Government tax office detains two HP executives in Pakistan following raid on distributor’s offices in February.
Wall Street Journal reported that the raid, carried out at the offices of computer systems distributor Advance Business Systems (ABS), found records indicating that equipment “wasn’t properly taxed”, and later resulted in the arrest of Shahid Ali Khan, HP Pakistan’s Country General Manager for Printing and Personal Systems, and Salim Rawjani, the OEM’s Country Controller, under suspicion of corporate tax evasion.
Following the raid in February, charges were filed against ABS management for sales tax evasion, with Tanveer Malik, Director of Intelligence and Investigation for Pakistan’s Federal Board of Revenue, explaining that the evasion was “done by under-invoicing the products”.
The probe then led to Dell Inc. and HP Pakistan’s units, which were requested to provide details of their transactions with ABS. While Dell complied, HP Pakistan managers “declined to share information”, leading to the arrest of Khan and Rawjani in Karachi.
While the arrests are reportedly a “preliminary step in Pakistani legal proceedings”, officials noted that the tax evasion accusations “could be expanded after further investigation”, with many of the allegedly untaxed products unable to be “brought into Pakistan without the knowledge of customs authorities”.
Malik said the pair were arrested after the agency received “overwhelming evidence” of wrongdoing, but that it “found no evidence” of HP’s involvement in the wrongdoing; with a spokeswoman for HP stating: “We have no comment at this time, other than to say that HP adheres to the highest ethical standards”.