The mysterious case of Mitsi Madongo and the missing millions
Who is Mitsi Madongo, and where is she?
Ms Madongo featured prominently, if only by her absence, as the lengthy trial of Wellington accountants Barrie Skinner and David Rowley reached its end in Wellington this week.
According to the two defendants, Ms Madongo was one of the actual beneficiaries of some of the missing money which flowed through their hands.
No one has found Ms Madongo, although one observer suggested this week that perhaps people should try looking for her in Nigeria.
The trial, a lengthy affair, involves accusations of fraud, valued at $9.5 million, and tax evasion, valued at $3.1 million.
The accountants are accused of more than 100 counts of fraud, mostly but not exclusively on behalf of clients of their firm, Tax Planning Services. They are also accused of benefiting to the tune of $2.3 million themselves, over a five year period.
The two are alleged to have declared low incomes, with one of the two, Mr Skinner – a former Inland Revenue employee – having declared an income of lower than $400,000 over the five years between 2006 and 2011. Over that same period Mr Skinner’s credit card statements showed he blew more than $2 million overseas on air travel, hotels and bars and restaurants.
The court was presented with a serious of lengthy and complex transactions which, the defence claimed, was for clients who were beneficiaries of trusts and companies run by the pair.
Much of the money was directed to the mysterious Mitsi Madongo, who, Mr Rowley told the court this week, was often hard to get hold of.
The difficulty for Justice Stephen Kos, is that neither the prosecution nor the defence presented the court with a complete set of reconciled transactions showing where the money had gone.
“Essentially everything is unreliable,” Justice Kos told the lawyers, at the end of a hard day’s cross-examination this week.
“I don’t know how, at the end of the day, I’m going to resolve these things unless either one of two things happens to assure me the money went into Ms Madongo’s hands, and did not come out again.
“Or..Ms Madongo magically appears finally in this court in whatever form or manifestation she takes.”
None of the 27 clients of the firm who are alleged to have benefited from the transactions have been charged with fraud: Crown prosecutor Dale La Hood told Justice Kos the legal “bar” for fraud is too high to make such charges worth making. It is however understood that at least some of the 27 are in or have been in dispute with Inland Revenue over the tax benefits received from the transactions.
One accountant connected with the case, Shaan Stevens, has already been convicted of fraud and has been struck off by the Institute of Chartered Accountants.
Mr Stevens was accused of having directed a number of clients to Tax Planning Services, and gave evidence earlier in the trial against his former friends and business associates.
A key part of the defence of Messrs Skinner and Rowley was that most of the charges related to transactions of clients of Mr Stevens, of which they were largely unaware.
However Mr Stevens – who is serving a sentence of 10 months home detention and 150 hours community service - told the court otherwise.
Mr Stevens outlined a “money-merry-go-round” where false invoices were created for property deposits, sub-contracting or other work and the funds would be moved from the clients’ companies, through entities controlled by Messrs Skinner and Rowley, and eventually back to the client’s accounts, minus a fee to the two accountants.
Another witness – who worked directly with the two accused and not Mr Stevens – described making “big payments” to the company, although he told the court he couldn’t recall why.
Napier-based Edward Roberts, a contractor and scrap metal dealer, told the court earlier in the trial that he had ended up with $620,000 tax bill but Mr Skinner had come up with an arrangement which reduced this to $250,000.
The arrangement involved a deposit on a property in Boulcott St, Wellington, and that although he had not understood the arrangement he “trusted what Barrie [Skinner] was doing” and “hoped what Barrie was doing was above board”.
A similar memory lapse infected another earlier witness, software developer Douglas Leyser, who had used the services of Tax Service Planing for 17 years.
In an arrangement fixed up by Messrs Skinner and Rowley’s firm, Mr Leyser paid a $29,000 deposit on a property in Wellington’s Taranaki St, and received a $20,000 payment back.
He told the court he couldn’t recall how that had happened, but said he had been under a lot of pressure at the time.
“It would have been something I would not have given a lot of thought to, to be honest,” he told the court.
The case wrapped up on Thursday, and Justice Kos is considering his decision.