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By Tess B. Bacalla, Philippine Center for Investigative Journalism
Last of four parts
LUXURY vehicles are not uncommon at the Bureau
of Customs, where officials and employees like to drive fancy cars,
although most of them cannot explain how they bought these, given
the salary scales at the bureau.
But the assistant Customs section chief,
Ildefonso Almero, does not even have a car. Just five years away
from retirement, he also does not own a house, but rents an
apartment where he lives with his family.
Almero also seems bent on making sure the
government collects the right duties and taxes—something that
businessmen and Customs insiders alike say no longer interests many
bureau personnel.
For years Almero has been calling the attention
of his superiors to review the bureau’s 1998 reclassification of
two petrochemical products, low-density polyethylene (LDPE) and
linear low-density polyethylene (LLDPE), as copolymers.
Both had been classified as homopolymers for
more than 20 years, he argued in a position paper.
The 1998 reclassification, however, subjected
the two kinds of imported petrochemicals, specifically the Dow
Chemical Co. and Elite brands, to a lower tariff rate of 3 percent,
instead of the 15-percent duty they merited under the original
classification. As a direct result of this misclassification, wrote
Almero, the government has run up huge revenue losses amounting to
millions, if not billions, of pesos in the last six years.
The resulting loss, he argued, is “so massive
it has contributed to the impending collapse of our $1-billion
[petrochemical] industry.”
Jose Sereno, executive director of the
Association of Petrochemical Manufacturers of the Philippines (APMP)
and who read Almero’s paper just recently, describes the Customs
official’s analysis as “excellent.” Yet Almero’s own agency
seems less impressed and so far has been unmoved by his arguments.
Business groups are not surprised. They say they
have had to endure the same lack of enthusiasm whenever they ask
Customs to carry out specific reforms to curb smuggling.
“Very slow ang response time,” complains an industry
representative. “You cannot help suspecting whether the
delay is deliberate. You can’t readily point the finger at anyone.
Administrative lapses, yes.”
‘Packaged from the top’
Other observers, though, are more forthcoming in
pointing out what they believe to be the real reason behind the
bureau’s foot-dragging. Says one: “They [the smugglers] are
always one or two steps ahead of us, and the personnel of the
bureau are part of the syndicates. They are the ones advising
importers on what to do.”
Customs insiders themselves admit as much,
adding that some technically smuggled goods are “packaged from the
top,” involving powerful politicians or their cronies.
This situation may help explain why it took the
Federation of Philippine Industries (FPI) years before it gained
access to the inward foreign manifests (IFMs), the shipping
documents containing all the vital information about the cargo that
comes into the country. The information in the manifests includes
the description of the goods contained, the names of the consignees,
the ports of lading and destination.
Access to these documents, the federation
believed, would enable it to help the bureau prevent smuggling,
because it would allow detection of any irregularity in a foreign
shipment even before the goods reach the Philippines.
“The federation has contended that these
documents are public and should be accessible. We submitted our
legal arguments to the Bureau of Customs, but our request was turned
down because access to these might give an advantage to some
companies,” wrote Joseph Francia, secretary-general of the
federation. “The reply to this argument is that if everybody had
access to the shipping manifests, no one would have undue advantage
over anybody else.”
Customs eventually did release the manifests to
the National Antismuggling Task Force (Nastaf), which was created
last March. The task force, headed by Local Governments Secretary
Angelo Reyes, promptly allowed industry organizations to view the
electronic copies in its headquarters, since it needed their
expertise to make sense of the data.
An industry representative says this proved to
be a big help in their efforts to curb smuggling and protect local
industries. Using the data from the IFMs, they were able to alert
Nastaf about incoming vessels with questionable cargoes. But then
technical smugglers began diverting their shipments from the two
Manila ports covered by the IFMs to other ports such as Subic.
‘A deluge of resin’
Volumes of resin shipments, for example, went
down significantly in the Manila port even as, an industry
representative says, “they were having a deluge [of resin] in
Subic.”
Access to the IFMs meant that some of the
affected industries no longer had to rely too much on insiders to
get confidential information on irregular shipments. In the past,
that information was obtained in exchange for an outright fee or
some favors.
The fee, says one businessman, amounts to “a
few thousand pesos,” which is handed out if the information proves
to be correct. Businesses also had to keep their contacts happy by
small tokens of appreciation such as cell-phone loads or pocket
money if the Customs insider was traveling abroad.
But the industries’ access to IFMs was
short-lived, lasting only until Nastaf was dissolved last
August on President Arroyo’s oral instructions for it to cease
operations. “Now we have to rely again on our contacts inside the
bureau,” says an industry representative, acknowledging that
Customs insiders providing them with information are not exactly
doing it out of good will and probably have their own vested
interests and other groups to protect.
Industry groups hit hard by technical smuggling
lost access to the IFMs when Nastaf was dissolved. They also lost
the momentum brought on by the task force’s efforts to bring about
coordination among the government agencies whose functions are vital
in containing smuggling. “Before Nastaf [was created], we just
wound up frustrated because everything was piecemeal,” says an
industry representative. “If the agency will not cooperate,
nothing more can be done.”
Indeed, some agencies sometimes act as if they
are not part of the same government as the other state bodies.
Earlier this year, for example, Columbian Grains Foods Corp. was
found to have misdeclared 180,000 bags of iodized salt as natural
salt. Yet it claimed to have secured an Authority to Release
Imported Goods, or ATRIG, from the Bureau of Internal Revenue. The
issuance of this authority exempts an importer from payment of VAT
and facilitates the release of the shipment.
Asked by the Antismuggling, Intelligence and
Investigation Center (ASIIC), Nastaf secretariat, for a certified
true copy of Columbian Grain’s ATRIG, the BIR invoked Section 70
of the National Internal Revenue Code in its refusal to release the
document. “We will be able to affirm the authenticity of the ATRIG
in a proper forum like a court of competent jurisdiction, which
subpoenas us to testify,” BIR Deputy Commissioner Jose Mario Buñag
said in a letter to ASIIC.
‘Compromising the government’s
interest’
A government official would later observe that
the BIR had granted the ATRIG without first checking with Customs
regarding Columbian’s shipment. “Instead of protecting the
government’s interest, it’s compromising [it],” he said.
The accumulation of huge uncollected customs
bonds (the figures vary: P5.7 billion as of September 2003, as
reported by Customs to Nastaf; P1.27 billion covering the period
2000-03, based on Customs-furnished data) also highlights the
absence of coordination among government agencies.
It was only recently that the Insurance
Commission announced that it would issue a circular saying it would
not renew the Certificates of Authority to issue surety bonds of
companies with unsettled accounts of at least 70 percent of their
outstanding obligations to the Customs bureau. It was also only
recently that the issue of getting the Commission on Audit to do an
audit of all outstanding customs bonds came about.
It seems only now, too, that the Department of
Finance, given its oversight functions over Customs, has seen it fit
to look into the customs-bond issue through a subcommittee on
unliquidated bonds headed by Undersecretary Noel Bonoan. In
addition, the finance official heads the subcommittee on
customs-bonded warehouses, yet another source of massive technical
smuggling at Customs. Both subcommittees were created as a result of
the regular meetings of the Cabinet Oversight Committee on
Antismuggling.
There was actually a Congressional Oversight
Committee for Customs, whose creation was mandated by Republic Act
7650 to monitor the enforcement of this law on the physical
examination of cargo. The committee was supposed to be composed of
the chairs of the Committees on Ways and Means and both houses of
Congress, plus four additional members from each house. A check with
the two houses showed that the committee does not exist. R.A. 7650
was enacted in 1993.
Such legislative aberration may also be seen in
the newly enacted Republic Act 9280, which has not been fully
enforced to this day in the absence of approved implementing
regulations. This after many legitimate brokers waited some 25
years, according to Felix Romano, president of the Vis-Min Customs
Brokers Association, before the law was finally passed last March.
Professionalizing the ranks and brokers
The law, “An Act Regulating the Practice of
the Customs Brokers Profession,” is expected to professionalize
the ranks of brokers, often tagged as principal accomplices in the
commission of technical smuggling. Among others, it requires customs
brokers to sign import entry declarations under oath. This law is
designed to put a stop to some of the malpractices among brokers,
including signing of blank entries and connivance with
nonbrokers to facilitate the irregular importation of goods, thus
abetting technical smuggling.
Romano says that because of the law
“brokers will have to think twice before conniving with
importers” in making irregular shipments. Romano is among those
actively pushing for the approval of the draft implementing
regulations for the law.
Another law considered vital to discouraging
smuggling would declare smuggling, whether technical or outright, a
heinous crime and an act of economic sabotage. On September 3, 2004,
three bills that would more or less do this were filed in Congress.
Similar bills had been filed in the previous Congress, but, nothing
came out of those.
Many industry representatives note that no one
has been convicted of smuggling despite the damage it has wreaked on
local industries and the tremendous amounts of potential revenue the
government has lost because of it.
Recently, Customs released a list of 112 names
of individuals it claims to have sued, including suspected
smugglers. But a broker who claims to be an expert in
“facilitating” the importation of “problematic” cargo scoffs
at the list, saying that the number one “is not even a small
fish.” Conspicuously absent on that list at least is a name that
an industry source recalls was mentioned by President Arroyo in a
2002 meeting with the business groups. According to an industry
source, the President told those present, “We know who the
smugglers are,” and named one particular smuggler.
Amending the Tariff and Customs Code
In the meantime, amendments to the Tariff and
Customs Code are also being sought, since many believe it is no
longer responsive to the needs of the times, especially where
smuggling is concerned.
But some industry representatives and government
officials say other state agencies besides Customs should be
stricter in issuing the permits needed by traders to bring in goods,
and to scrutinize more closely all the documents presented by
importers.
Last August, Mount Zion Cargo Express (Mozex)
was found to have gotten import permits from the Plant Quarantine
Service of the Department of Agriculture by using fake documents.
Mozex had been regularly importing broccoli from Australia,
supposedly from a company called Scholastic Australia Pty. Ltd. To
facilitate the imports’ release from the port, Mozex presented
phytosanitary certificates, which are guarantees issued from the
exporting country that an agricultural product is free from pests
and diseases.
Acting on tips that the company was bringing in
“questionable cargo,” the Antismuggling, Intelligence and
Investigation Center wrote to the Australian Quarantine Inspection
Service (AQIS) regarding the authenticity of 12 phytosanitary
certificates supposedly issued to Mozex. AQIS denied having issued
them and added that it had no record of Scholastic P/L exporting
farm produce. Scholastic Australia turned out to be a children’s
book publisher.
Part 1 |Part
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