Two HP Pakistan Executives, Shahid Ali Khan and Salim Rawjani, were arrested on suspicion of corporate tax evasion, in April. The arrests came after a raid on the offices of Advance Business Systems (ABS), a large Pakistani computer systems seller.
Records seized during the raid led to the arrest of ABS management for charges related to sales tax evasion. Tanveer Malik, the director of intelligence and investigation for Pakistan’s Federal Board of Revenue, said that the tax evasion was done by under-invoicing certain products. These products included computers and other supplies, possibly HP ink cartridges and toner cartridges.
A probe then led investigators to Dell Inc. and HP’s Pakistan offices, which were asked to provide records of their transactions with ABS. According to Malik, Dell responded quickly and were fully compliant, but HP Pakistan’s managers declined to share information. Further investigation led to the arrest of Mr Khan, HP Pakistan’s country general manager, and Mr Rawjani, HP Pakistan’s country controller, after the investigators found overwhelming evidence of wrongdoing.
These arrests are a preliminary step in Pakistani legal proceedings and the accusations could be extended after further investigation. According to investigators, many of the allegedly untaxed goods could not have been brought into Pakistan without customs officials’ knowledge.
When asked for comment, a spokesperson for HP’s head office in California said “we have no comment at this time, other than to say that HP adheres to the highest ethical standards.”
Source: The Wall Street Journal