Raid on Digicel office in Jamaica

Tue, May 8, 2012, 01:00

THE CARIBBEAN mobile network owned by Irish businessman Denis O’Brien is in dispute with Jamaican tax authorities following a raid on its offices there at the weekend.

Police and officials from Tax Authority Jamaica (TAJ) raided Digicel’s offices in New Kingston on Friday in a bid to obtain records that it had been seeking from the company for months.

The authority was acting on foot of an order obtained from the Jamaican supreme court. It was seeking data confirming that the company had been paying general consumption tax – paid by its customers – over to the authority.

Digicel subsequently got a court order barring the authority from taking information from its servers. The company said yesterday it intended to return to court today and was considering why tax authority officials should not be cited for contempt.

Accounts of the raid say that authority officials, accompanied by armed police, turned up on Friday afternoon at Digicel’s offices on Grenada Way, New Kingston in Kingston.

In a statement the tax authority said the operation’s “sole purpose” was “to ensure that general consumption tax paid by customers was paid over in full to the tax authorities”.

The authority added that it raided Digicel after it failed to produce the information required following negotiations which began last December.

A company statement said Digicel had always complied with the authority’s information requests “subject to the constraints of the Telecommunication Act in terms of the protection of confidential customer information”.

The company denied any wrongdoing, accused the authority of carrying out a witch-hunt against it and described the raid as a fishing expedition.

“Digicel is shocked and offended by the abuse of process and approach undertaken by the TAJ in this matter – especially as all information which the TAJ was seeking pursuant to the order, and which the Telecommunications Act allowed Digicel to provide, had already been supplied,” the statement said. It added that the authority had already acknowledged this fact in writing.

Mr O’Brien controls Digicel, which operates mobile networks in 31 countries in the Caribbean, Central America and the south Pacific. In February the company borrowed $250 million through a bond issue. It has raised more than $4 billion in bonds since 2005.

In the six months ended last September it generated $1.24 billion in revenues and $524 million in earnings before interest tax and write-offs, a measure of the cash that the business produces.

There is speculation that Mr O’Brien may launch a bid for Ireland’s biggest newspaper group, Independent News Media, after increasing his stake in the business to 29.9 per cent at the weekend. If he reaches 30 per cent or more he will have to bid outright for the company.