Gov’t works out ‘fair settlement deal with SGS

The government said it would be willing to enter into a settlement deal with Swiss firm Societe Generale Surveillance (SGS) on the payment of P6 billion in claims for the latter’s rendered services.

SGS was claiming the amount under a comprehensive import supervision service agreement with the government, which allowed the Geneva-based firm to undertake pre-shipment inspections of exports in behalf of the state.

However, the Department of Finance (DOF) said it would only agree to a "fair settlement" with SGS only after billing questions are appropriately addressed.

"SGS was supposed to file their claims with us and we have been preparing for it but so far, they have not made any move,"DOF Undersecretary Emmanuel P. Bonoan said.

Last February, the International Center for Settlement of Investment Disputes (ICSID), a World Bank panel which settles investment disputes between a host government and its foreign investors, ruled in favor of the Philippine government and ordered SGS to pursue its P6-billion claims before the local courts.

The government has been insisting that it had every intention of honoring its contract with SGS but the company still filed a petition asking ICSID to intervene and help settle the conflict.

The government recommended the suspension of SGS payment because of questionable billings from Sept. 1998 to March 2000.

In the meantime Bonoan said the DOF is also investigating allegations that SGS was involved in some fraudulent activities, which led to the under-valuation of import taxes and reduction of government revenues.

Bonoan said they are questioning the SGS billing following reports of under-valuation. "We have good grounds to believe that there were fraudulent activities on the part of SGS," he said.

The DOF said it has convincing documents that show SGS has been unfairly charging Philippine products that pass through China, thinning revenues that should have been credited to the government.

"We found out that for a number of years SGS not only has been under-charging but using double taxation," Bonoan said. These double billings stem from the validation of two million records of clear report finding (CRF), which showed double charging of 1, 048 CRFs amounting to P43 million. A CRF is a report on the inspection findings of goods entering the country.