haraseb, were suspended.The Ilze couple have subsequently been dismissed.At least one of them faces criminal charges, while Hans Haraseb’s disciplinary hearing is still ongoing.Grunschloss’s arrest is the first in the private sector, and suddenly raises many questions over the meteoric rise of the former accountancy teacher who transformed a private accounting practice into a sugar and food trading empire worth an estimated N$150 to N$200 million.His Family Choice brand of sugar, which is generally acknowledged to have made him a multi-millionaire, could turn bitter: If interests and penalties were to be included in the claim against him by the Ministry of Finance, he could face a tax bill as high as N$170 million.Ironically, his sugar-packing business is where most of his tax problems occurred, as alleged illegal practices allowed him to undercut all his competitors, driving some of them out of business.The high-profile arrest is sure to send shudders of unease through the northern Namibia business community.At least three other businesses operating in the Oshikango border town are known to be under investigation, as well as at least one other well-known businessman at Tsumeb.Schlettwein confirmed that apart from Haraseb and the Ilze couple, two other Revenue officials – Abner Davids and a certain Witbooi – have been removed from their positions, pending the outcome of the wide-ranging forensic audit.Unconfirmed reports suggested that Grunschloss was blocked from allegedly trying to move money into trust accounts, where such funds would be harder to seize.Schlettwein made it clear that the Ministry of Finance was going to come down hard on tax fraud and, where necessary, throw the book at the culprits.”We are serious about putting an end to these abuses,” he said in a telephonic interview over the weekend.”If you cheat with taxes, we will hit you with whatever the law allows us to do.”* John Grobler is a freelance journalist; 081 240 1587Grunschloss was arrested on Thursday on the basis of an arrest warrant issued from Windhoek, a Police spokesperson, Chief Inspector Angula Amulungu, said on Friday.Grunschloss owns the Family Choice sugar plant at Tsumeb.He appeared in court before Magistrate LK Amutse on Friday afternoon, after he had spent the previous night in Police custody.He was granted bail of N$1 million by agreement between Public Prosecutor Zenobia Barry and his defence lawyer, Danie Kotze.Barry also asked the court to order that his case be transferred to Windhoek, where he is set to make a second court appearance on December 1.In the meantime, he has to report to the Police at Tsumeb each Monday, had to surrender his passport to the Police, and will be restricted from leaving the Tsumeb district or travelling outside Namibia without the knowledge and permission of the Police, in terms of the bail conditions.A task force comprised of Ministry of Finance officials, special investigators attached to auditing firm Ernst & Young’s forensic auditing unit and the Police swooped on 12 of Grunschloss’s premises on Thursday.Computers and all forms of documentation were impounded in the search for more evidence, it was reported at the weekend. Grunschloss is just one of at least four businessmen in northern Namibia who were presented with new tax assessments some two weeks ago.His arrest comes as a result of wide-ranging audit, contracted to Ernst &Young’s forensic auditing unit, that was commissioned by Schlettwein late last year in the wake of the sudden financial collapse of the Santa Clara bonded warehouse complex a year ago.The bankruptcy of Jacques Fobian’s trading empire alerted the Finance Ministry to the prevalence of the illegal practice of “round-tripping” – the false declaration of exports and fraudulent claiming of rebates and VAT inputs.Gross irregularities in terms of non-payment of income tax, as well as under-declaration of goods imported and then exported again, were also picked up.In the early stages of the forensic audit ordered by Schlettwein, the Rundu Receiver of Revenue, Wietz Ilze, his wife, as well as Oshakati Receiver of Revenue Hans Haraseb, were suspended.The Ilze couple have subsequently been dismissed.At least one of them faces criminal charges, while Hans Haraseb’s disciplinary hearing is still ongoing.Grunschloss’s arrest is the first in the private sector, and suddenly raises many questions over the meteoric rise of the former accountancy teacher who transformed a private accounting practice into a sugar and food trading empire worth an estimated N$150 to N$200 million.His Family Choice brand of sugar, which is generally acknowledged to have made him a multi-millionaire, could turn bitter: If interests and penalties were to be included in the claim against him by the Ministry of Finance, he could face a tax bill as high as N$170 million.Ironically, his sugar-packing business is where most of his tax problems occurred, as alleged illegal practices allowed him to undercut all his competitors, driving some of them out of business.The high-profile arrest is sure to send shudders of unease through the northern Namibia business community.At least three other businesses operating in the Oshikango border town are known to be under investigation, as well as at least one other well-known businessman at Tsumeb.Schlettwein confirmed that apart from Haraseb and the Ilze couple, two other Revenue officials – Abner Davids and a certain Witbooi – have been removed from their positions, pending the outcome of the wide-ranging forensic audit.Unconfirmed reports suggested that Grunschloss was blocked from allegedly trying to move money into trust accounts, where such funds would be harder to seize.Schlettwein made it clear that the Ministry of Finance was going to come down hard on tax fraud and, where necessary, throw the book at the culprits.”We are serious about putting an end to these abuses,” he said in a telephonic interview over the weekend.”If you cheat with taxes, we will hit you with whatever the law allows us to do.”* John Grobler is a freelance journalist; 081 240 1587