Aviva UK-based insurer Aviva found guilty in $26 million fake invoice scandal in India: Report
New Delhi/IBNS: The Income Tax (IT) department has found that British multinational insurance company Aviva breached local regulations in India, capping commissions to sales agents with a system of fake invoices and clandestine cash payments, Reuters reported, citing an IT notice to the company dated August 3.
According to the tax notice seen by Reuters, in an attempt to grow operations, Aviva's India business paid about $26 million between 2017 and 2023 to entities who purportedly provided marketing and training services.
But the vendors, who did not perform any work, were actually a front for channeling funds to the London-headquartered insurer's agents, Reuters reported, quoting the Directorate General of GST Intelligence (DGGI), which is responsible for policing violations of indirect taxes.
"Aviva and its officials have indulged in a deep-rooted conspiracy and used the modus of fake invoices (without receipt of services) to pass on certain money to ... insurance distributors of Aviva," investigators wrote in the notice to Aviva.
According to Reuters, details of the notice, which is not public, have been reported exclusively by the news agency for the first time.
Such "show cause" notices typically require companies to explain why authorities should not issue penalties for their alleged acts, as per Reuters.
The case is part of broader investigation into over a dozen Indian insurance companies for alleged evasion of $610 million in unpaid taxes, interest and penalties, reports Reuters.
The news agency reported, citing the tax notice, that the roughly $26 million in fake invoices were allegedly used by Aviva incorrectly to claim tax credits and evade $5.2 million in taxes.
Responding to the matter, a UK-based Aviva spokesperson told Reuters, "We do not comment on speculation or ongoing legal matters."
However, the London-based insurer's Indian operations did not respond to queries.
A person familiar with the matter told Reuters the company intends to rebut the notice's allegations but has not yet responded.
The 205-page report included screenshots of emails and WhatsApp messages between Aviva executives and insurance distributors, in which they discussed ways to skirt compensation regulations, according to Reuters.
The notice also contained summaries of interviews conducted by tax officials with executives, who described how payments were made.
Indian tax and insurance authorities, however, did not respond to Reuter's requests for comment.
Aviva reportedly faces roughly $11 million in penalties, which is roughly the company's 2023 profit from selling life insurance in India, as per reports.
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