Press Release
January 2, 2009

BIR, AMLC should look into possible violations of Feshan -- Gordon

Independent Senator Richard J. Gordon today called on the Bureau of Internal Revenue (BIR) and the Anti-Money Laundering Council (AMLC) to look into possible culpability Feshan Philippines Inc. may have committed when it entered the farm input-farm implement project with the government.

Gordon, chairman of the Senate blue ribbon committee, said that the BIR and AMLC should already be taking necessary actions after possible liabilities of Feshan executives had been revealed in the panel's probe into the P728-million fertilizer fund scam.

"The executives of Feshan fumbled, spilled the beans, and virtually owned up to evading taxes and money laundering," he said.

"Tax amnesty was used to cover up the fruits of the crime. The BIR should now look into that because that's evidence. What was revealed in the recent hearing is evidence that tax amnesty was used to cover up what was stolen from the government," he added.

Gordon said that during the Dec. 21 hearing of the committee, Feshan president Julie Gregorio confessed that she allowed Feshan to enter around P105 million into its accounting books but had only sold approximately P50-million worth of fertilizers to the government.

Gregorio also revealed that Marites Aytona, the said "packager" of proposals for the project, had advised her to apply for tax amnesty so that Feshan would not pay any tax on the income it did not earn but which was entered in the books.

Gordon said that Gregorio's testimony revealed the liability of the executives of Feshan, which was the biggest supplier in the farm input-farm implement project, insofar as the fertilizer fund scam is concerned.

"Feshan had to show that they were paid P105 million for the fertilizer project. They also availed of the tax amnesty so that they will not be liable for taxes anymore. And yet they paid only P500,000 which is not even 10% or 5% of the amount. So that is all illegal," he said.

The total tax due from Feshan amounts to P23,228,800. This is computed from the total amount paid by the government which is P105,000,000 less the total landed cost of P32,410,000 to get the gross profit of P72,590,000. A tax rate of 35% is applied to the gross profit to arrive at the total tax due of P23,228,800.

Gordon said even if Feshan availed of a tax amnesty, which is at least five or 10% of the gross profit, the P500,000 amount they paid was far too low from the taxes they ought to pay.

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