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Philippine Daily Inquirer: Tax credit scam witness laments slow justice

Michelle V. Remo,
Published: Aug 29, 2007

THE MAIN WITNESS TO THE MULTIBILlion-peso tax credit scam has asked Finance Secretary Margarito Teves to help speed up the resolution of the case that has dragged on for more than a decade.

Unfortunately, it appears that government efforts to recover the lost revenues in the tax credit fraud and punish its author cannot take off, for one reason or another, said the lawyer of witness Felix Chingkoe in an Aug. 22 letter to Teves.

Felix Chingkoe is the brother of Faustino Chingkoe, the main suspect in the tax credit fraud perpetrated in the 1990s that resulted in the government losing more than P5 billion worth of revenues.

Lawyer Jose Isagani Gonzales told Teves that Felix Chingkoe had similarly written to Ombudsman Merceditas Gutierrez last year to no avail.

Felix Chingkoe said he wanted the cases resolved for the sake of his family whose security has been under threat since he made the decision to become a government main witness in the case against his brother.

Charges against Faustino in connection with the tax credit scam have been pending with the Office of the Ombudsman since 2003. Until now, however, no extradition or forfeiture cases have been filed.

Faustino Chingkoe, and his wife Gloria, are reported to be living in Canada where they reportedly own millions of dollars worth of real estate.

The couple are major suspects in the tax credit scam of the mid-1990s, in which some 64 companies owned by the couple obtained through fraudulent means tax credit certificates worth abut P5.3 billion and sold these to other companies which used them to pay for their tax obligations.

When the TCCs were later found to be fraudulent, it led to large revenue losses.

Tax credits are refund payments that certain export companies are allowed to claim for duties paid on imported materials used for the manufacture of products for export. Instead of a cash refund, the government issues certificates, the TCCs, which companies can use to settle tax obligations. The companies are also allowed to sell the TCCs to other companies.

Faustino and Gloria are said to be the owners of the garments-manufacturing firms that sold fake TCCs to giant oil firms Petron Corp. and Pilipinas Shell Petroleum Corp., which used the TCCs to pay their tax obligations.

After the Court of Tax Appeals invalidated their tax payments because of the use of fraudulent TCCs, Petron and Shell were ordered to each pay close to P600 million in taxes to the Bureau of Internal Revenue.

The firms owned by Faustino Chingkoe tagged in the tax credit scam include Diamond Knitting, Filstar Textile Industrial, New Alliance Thread Co., Fiber Tech Corp., Jantex Philippines, Express and Master Colour System and Allstar System.

Felix used to be involved in the operation of these family owned companies but decided to serve as government witness, saying his brother had used the firms to engage in the scam.

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