Belgian court to rule on Loughney Vat fraud case

A judgment is due in a Belgian court case arising from allegations that Irish businessman Kevin Loughney - a co-founder of the Kitty O’Shea pub chain - gave gifts to a Vat officer to avoid paying €300,000 in tax.

Final documents were exchanged before the court last Thursday, and a judgment is expected within one month. Loughney, who is originally from Mayo, is facing the threat of a two-year suspended prison sentence, following allegations concerning tax returns for Kitty O’Shea’s pub in Brussels.

The Belgian prosecutor is also bringing charges against the Vat officer dealing with the returns. The officer, Pascal Wulf, could be facing two years in prison for alleged ‘‘passive corruption’’ if he is found guilty. Both Loughney and Wulf deny the charges.

The first international Kitty O’Shea’s pub was established in Paris in 1986, and the chain grew to nine pubs, including several US outlets and one at the Grand Canal Hotel in Dublin.

Kevin Loughney and his brother Brian owned the chain. Only three outlets still operate. They include the Brussels pub, which is based near the so-called ‘EU quarter’ in the city and is under new management.

Ten days ago, the Belgian criminal circuit court heard allegations that Wulf, who oversaw Vat collection in Brussels city centre, did not collect the €300,000 Vat debt owed by Kitty O’Shea’s.

The court heard that no tax return had been filed for the business for the preceding three years and, as a result, it was issued with a bill including interest and penalties, which amounted to €300,000.

It was alleged that Wulf appeared to classify the company as bankrupt on the Vat office’s computer database, and that he advised Loughney to declare the company bankrupt.

In exchange for this, it was alleged, the tax officer appeared to have received several perks, including airline tickets for a trip to Ireland. Loughney was not in court, but was represented by a solicitor.

The court heard that, because Wulf was the only English-speaking official in the Vat office, he dealt with Loughney. It was alleged he had meals and drinks at the pub and that a cordial relationship developed between the pair.

In the case of the airline tickets, the court heard Wulf planned to travel to Ireland with his wife, and that Loughney offered him an attractive price of €210 for the tickets, because of a frequent flyer discount.

Wulf told the court that Kitty O’Shea’s had been a successful business until 2002, when it ran into difficulties because of works at the nearby Berlaymont building, which reduced customer numbers and created financial difficulties.

He also claimed that the Belgian manager of the establishment ‘‘made off with the cash register takings’’.

Wulf said that Loughney began to take over the management of the business in 2002, and wanted to bring the Vat debt down to €30,000.Wulf alleged that Loughney presented a payment schedule and offered a personal guarantee on it to the tax office.

He said that, as the Vat office was understaffed and he was the only English speaker there, he dealt with the case himself. Wulf’s defence lawyer, Paul Tavernier, said that no offence had been committed.

He said his client was planning to travel to Ireland and that Loughney provided him with airline tickets at an attractive price.

But those tickets, for €210, were never used and the trip did not take place, according to the defence.

Loughney described the charges as ‘‘outrageous’’ and said that no one would ‘‘drag his name through the muck’’.

Source : Sunday Business Post - Dublin, Ireland  dated 17/02/2008