Management of real estate agency Habita charged with aggravated economic crimes

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The owners and management of Habita, one of Finland’s largest private real estate agencies, are suspected of a number of severe economic crimes. A total of 14 executives of the company are being charged with aggravated tax fraud or aggravated accounting offences.
      The Helsinki District Prosecutor decided to file charges against five of them on both crimes.
      According to the information gathered by Helsingin Sanomat, the Habita management is suspected of illegal payments of tax-free kilometre allowances. The suspects have denied all allegations of such activities.
     
On the basis of police investigations, Habita’s payments of kilometre allowances have not been based on actual kilometres driven, which means that the management has issued false monthly statements of the so-called employer’s contributions to the tax authority.
      The police and the prosecutor both suspect that this is how the company has avoided withholding taxes and to some extent even paying the employer’s contributions.
      The suspicions of accounting offences are based on the fact that the kilometre allowances should have been handled as a salary emolument, whereby income tax should have been deducted and the employer’s social security contributions should have been paid.
      The penalty for aggravated tax fraud or aggravated accounting offence always involves imprisonment of four months to four years.
     
The police investigations sprang from the special tax audits that had been started after one of Habita’s real estate agents had reported on some misconduct in the current affairs programme A-Talk, screened by the Finnish Broadcasting Company YLE in 2006.
      The tax authorities inspected a total of 46 Habita agencies across Finland. Only ten of them were clean, while 36 offices were subject to further investigations.
      As a result of the investigations, residual taxes and payments worth EUR 1.6 million were imposed on the agencies concerned. Around EUR 1.5 million of the total amount included taxes which had not been withheld in advance.
      According to director Anita Wickström from the National Board of Taxes, the kilometre allowances typically formed as much as one-third of the salary.
      According to the information gathered by Helsingin Sanomat, the only employees being charged are executives, who are just a small portion out of Habita’s 260-member personnel.
     
The main suspects appear to be directors Jari Gardziella and Tom Rindell from the parent company Habita Invest. Both of them have in recent years been found in the ranking list of well-paid real estate agents.
      At the same time, the management of the company has from time to time posted very high growth figures. A few years ago, Habita reported that it had increased its sales by as much as 46 % compared with the previous year.
      Earlier this year, Habita also reported that its first quarter sales were up 22 % from 2007.


Links:
  Finnish Tax Administration

Helsingin Sanomat