17 charged in tax credit scam

Seventeen former officials and employees of the Department of (DoF) Finance are facing criminal charges before the Sandiganbayan for granting P200 million worth of tax credits to a ghost company and its purported suppliers in the 1990s.

Ombudsman Conchita Carpio Morales has ordered the filing of graft and estafa (fraud) charges against the DOF officials and other private individuals implicated in what has come to be known as “tax credit scam” that operated from 1993 to 1998.

Morales said in a resolution that the officials of DOF’s One Stop Shop-Inter Agency Tax Credit and Duty Drawback Center conspired with private companies in granting P202.4 million in tax credit certificates (TCCs) to Filipino Way.

Paper company

It turned out that Filipino Way was a paper company apparently created by the accused. Morales said that the firm had “no physical or legal existence” and its purported proprietor, Richard Noriegas, was fictitious.

The DOF center was created in February 1992 to process tax credit and duty drawback applications. The tax credits were offered as incentives by the then Estrada administration to enterprises registered with the Board of Investments (BoI). Approval of the applications translated to government refund payments on duties and taxes.

TCCs are refund payments granted to exporters and manufacturers of BoI-registered products for export who have actually paid duties and taxes on the raw materials and supplies they used.

Under the scam, refunds were made on taxes that were never paid or tax credits granted to some firms that had ceased operations.

Scam principals

Facing charges for violation of the Anti-Graft and Corrupt Practices Act and estafa are former DOF Undersecretary Antonio Belicena and former Deputy Executive Director Uldarico Andutan Jr.

Their corespondents were DOF reviewers Asuncion Magdaet, Jane Aranas and Rowena Malonzo and evaluators Sylvialina Daguimol, Mark Binsol, Annabelle Diño, Merose Tordesillas, Charmelle Recoter, Marife Cabadin, Gemma Abarra, Emelita Tizon, Gregoria Evangelio, Purita Napeñas, Cherry Gomez, and Ma. Cristina Moncada.

Morales also ordered the filing of charges against the listed officers of the private corporation Filipino Way, and its purported supplier-companies: Filsyn Corp., Hi-Lon Manufacturing Co. Inc., Manila Bay Spinning Mills Inc., Wise and Co. Inc., Bush Boake Allen Philippines, Inc., Dragon Textiles Mills Inc., Steel Asia Manufacturing Corp. and Pilipinas Shell Petroleum Corp.

The case arose from a complaint filed by the Special Presidential Task Force 156 that reviewed, investigated and gathered evidence to prosecute irregularities at the Bureau of Internal Revenue, Bureau of Customs, and other DOF agencies.

Spurious papers

Records provided by the Ombudsman showed that of the P202 million tax credits granted to it, Filipino Way was purported to have used some P101.8 million to pay its own tax liabilities and transferred P90 million to the supplier-companies.

To avail themselves of the credits, Filipino Way submitted spurious or simulated export declarations, bills of lading, bank credit memos, export sales invoices, supply agreements and deeds of assignment to make it appear that it was entitled to tax credits.

Morales resolved the first set of tax credit scam cases in March this year, dismissing 13 DOF officials, including Belicena and Andutan, for defrauding the government of P82 million and P74.8 million from 1994 to 1998.

The officials were found guilty of grave misconduct and were penalized with dismissal, plus accessory penalties of cancelation of eligibility, forfeiture of retirement benefits, and perpetual disqualification from re-employment in the government service. Since Belicena had already retired from the government service, he was meted out the accessory penalties.