After a four day inquiry Interim Finance Minister Mahendra Chaudhry has been cleared of allegations of tax evasion.

According to the three member Inquiry Team made by Bruce Cowley, Taufa Vakatale and Russel Postle tax assessments by FIRCA regarding Mahendra Chaudhry between 2000 and 2006 were carried out in accordance with the Tax Act and other relevant laws of Fiji.

The Inquiry team also did not identify any breaches of the Exchange Control Act by Chaudhry between 2000 and 2006.

The independent inquiry team that investigated tax evasion allegations against the Interim Finance Minister said there was a reasonable basis for FIRCA to conclude that the principal sum paid into Mahendra Chaudhry's financial institution accounts in Australia and NZ were not taxable in Fiji.

The report of the team which was made public by the Interim PM earlier today also states that the imposition of a flat 10 percent penalty on Chaudhry in respect of the undisclosed interest earned on his Australian and NZ bank accounts was consistent with FIRCA's policies and the treatment of other taxpayers in similar situations.

The report further states that there is no evidence to suggest any basis on which Chaudhry should have been charged with the offence of tax evasion under the Tax Act.

The Bruce Cowley Inquiry Team also states that the payment of the principal sum into Chaudhry's Australian institution accounts does not appear to constitute a breach of the Exchange Control Act. In relation to the payment of amounts from that account there is some doubt as to whether the Exchange Control Act applies to monies in a foreign bank account where that account was lawfully established. In any event the inquiry team members said that they are not aware of any reason to believe that a breach of the act has occurred.

The Inquiry Team has revealed that its enquiries have not revealed any breaches of any other laws of Fiji.

We now go into the background of the Chaudhry's tax details in offshore accounts which has been the centre of speculation for weeks.

It has been revealed that prior to 2000 Chaudhry held a bank account with an Australian financial institution which held a nominal balance.

The report states that during the years 2000 to 2002 inclusive various amounts were paid for the benefit of Chaudhry into that account much of which Chaudhry transferred into other accounts also with financial institutions in Australia.

It then reveals that Chaudhry lodged his tax returns for 2000 and 2001 financial years together on 30th May 2002 which was outside the 31 March due date for the lodgment of those returns. The report also states that Chaudhry lodged his return for 2002 on 12 December 2003 which was also outside the time allowed. It said Chaudhry also did not declare interest on the Australian and New Zealand financial institution accounts in his tax return lodged with FIRCA in respect of any of the 2000 to 2003 years.

During 2004 FIRCA's data matching unit received information from the Australian tax authorities that Chaudhry had received interest on his Australian accounts. FIRCA then wrote to Chaudhry seeking an explanation Chaudhry replied indicating that his understanding was that the interest derived in Australia would only be subject to tax when the funds were repatriated to Fiji.

FIRCA then advised Chaudhry that the interest income was chargeable when the interest was credited to his account irrespective of location and currency.

Chaudhry then sought professional advice and forwarded all the details of his accounts in Australia and New Zealand. In relation to the principal sum the ultimate conclusion reached by FIRCA was that it did not constitute chargeable income.

FIRCA's reasoning was based on correspondence to Chaudhry from the organizer of a fundraising group in India which states and I quote "You may recall that when you were in India in 2000 we had formed a committee which requested you to leave Fiji and stay in Australia since the situation in Fiji was not safe and you were not secure in Fiji. The committee also assured you that it would collect funds for your settlement in Australia" end of quote.

The letter also gives specific details of the various payments made into Chaudhry's financial institution accounts.

However some details have not been made public today.

In the report the inquiry committee also highlights that Chaudhry remains entitled to have information which he disclosed to FIRCA in relation to his income treated with appropriate confidentiality. For this reason in the body of the report the committee has not disclosed details of Chaudhry's income.

The inquiry team also recommends that matters in relation to his income which was summarized in an Attachment B, be kept confidential and disclosed only to FIRCA and Chaudhry as they contain detailed information about Chaudhry's tax affairs.