Kim Henares: Binay ally evaded taxes

MANILA, Philippines – Did the ally of Vice President Jejomar Binay commit tax evasion in a bid to explain Binay’s alleged 5% kickback from the land deal between the Boy Scouts of the Philippines (BSP) and Alphaland Corporation?

This question emerged from the Senate hearing on the transaction after Bureau of Internal Revenue (BIR) chief Kim Henares said that Binay’s friend, Alphaland president Mario Oreta, should have paid income tax for the supposed 5% he got as compensation for the deal. (READ: Did Binay use Boy Scout funds for 2010 bid?)

Former Makati vice mayor Ernesto Mercado accused Binay of getting P188.98 million (US$4.23 million) or 5% of the deal, which he supposedly used for his 2010 vice presidential campaign. In the February 18 hearing, Oreta said that the 5% was not Binay’s kickback but his own compensation for packaging the deal. (READ: Binay ally ‘making excuses,’ won’t open bank accounts)

Yet Henares rejected the statement of Oreta and Alphaland chairman Roberto “Bobby” Ongpin that the 5% was not subject to income tax. Oreta said he did not pay income tax for the shares in his company, Noble Care Management Corporation.

“The point is, how will Noble Care get those shares if not for the compensation package? That’s part of the negotiation [of Ongpin] for Oreta, who works for Alphaland. Whether Oreta subscribed or not, that is already compensation,” Henares said on Thursday, March 12.

Ongpin and Oreta were both absent in the hearing – Ongpin sent word he was abroad, while Oreta cited “medical reasons.” Senator Aquilino Pimentel III quipped that Oreta did not want to hear Henares’ opinion on the income tax issue.

Rodolfo Ponferrada, Alphaland corporate secretary and general counsel, said that Oreta’s 5% was not “structured as compensation.” He added that when Ongpin called it compensation, the businessman only meant it “in the general sense,” and not as defined in the Internal Revenue Code.

Henares disputed this. “It can be the company that pays the fringe benefit tax or the recipient who pays for the dividend. Whatever you say, it is part of compensation. By your own word, it was structured. You already admitted you evaded taxes.”

The BIR chief told reporters after the hearing that it is “common sense” for her agency to investigate Oreta’s failure to pay taxes. She said that failure to declare taxes is a criminal offense but refused to say what case the BIR might file against Oreta.

To Senate Majority Leader Alan Peter Cayetano, Henares’ statements showed that Oreta was only making excuses to explain where the 5% went. The senator maintained that the 5% in shares disappeared from the financial statements of Noble Care and Alphaland. 

“’Pag ang storya mo ay totoo at buo, masusundan mo sa dokumento. Ang problema nawawala ito (If your story is true and complete, you can back it up with documents. The problem is it is missing),” Cayetano said.

Alphaland’s Ponferrada wanted to show a presentation to explain his point but was unable to do so due to lack of time.

The Senate is investigating the 2008 BSP-Alphaland deal on the Boy Scouts’ one-hectare prime property in Malugay Street and Ayala Avenue Extension in Makati. Senators said the agreement grossly shortchanged the Boy Scouts.

The Binays again skipped the 16th hearing on corruption allegations against them, branding the exercise as a ploy to pull down Binay’s survey numbers as he runs for president in 2016.

COA to audit Alphaland deal

Appearing in the hearing was Commission on Audit (COA) Officer-in-Charge and Commissioner Heidi Mendoza, whom the Binays criticized for her role as auditor of Makati transactions when the elder Binay was still local chief executive.

Mendoza said that the COA is looking into the BSP’s transactions in 2012, and can audit previous deals like the BSP-Alphaland agreement.

“If they entered into the contract and there are payments still coming in 2012 and 2013, to complete our assessment, we can go back to the start of the transaction,” Mendoza said.

The Supreme Court ruled only in 2011 that the BSP is a government agency whose funds are subject to COA audit.

Former BSP president Roberto Pagdanganan said that the Boy Scouts already created a committee in October 2014 for the group to choose the units from which it will get its 15% share from the Alphaland deal. He said the BSP met on February 26 to identify the units.

Senators criticized the BSP for allowing Alphaland to use the property to develop the Alphaland Makati Place, a residential and leisure complex, and to sell condominium units without determining how it will get its 15%.

Senator Aquilino Pimentel III said: “You are just remedying the situation because it already happened. The deal was back in 2008. What made you act was the hearing.”

Cayetano said the BSP was the victim of a “double whammy.”

“You did not select the units. Alphaland already chose the best units, and what they will give you is the price during the time the units were sold, not the price now. Until 2014, the Boy Scouts got zero cash from this deal,” Cayetano said.

‘Boy Scouts became a syndicate’

Mercado said part of the problem was that the leadership of the BSP is composed mostly of people subservient to Binay, and do not question the Vice President’s decisions. (READ: Shadows over Binay’s leadership of Boy Scouts) 

Binay’s ally-turned-whistleblower said that politician-members are even given awards for delivering votes to Binay. 

Cayetano followed up on the point, and cited the case of BSP Senior Vice President Wendel Avisado, also assistant secretary at the Housing and Urban Development Coordinating Council (HUDCC) which Binay chairs. Cayetano said this was conflict of interest.

Avisado explained that BSP officials get their posts through elections. In his case, he was a presidential appointee.

Cayetano asked: “Who recommended you to the President?”

Avisado responded: “Vice President Binay.”

Avisado maintained that his loyalty lies with the Boy Scouts.

Mercado retorted: “Naging sindikato na ang national executive board ng Boy Scouts. Mananalo ka lang ‘pag nagmamano ka kay VP Binay (The Boy Scouts national executive board has become a syndicate. You will only win if you follow Binay).” – Rappler.com