MANILA, Philippines (UPDATED) – Trade Secretary Ramon Lopez and officials of the Philippine affiliate of South Korea-based Hyundai Motor Company are facing plunder and other criminal charges over P1.1 billion worth of undue tax exemptions and alleged preferential treatment.
The charges were filed by the Volunteers Against Crime and Corruption (VACC) on Thursday, February 8, before the Department of Justice (DOJ).
In a 13-page complaint, VACC lawyer Ferdinand Topacio accused Lopez, who also heads the Board of Investments (BOI), of economic sabotage “through technical smuggling and estafa.” (READ: Politics and trade do not mix, Lopez tells EU businessmen)
Hyundai officials such as chairman Mong-Koo Chung, president Won-Hee Lee, Hyundai Asia and Pacific president Yong Suk Lee, Hyundai Asia Resources chairman emeritus Richard Lee, and Hyundai Asia Resources chairman Edward Go were also named as respondents in the complaint.
Hyundai Asia Resources vice chairman Conrad Marty and Hyundai Asia Resources president Maria Fe Perez-Agudo were also named in the complaint.
VACC filed the complaint after the BOI inspected Hyundai Asia Resources’ manufacturing plant in Sta Rosa, Laguna and discovered its non-compliance with the Motor Vehicle Development Program (MVDP).
Alleged preferential treatment
According to the VACC, Lopez gave Hyundai Asia Resources the “luxury of time” to comply with the MVDP.
“[Despite] the incontrovertible evidence of Hyundai Asia Resources’ guilt, the BOI, through respondent Lopez, still opted to give Hyundai Asia Resources the luxury of time in complying with the terms and conditions of the MVDP,” the group said.
The VACC said Lopez should also be held liable for plunder for “taking advantage of his position as chairman of the BOI to unjustly favor” Hyundai Asia Resources.
“It is worth noting that HARI has always enjoyed preferential and favorable treatment from respondent Lopez, the cancellation of HARI’s registration with the MVDP notwithstanding,” claimed the group.
Supposedly due to this alleged preferential treatment, Hyundai Asia Resources was “enriched at the expense of the government in the amount of P1.1 billion, representing the tax incentives given to Hyundai,” the VACC said.
In a statement sent to media on Thursday, Lopez said he does not know “where the VACC is coming from.”
“We in BOI were the ones who investigated and suspended their MVDP license, and asked for the collection of what’s due to the government. We just did our job,” said Lopez.
“They filed [a] motion for reconsideration. Our technical guys and lawyers studied the case further. But we later confirmed [our] decision to suspend their [MVDP] registration because BOI found out there was no assembly plant in operation. That means they should not have availed of the duty preference of 1% versus the usual 20-30%,” he added.
Lopez also explained further that the BOI then asked the Bureau of Customs (BOC) to compute for the duties that Hyundai owed.
“So is that favoring [Hyundai]?” asked the trade chief.
Under Executive Order No. 156, the MVDP aims to establish and/or expand production facilities of global vehicle manufacturers to allow the export of completely built-up motor vehicles as well as increase the export of motor vehicle parts and components.
Four-wheel motor vehicle manufacturers which qualify under the MVDP are eligible, among others, for a preferential tariff rate of 1% on the importation of completely knocked-down units, as well as parts and components.
The BOI discovered during an inspection that Hyundai had “no assembly jigs and welding machines” on its assembly floor, recounted the VACC in its complaint. This made the company ineligible for the MVDP.
“There were pallets of newly-delivered and fully painted body shells of several car models with steering wheels, seats, front and back lights, and side mirrors already installed; there were no painting and welding processes for its assembly operations; as well as only the installation of engine, tires, and batteries and quality testing/inspection are being undertaken within the facility,” said the VACC. – Rappler.com