KARACHI, Aug 31: The Federal Investigation Agency has unearthed a multi-million rupee fraud, involving bogus income tax refunds, and arrested an income tax official.

The deputy director of the Crime Circle, Khaliquzzaman, told Dawn on Sunday that a chief manager and a cashier of the Allied Bank Limited’s Hyderi branch had already been arrested by the FIA’s Crime Circle in the Rs83 million scam, detected on the complaint of the ABL.

He said the fraudsters deposited as many as 3,063 bogus cheques of income tax refunds, issued by the income tax officials, in 11 accounts at the ABL branch.

The FIA official said the Crime Circle registered an FIR (49/2008) on Aug 21 and arrested the chief manager of ABL Hyderi branch, Mohammed Aslam Khan, and cashier, Kashif Shahid, for operating the 11 accounts in the name of Mohammed Azeem Khan.

“We arrested Azeem, who told us that an income tax official provided him the bogus cheques of income tax refunds and that he got only two per cent of the cheque for operating the accounts,” he added.

The FIA official said that later Umer Farooq, a clerk in the income tax department, was arrested. “According to him, the bogus cheques were issued by different income tax officers and assistant commissioners, who also had their share in the booty,” he added. He said that the arrested IT man had disclosed the names of over two dozen income tax officials involved in the racket of issuing bogus cheques of tax returns. “He said he got only 10 per cent while the remaining money was distributed among other officials,” he added.

According to the income tax clerk, 60 per cent of the amount was given to the official who issued the bogus cheque of income tax refunds, he said.

The FIA deputy director said that an audit team of the ABL took notice of the large number of cheques being deposited in only 11 accounts — those too being operated by only one customer — with the active connivance of the manager and cashier.

“This racket was going on for the past three years and it stopped when the ABL audit team started a probe into the matter,” he added.

He said that surprisingly, the relevant section of the State Bank of Pakistan could not find anything odd behind the clearance of over 3,000 cheques of income tax refunds in only one branch. “We have solid evidence about the fraud of Rs83 million,” he added.

The FIA deputy director did not rule out the possibility of similar rackets in other branches.

Meanwhile, FIA investigators said that suspect Umer Farooq was an upper division clerk (UDC) in the income tax department. They said the suspect was found carrying a bogus service identity card describing him as an income tax inspector.

The investigators said suspect Azeem was a resident of North Karachi. They said the FIA would produce the two suspects — Umer Farooq and Azeem — before a judicial magistrate on Monday to seek their physical custody for investigation and interrogation.