Lycamobile France, three of its managers and eight other people are on trial in Paris from Monday on charges of money laundering and VAT fraud between 2014 and 2016, French media reported.
Lycamobile is owned by Subaskaran Aliraja, who has become the ultimate owner of three radio and television channels in Sri Lanka. The company has also offered to buy state-owned shares in Sri Lanka Telecom PLC and Lanka Hospital PLC.
BFM Business news said a Paris Court is looking into Lycamobile involving a series of front companies and traders in the Parisian district of La Chapelle, which would have made it possible to launder more than 17 million euros in seven months.
However, according to the company, which defends itself from any infringement, has said that a “system” has been set up “without their knowledge.”
Revealed by the Buzzfeed site, the investigations were launched in early 2016 into the allegations.
The investigations revealed a circular operation where there were construction companies which made transfers and checks to “filter” companies in exchange of false invoices.
These companies, in reality empty shells, bought cards and phone recharges from Lycamobile, but these goods were not received, according to the investigation.
Two Lycamobile sales reps resold them to shops in the 18th arrondissement of Paris.
The prepaid cards and their top-ups were resold on the “ethnic market” of North African, African and Indo-Pakistani communities wishing to call abroad.
“This procedure shows very clearly that filter companies and construction companies have organized and implemented a system to remunerate work concealed by a game of SIM card resales without the knowledge of Lycamobile”, a company spokesperson has told the AFP.
“We cannot therefore hold Lycamobile responsible for the implementation of this illegal scheme which is totally foreign to it”, adds the spokesperson.
The court will examine suspicions of VAT fraud through the “misuse” of an existing legal derogatory regime in the telephone sector.
The prosecution considers that, via an “arrangement” between the two sister companies, Lycamobile Services improperly resold the telephone products, purchased all taxes included (TTC) from Lycamobile France, at a price excluding tax (HT), which allowed it to claim VAT refunds.
Lycamobile France, Lycamobile Services, as well as Alain Jochimek, managing director of the two companies, are tried for laundering or misuse of corporate assets and concealed work in an organized gang.
Lycamobile Services and Alain Jochimek are tried for VAT fraud.
Eight other defendants are tried for one or the other offence, suspected of having played a role in the scheme.