From the great rip-off to the ‘Great Escape’?

There has been so much sound and fury about the matter, which includes a second impeachment rap filed by a Mindanao congressman against Ombudsman Aniano Desierto for allegedly botching the case (deliberately?) that the public may be getting confused over why cracking down on the tax credit scam involving more than P60 billion is so important.

When everything is toted up, the scandal may, indeed, have cost our government much more than P60 billion, but even that amount is already mind-boggling.

So here goes:

By way of background, the immense and – if you ask me – supremely arrogant scam was first exposed more than two years ago by former Senator Juan Ponce Enrile when JPE was still in the upper chamber. In a privilege speech entitled "The Great Rip-off," deliverd on July 14, 1999, Enrile indicted the Department of Finance’s "One-Stop Shop Inter- Agency Tax Credit and Duty Drawback Center" as "deeply mired in a P60 billion tax credit scam."

Since the kilometeric name of the accused agency is a jawbreaker we will, in this piece, for the sake of brevity, henceforth refer to it as the Tax Credit or, even better, as the Center. The Tax Credit Center had been created by then President Corazon C. Aquino through her Administrative Order No. 266. Why? The rationale was that, before such Center was established, the processing of tax credit and duty applications had to be separately undertaken by three agencies – the Board of Investments, Bureau of Internal Revenue and Bureau of Customs – with each agency compiling its own separate documentation, and having its own processing schedules and regulations. Owing to this disarray, corruption, inefficciency and delay in the processing of papers flourished.

Therefore, it can be seen that the consolidation of all these tasks in a single Center had been designed to curb graft and corruption and promote efficiency. To ensure that all the agencies concerned were well-represented, the Center was chaired by a representative of the Department of Finance, and its membership composed of representatives of the Board of Investments (BOI), Bureau of Customs, and Bureau of Internal Revenue (BIR).

The idea was for tax credit and duty drawback certificates to be issued to firms and entities entitled to these incentives and exemptions from import duties under the Omnibus Investment Code, the Tariff and Customs Code, and the National Internal Revenue Code. These were extremely valuable documents since the certificates could be applied by the firms or entities receiving them to pay taxes due the government.

Did the Center fulfill its goals? On the contrary, instead of curbing corruption and graft, and promoting efficiency, the move merely "centralized" venality in one single agency with – unfortunately – a voracious appetite.

According to Enrile’s expose, between February 1992 when the Center was established to March 31, 1999, it issued a total of 19,353 tax credit certificates and duty drawbacks amounting to P54 billion to various claimants – quite a number were firms whose tax credit claims were completely out of proportion to their average annual sales.

Enrile further charged that during the same period, the Center had also issued 15,588 tax debit memos amounting to about P24.32 billion. This means, JPE averred, that at least P24.32 billion worth of tax credit certificates were used to discharge an equivalent amount in tax obligations owed the government.

Of course, there would have been nothing illegal or wrongful on the part of those rightfully entitled to these tax credits and duty drawbacks utilizing the certificates to pay their tax obligations to the government.

What happened, however, was that many business firms, including fictitious firms not entitled to tax credits and duty drawbacks, acquired certificates from the Center by resorting to such fraudulent schemes as fictitious transactions, fake raw material import documents and fake back credit memos. In fact, several of them went on to sell their fraudulently acquired certificates to companies like Filipinas, Shell Petroleum Corp. and Petron Corp. These companies, in turn, used those documents to pay taxes.

Get the picture on how insolently the government was bilked?

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Former Senator Enrile backed up his indictment with several concrete examples of highly anomalous gifting of certificates by the Center. One firm, identified by him as Jibtex Industrial Corporation, allegedly received tax credit certificates amounting to P125.4 million (between 1996 and 1997) when its average annual sales came to only P8.45 million!

Here we are, two years and seven months after the tax credit scam was exposed, yet proceedings against the culprits supposedly charged before the Sandiganbayan, our anti-graft court, have not been begun.

It gets worse: The government’s chief graft-buster, investigator and prosecutor, Ombudsman Aniano Desierto, is now being openly accused of intentionally bungling the filing of charges against the accused. The accusation is that Desierto and his Office, instead of filing cases of "plunder" (considering the large amounts involved), a heinous crime, cited only lesser crimes of graft and corruption which are bailable.

Not just that: he excluded some from indictment and caused the dismissal of 62 cases against 50 individuals, including somebody as important as former Petron Chairman Monico "Nick" Jacob. Anyway, these are the allegations which form the basis of the second impeachment complaint filed by Misamis Rep. Oscar Moreno (Lakas-NUCD) against Ombudsman Desierto.

Will the minimum number of 73 members of the House of Representatives (out of 220) be mobilized to move Desierto’s "impeachment" forward? That is the question of the hour.

The way I look at it, what happens will depend a great deal on the say of Speaker Joe de Venecia. As one columnist said yesterday: It is JDV’s call.

If this is true, will a pivotal factor be the fact that Joe’s other "patron", his comprovinciano from Pangasinan, is former President Fidel V. Ramos – and it was FVR who had originally appointed Desierto the Ombudsman?

There are wheels within wheels in this Republic. Which is why anybody seriously studying the decision-making process must dig beneath the surface and examine the constant "networking" that operates. Not all that glitters is gold – or dross. Not everything is logical. The padrino system giveth or taketh away.

Let’s trust that in this convoluted but vital case, justice, not palakasan, prevails.

* * *

For, if the allegations of Rep. Moreno are true, the multibillion-peso scam which JPE had pithily dubbed "The Great Rip-off" could be converted into "The Great Escape." If the big fishes involved in this "mother of all scams" (to invoke the hackneyed but still colorful phrase) are let off the hook swing to the bungling of their prosecution – that would be a terrible scandal in itself.

Moreno has also alleged that Desierto violated an earlier agreement with Task Force 156, the top-level inter-agency body under the Office of the President which was created to conduct the fact-finding investigation of the P2.5-billion tax credit scam involving 12 firms of the Chingkoe group! The clear understanding, according to Moreno, was that the twelve separate plunder cases would be filed against the Chingkoe companies.

Without the knowledge of Task Force 156, declares Congressman Moreno, Desierto had proceeded to file one single consolidated plunder case against the 12 Chingkoe firms. (The Chingkoe family members, who were identified, seem to have gone abroad in the meantime – gone for good?)

Another newspaper has asked the question: Did Desierto "take a drive" (as they say in boxing)? That’s the multibillion-peso question.

Abangan.

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If you’re still in doubt as to the money-making capability of the Philippine Amusement and Gaming Corp. (PAGCOR), PAGCOR Chairman and CEO Efraim Genuino has announced that the government agency has just posted record-breaking earnings of more than P17.45 billion.

What is attracting much interest these days, however, are Genuino’s plans – in the midst of the current recession, mind you – to convert Manila into the "Las Vegas" of Asia, or the "next Macau" (minus Stanley Ho) by establishing a PAGCOR Entertainment City along Roxas Boulevard. If Hong Kong is building a Disneyland theme park that near its airport, Genuino’s grand vision is to erect a Vegas-by-the-Bay. Can he do it?

Under the scheme, the PAGCOR E-City blueprint calls for the constructions of six "world-class" hotel-casinos and several theme parks. The latter are a 10.5-hectare tropical rain-forest, beach and lagoon; a five-hectare marina and sports complex, and a 7.4-hectare winter park which will feature not only ice-skiing rinks but, Efraim vows, real snow. Too late for us to qualify for the Winter Olympics in Salt Lake City (Utah) just a bit more than a week away – but, who knows, the succeeding one?

Another attraction on Genuino’s "dream city", will feature an 117-story observation tower (the tallest in the country) in the center of a six-hectare park. An educational and cultural complex, sitting on a 5.88-hectare site, will feature a series of "must-see" attractions for local and tourists, the PAGCOR chief enthuses, such as a state-of-the-art IMAX Theater and a four-story central aquarium with a walk-through glass tunnel to view exotic marine life. The "city", naturally, will have its own power plant, waste disposal and water treatment systems.

The E-City will have its convention centers, music halls, a sports stadium, shopping malls, a hospital-cum-hotel, a retirement complex, a PAGCOR village for many, if not all, of employees, office condominium blocks with most modern communications facilities and advanced computer systems.

There’s more: Serving the entire neighborhood, in Genuino’s grand design, will be a 21st century monorail with its terminal located in a 1.72-hectare transportation hut. It will be linked, according to the plan, to the Ninoy Aquino International Airport (NAIA) by a skyway specifically geared to whisk tourists planing in from abroad directly to E-City in "just three minutes flat!"

Genuino swears that "a project of colossal magnitude like our PAGCOR E-City is our best bet to move the country forward and upwards. It means hundreds of thousands of jobs being created and billions of dollars in investments pouring in." Whew. I can only say: Once a Rotarian, always a Rotarian.

Will the high-rollers come? In fact, the burning question remains: How will such a mega-project be financed? Will it pass the Four-Way Test? And finally, can much of it be realized within less than three years – just in case the "cut-off date" is the Year 2004? Remember, I said – "just in case."

One thing you can’t accuse Genuino of – that he thinks "small."