The Senate Blue Ribbon pursued its tack of focusing on the possible tax liabilities of government contractors of pandemic supplies on Thursday, seeking more documents that it said were not covered by President Duterte’s ban on Cabinet officials testifying before the committee.
Sen. Richard J. Gordon, committee chairman, directed the panel’s director general, Atty. Rudy Quimbo, to secure more documents from the Bureau of Internal Revenue (BIR), among others, as senator-members closed in on the liabilities of Pharmally, Xuzhou Construction Group of China, as well as businessman Michael Yang, former economic adviser of the President.
At the 14th panel hearing, Gordon remarked that at the rate the revelations are unfolding, the Senate probers stand the biggest chance in pinning down the suppliers on the tax issues, and quipped that they could end up like the US federal agents who nailed the gangster Al Capone, not for organized crime but for tax fraud and evasion.
Gordon asked Quimbo to remind the Department of Justice, the BIR and other agencies cooperating in the inquiry that they must continue to supply records as needed, since it is only the subpoena testificandum powers of the Senate that the Executive has challenged, not its subpoena duces tecum powers or the authority to require submission of documents.
At Thursday’s hearing, the Blue Ribbon’s tax consultant Mon Abrea said that P3.4 billion of Pharmally’s claimed P7.2-billion purchases as it declared to BIR, are unsupported by documents.
The controversial, low-capital startup that bagged some P10 billion in pandemic supply contracts paid only P21 million in taxes, not P95 million as it claimed. In earlier hearings, senators were aghast to learn that Pharmally even claimed millions in tax credits.
Also in Thursday’s hearing, Gordon continued to grill Michael Yang about the source of his wealth, the businesses he built up and how, and his relationship to the President, noting that Yang’s stint as close adviser coincided with Duterte’s perceived softness to China despite the latter’s bullying in the West Philippine Sea.
Gordon asked Yang pointblank if he was ever an “agent” of the Chinese Communist Party, which the businessman denied.
Before the 14th hearing, it was learned that the Blue Ribbon, looking into anomalies in the use of P42-billion funds for pandemic-related contracts, had formally asked the BIR to form a special task force to expedite the investigation of possible tax liabilities of certain government suppliers, led by Pharmally Pharmaceuticals Corp.
In a letter dated October 29, Gordon asked BIR Commissioner Caesar Dulay to form the task force so that any unpaid taxes can be quickly collected from the contractors, and used by the cash-strapped government still relying on debts to fund its pandemic response.
Senate Minority Leader Franklin M. Drilon earlier estimated at P7.5 billion the potential taxes that government could collect from contractors who bagged contracts from the Procurement Service-Department of Budget and Management (PS-DBM).
The Department of Health in early 2020 had transferred P42 billion of its pandemic response funds to PS-DBM, but the absence of a memorandum of agreement covering such lump-sum transfer was flagged by the Commission on Audit’s 2020 report on DOH, thus sparking the Blue Ribbon inquiry.