Informers rattling on tax credit scam - Gotcha

Old hands at the finance department used to belittle investigators of the P52-billion tax credit certificates (TCCs) scam. They thought that chief prober Alberto Salanga lacked detective and legal skills. Besides, crucial records are missing at the Tax Credit and Duty Drawback Center, the one-stop shop that simplifies processing of incentives for pioneering investors.

But Salanga tapped friends for expert help to clean up the center he now heads. His team randomly audited several TCCs issued from May 1992, when the center was formed, to June 1998, when his predecessors left. It turned up P4.5 billion worth of TCCs whose supporting documents appeared to have been faked. Salanga eventually pieced together bits of evidence to show that at least P8 billion worth of TCCs are fraudulent. Realizing that silence could incriminate them, center personnel are now coming forward to explain the modus operandi of their former bosses.

It appears that former center executives had willing businessmen as cohorts in the "trade" of tax credits and drawbacks for import duties on raw materials. The cohorts formed and registered corporations with SEC under dummies. They then set up small garment and textile factories, and wangled Board of Investments ratings as large operations.

Upon registration with BOI, they filed tax credit claims with the center, using fictitious export documents -- unregistered sales invoices, bills of lading, bank credit memos. "Consultants" served as go-betweens who handled payment of "facilitation fees" to former center officers. These officers charged 30-40 percent of the face value of fraudulent TCCs. For legitimate claims, they charged 10-20 percent just to release the TCCs.

The scam worked in other business sectors as well. In the case of fraudulent TCCs granted to transport firms under the "domestic capital equipment window," the modus operandi was to simulate purchases of buses by presenting fake commercial invoices and delivery receipts, even LTO certificates of registration. This, to justify the grant of much larger tax credits by making it look like the claimant bought more buses at a higher price than he actually did.

The scam involved not only finance but also trade department officials who managed or influenced the BOI. Upon release of fraudulent TCCs to them, the claimants sold the papers to other BOI-registered firms.

They circumvented rules on the transferability of TCCs by submitting fake supply agreements with TCC buyers. Oil companies Petron and Shell were among the biggest buyers of TCCs from, of all companies, textile millers and garment makers. Such buyers gobbled up the TCCs because they were being sold at 5 percent discount, which meant billions of pesos in tax savings.

So far Salanga has elevated to the Sandiganbayan a case involving 95 TCCs worth P231 million granted to only one firm. The Ombudsman is evaluating seven other cases involving P470 million worth of fake TCCs given to garments, textile and steel companies.

Salanga also has cancelled 569 TCCs worth P2.2 billion granted to 10 knitting and dye companies under the Chingkoe Group. Slated for cancellation are 476 ,ore TCCs worth P1.3 billion granted to 10 other knitting factories. He has audited and gathered evidence of fraud in the grant of 71 more TCCs to 20 bus companies.

Speaker Manuel Villar wrote to clarify points raised in "Executive-Legislative deadlock by LAMP" (Gotcha, 8 Mar. 2000). Excerpts:

To date, the House of Representatives has passed over 390 bills, resolutions, franchises on third and final reading. This includes 80 bills of national significance, with close to 20 enacted into law. Aside from the Clean Air Act, for which funding has been obtained through assistance from the Asian Development Bank and the 1999 and 2000 national budgets, this also includes economic bills such as the Retail Trade Liberalization Act, Home Insurance Guaranty Act, and Countervailing Duties and Anti-Dumping Act.

While the House is but one component in the law-making process, as the Senate and Executive must concur before anything is passed into law, I can proudly say that we have conscientiously done our part in giving Filipinos quality legislation that is responsive to their needs.

Hmm, first there were rumors of a coup d'etat in the offing. Then the National Security Council meets to revive the Marcos policy of using the Armed Forces for all internal threats. What gives?

INTERACTION. Manuel C. Diaz, aol.com: Why all this fuss over lobbying by Erap friends Nora Aunor and (no relation) Paquito Diaz (Gotcha, 15 Mar. 2000)? Here in America, retired lawmakers act as Washington lobbyists for military supply contracts.

Lobbyists here or there are supposed to register, Manuel.

Bimbo of compass.com: Erap got it all wrong (Gotcha, 18 Mar. 2000).

Sr. Tan didn't accuse the First Family of misusing PCSO funds. She only said more money was coursed through Malacanang and the First Lady's office instead of being distributed directly to beneficiaries identified by law.

No need for Dra. Loi to show all those documents; her integrity is not an issue. As for Jinggoy, Sr. Tan said ambulances were sent to him for the usual markings instead of being farmed out directly to intended users. She didn't accuse him of misappropriation.

They're coming to take them away, Bimbo.

Nilo Orocio, aol.com: Everybody, including Estrada kin who handle public money, is subject to public scrutiny and accountability.

Mar Tajon, QC: Erap sounds very tough in dealing with the NPA and MILF, saying he will match their threats with force. But when it comes to dealing with the oil cartel (Gotcha, 20 Mar. 2000), he says he's willing to kneel and beg.

Bing Ramos, Hayward, Ca.: Friends and I extend our condolences to the family of the late Speaker Ramon Mitra Jr.

Thank you, Timothy Ramos, Private Santiago, PGX of skyinet, Jay Entruda, Bert Celera, Chupsie Medina, Even Grace Paulino, Tom Cruz, Rene Bernardo, Pediasur of mozcom, Martian of aol.com, Ernie Chaves.

YOUR BODY. For bleary-eyed parents who have trouble getting their children to sleep: the American Academy of Pediatrics has published a "Guide to Your Child's Sleep", that sorts through many approaches, including the importance of routine and rituals.

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