Despite fines, no case filed vs Mighty Corp.

MANILA, Philippines–Nearly a year after a Department of Finance (DOF) task force questioned Mighty Corp., the country’s oldest cigarette manufacturer, for alleged technical smuggling and tax evasion that resulted in huge revenue losses for the government, not a single illicit trade practices-related case has been filed against the firm.

For the record, “none,” the Public Information and Assistance Division of the Bureau of Customs (BOC) has told the Inquirer.

However, a BOC administrative order, issued in January and suspending the firm’s customs bonded warehouse operations remained in force, noted the DOF-attached agency.

The move was necessary to “prevent revenue leakages while further investigation (of the company’s trade practices) was being conducted” by the finance department, Customs Commissioner John Phillip Sevilla earlier said.

The 24/7 monitoring by a Bureau of Internal Revenue (BIR) team of Mighty’s 9-hectare fully integrated manufacturing and processing plant in Malolos, Bulacan, also continues.

The finance department has also required the firm to pay nearly P1 billion in customs duties and taxes for the importation of raw cigarette materials.

A BOC official interviewed for this story said, “Despite the fines imposed on Mighty Corp., it was neither blacklisted nor prevented from importing tobacco leaves and other cigarette-production materials.”

But the company’s operations are “being closely watched” by the DOF, said the official, who asked not to be named for lack of authority to speak to media.

Sought for comment, Oscar Barrientos, Mighty Corp.’s executive vice president, acknowledged the company had paid “an initial P854 million and an additional P124 million (or a total of P978 million) for the duties and taxes of our imports.”

“Mighty has settled all the necessary duties with the Bureau of Customs for raw materials it earlier imported for use in producing cigarettes for export, but were subsequently used for domestic consumption,” said Barrientos, a retired regional trial court judge.

Disputing the BOC official’s claim that these were fines, Barrientos said “the bureau audited us for duties for our imports that were used for domestic consumption and we settled whatever was assessed.”

“Government records will also show that we have paid the corresponding taxes. That is why the BIR never charged us with tax evasion because we paid the right taxes,” Barrientos said.

He lamented that Philip Morris Fortune Tobacco Corp. (PMFTC), the nation’s top cigarette manufacturer, “continues to muddle the facts to suit its position and support its attempts to have the sin tax law amended.”

Earlier, he said the BOC suspension order did not cover Mighty’s regular importation for the domestic market.

“Nothing has changed. It’s still business as usual. We will continue to cooperate with the authorities… We have been transparent with the Bureau of Customs and we will continue to be transparent,” he said.

Customs personnel said the order would compel the firm to declare every single imported item it would use in the production of cigarettes for domestic consumption and pay the appropriate duties and taxes.

The word war, meanwhile, between the rival tobacco companies raged on last week with Barrientos telling PMFTC president Paul Riley to “shut up and mind your own business.”

The Mighty Corp. executive vice president assailed Riley for issuing a series of statements accusing the company of engaging in illegal trade practices.

Barrientos chided the PMFTC executive for his alleged ignorance of the law, noting “under existing jurisprudence, he who alleges must prove his case before accusing anyone of wrongdoing.”

“Riley is in no position whatsoever to be putting words into the mouths of government officials because he and the company he’s representing have a vested interest in the country’s multibillion-peso tobacco industry,” he said.