Sen. Richard Gordon and Sen. Franklin Drilon (Screen grab/Senate PRIB)
MANILA, Philippines — A firm allegedly owned by the state of China that secured around P2 billion worth of contracts for personal protective equipment sets (PPEs) supplies to the Philippines was not an accredited importer of the country’s Bureau of Customs (BOC).
Senators learned this Tuesday as the Senate blue ribbon committee resumed its investigation into the government’s pandemic-related purchases last year.
The country representative of Xuzhou Construction Machinery Group Import and Export Co., Inc. was grilled by senators on its transactions with the government in 2020.
“Are you an accredited importer of the Bureau of Customs?” Senator Richard Gordon asked Xuzhou Construction country manager Robin Han.
Han, through an interpreter, said the company is “accredited by the Chinese customs.”
This prompted Gordon to say: “I’m talking about the Philippine Customs. We are not a province of China, we are in the Philippines.”
“We do not directly import, it is the [PS-]DBM (Procurement Service-Department of Budget and Management) who gets it from us,” Han explained through an interpreter.
“The clearance is handled by DBM. The clearance with Customs is handled by the [PS-]DBM,” he added.
But Gordon was puzzled by this.
“That is the first time I ever heard of DBM handling clearances for a Chinese company… Do you pay taxes when you import?” the senator further asked.
According to Han, the PS-DBM already deducts the taxes before paying the company for the supplies.
“That’s weird,” Gordon remarked.
Gordon also asked Han if the company is registered with the Securities and Exchange Commission (SEC). Han answered in the negative.
“But you’re doing business in the Philippines, you say you keep supplying medical supplies for the government,” Gordon said.
Han repeatedly told senators that the firm is an international trading company.
“So the clearance is done by the one who bought from us,” he said, noting that the firm only had two transactions with the PS-DBM.
When asked how much these contracts were worth, Han said the first deal amounted to over P446 million while the other contract was worth more than $33 million, which, based on Senator Minority Leader Franklin Drilon’s computation, is equivalent to some P1.6 billion.
“Did you file an income tax return for the transactions here?” Drilon asked.
In response, Han said: “We are a state-owned company in China, so we will definitely pay an income tax in China.”
But the minority leader pointed out that the firm entered into contracts in the Philippines so it should be liable for income taxes here.