DIGICEL FILES AFFIDAVIT

-Maintains TAJ made major errors

Tuesday 8th May 2012 – Kingston, Jamaica. Digicel wishes to advise that it today filed an affidavit in the Supreme Court in response to the affidavit submitted by Tax Administration Jamaica, “TAJ”, in support of its application for a search warrant on April 30th 2012 which led to the Friday evening raid of Digicel’s offices.

Digicel maintains that TAJ’s basis for obtaining a search warrant was fundamentally flawed as the analysis performed by TAJ reveals utter and complete incompetence.

Unfortunately, the matter has been adjourned until May 24th 2012 at the request of the solicitors representing TAJ as they had not adequate time to prepare for the hearing nor had they received any instructions from TAJ.

Digicel nevertheless feels it is important to highlight a number of matters which have come to light following receipt of TAJ’s affidavit yesterday afternoon:

- Based on fundamentally flawed logic and methodology, TAJ had asserted that, for the three month period under review, there was a J$111 billion (US$1.256 billion) discrepancy in the numbers it had “calculated” and the amount Digicel had included in its GCT returns. It is now abundantly clear however that TAJ completely misunderstood the data it had been provided with and - rather than seeking clarity - it arrived at its own grossly inaccurate conclusions.

- Alarm bells should have rung within TAJ when its conclusions implied that every man, woman and child in Jamaica is spending an additional undeclared J$13,762 (US$158) every month with Digicel.

- A cursory look at Digicel’s audited financial statements, which TAJ has, would have shown that its conclusions implied that the annualised TAJ derived sales number was ten times greater than the number audited by its external auditors, PwC. This again should have highlighted the gross inaccuracies in its conclusions.

- Further, TAJ was consistently using the wrong source documents in its analysis and, as such, the resultant outputs were fundamentally flawed. This begs the question of where was the management oversight? 

- Certain documents which TAJ maintains were not provided by Digicel were provided in February and March and this fact was acknowledged by TAJ’s representatives after they entered Digicel’s premises last Friday and were shown what was previously sent to them


Digicel contends that it is very unfortunate that TAJ did not choose to meet with Digicel to discuss its findings prior to adopting the heavy handed and inappropriate action it chose to take last Friday as such a meeting would have clearly demonstrated that TAJ’s conclusions were inaccurate, unrealistic, flawed and misguided.

Indeed, had Digicel been aware that the information it requested was “to ensure that GCT paid by customers was paid over in full to the tax authorities” (which was only learned about following the issuance of TAJ’s press release on Saturday), Digicel could have specifically advised TAJ on how the various pieces of independently requested data interacted for the purposes of the GCT returns.

Regrettably, neither the purpose of the investigation nor the outputs from the investigation were shared with Digicel until after the events of last Friday.  Instead, the action of last Friday has resulted in reputational damage to Digicel both in Jamaica and internationally. In addition, the approach taken by TAJ and the Police, whereby Digicel staff members were held in custody against their will, has resulted in Digicel arranging counselling for a number of affected staff – all of which could have been avoided.

In court today, Digicel’s attorney, Paul Beswick, advised the court that Digicel is willing to sit down with TAJ and go through the data supplied and Digicel is now waiting to hear back from TAJ as to whether it wishes to do so.

Digicel and TAJ are next due in court on May 24th 2012.

Digicel wishes to again assure its customers and all of Jamaica that every dollar of GCT collected by it is paid over in full, and on time, to the tax authorities.


 

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DIGICEL FILES AFFIDAVIT