PMFTC slams Mighty Tobacco over ‘clear case of fraud’

MANILA, Philippines–Mighty Tobacco Corp. should stop skirting the issues and instead explain its alleged acts of fraud which a government report recently uncovered, PMFTC president Paul Riley recently said.

“Mighty can no longer hide from the facts which expose its questionable business practices, described by a senator as a clear act of fraud. The congressional inquiry highlighted the questionable business practices of Mighty,” Riley said of the local cigarette company owned by the Wongchuking family.

These practices include using imported materials to make cigarettes for export, but diverting them to the domestic market without paying duties and taxes; and undervaluing the cost of tobacco and filter imports to evade customs duties and import VAT.

“After reviewing all the government data, I concur with members of Congress that this is clear case of fraud,” Riley said.

Instead of addressing what amounted to to systematic and endemic fraud, Riley said, Mighty instead sought to discredit the report of the Senate Tax Study and Research Office (STSRO) by saying it was based on a private study conducted by the UK-based Oxford Economics.

There is absolutely no data or reference in the STSRO report that comes from the Oxford Economics report, PMFTC said. The STSRO paper is a government report and is a compilation of official data and facts collected from the Bureau of Internal Revenue, the National Tobacco Administration, and the Department of Trade and Industry. The STSRO director general made this perfectly clear during the public hearing in Senate.

Based on the STSRO report, Mighty is the one that should apologize to the Filipino people for its questionable business practices that could have led to the loss of billions of pesos in tax revenues.

Riley said PMFTC has no issues with Republic Act 10351, also known as the Sin Tax Law, and is not working for its amendment, a fact Mighty refused to acknowledge.

In its report, the STSRO noted that 99 percent of Mighty’s importation of tobacco leaf and cigarette filter materials was declared for use in the manufacture of cigarettes for export only and virtually none for domestic use. Yet Mighty itself admitted to exporting only 1.5 percent of its total production.

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