Early 2018, accountant Mujeeb Rahiman Mundath left New Zealand for Sydney. He has not returned. Former employer, the Sharma Group having interests in hotels, motels and restaurants, alleges he embezzled at least $5.4 million from the group. Freezing orders have been imposed on assets both in New Zealand and Australia.
In the New Zealand High Court, Associate judge Bell ordered Mr Mundath pay $4.69 million; the amount Sharma Group incontrovertibly proved Mr Mundath embezzled. Claims for the balance allegedly taken require a full court hearing. Mr Mundath alleges the Sharma group is party to immigration fraud and tax fraud.
The High Court was told the Sharma group is a mix of companies and trusts associated with the families of three brothers: Rakesh Sharma, Ashok Sharma and medical practitioner Dr Vinod Sharma. They say Mr Mundath was employed by them at an annual salary of $75,000. They trusted him. He handled the group’s financial accounting and tax affairs. He has a commerce degree. He started, but did not complete, his professional accountancy exams.
Mr Mundath left for Sydney when his honesty was questioned; an unusual payment of $394,800 was queried. A forensic accountant was called in. She made a painstaking analysis of some 2800 financial transactions involving Mr Mundath covering eight years he was with Sharma group. These transactions totalled $9.2 million; all but $104,900 was paid into bank accounts under the control of Mr Mundath including accounts in his name and his wife’s name. Mr Mundath claimed these were reimbursements for payments he made on behalf of the Group. Some were in fact reimbursement, but not all, the forensic accountant said.
Evidence was given of Mr Mundath arranging cash payments for contractors and suppliers. Mr Mundath said he was then instructed to record the payment against other accounts so that tax deductions could be claimed. There was evidence of business invoices paid twice; the second payment going into an account controlled by Mr Mundath. Mr Mundath said Vinod Sharma and Rakesh Sharma told him to pay business GST refunds into bank accounts he controlled to hide from other family members that personal expenses were being run through business accounts. Mr Mundath set up fictitious payroll records, recording additional wages for existing employees and also wages for ‘ghost’ employees, with payments into bank accounts he controlled. He alleges these transactions were company policy, designed to cover an immigration fraud run by the Sharma group where immigrants without work visas were taken on and where others with work visas were paid less than their employment contract stated. The Sharma brothers deny any involvement in tax fraud or immigration fraud. The forensic investigation identified that most of the payments made into bank accounts controlled by Mr Mundath used a false payee description to disguise the fact payment was going to him.
Mr Mundath owed a fiduciary duty to the Sharma group not to take unauthorised personal benefits when arranging payments. It is implausible to say the millions of dollars unaccounted for were reimbursement for Sharma debts he had paid in cash, Judge Bell said.
Even if the Sharma group were involved in tax fraud and immigration fraud, said Judge Bell, Mr Mundath is still liable to repay money taken.
Sharma v. Mundath – High Court (24.01.19)
19.034