Pharmally

Senate to declassify BIR documents in Pharmally probe

Sofia Tomacruz
Senate to declassify BIR documents in Pharmally probe

FINANCIAL RECORDS. The Senate blue ribbon committee continues its probe into alleged corruption in the government's pandemic response.

Screenshot from Senate of the Philippines

The Senate blue ribbon committee agrees to make public documents subpoenaed from the Bureau of Internal Revenue

MANILA, Philippines – Senators at the blue ribbon committee’s latest hearing on Tuesday, December 21, agreed to declassify or make public documents the panel had subpoenaed from the Bureau of Internal Revenue (BIR) as the lawmakers doubled down on scrutinizing Pharmally Pharmaceutical Corporation’s finances. 

During the panel’s 17th hearing on the alleged corruption in the administration’s pandemic response, committee chairman Senator Richard Gordon said information in the documents would aid the Senate’s ongoing investigation. 

In back-to-back hearings, senators extracted several findings pointing to possible tax deficiencies incurred by Pharmally, its executives, as well as its network of suppliers. Lawmakers have since pressed Pharmally’s representatives to share more details about the transactions. They focused on documents that were needed to support about P3.5 billion in purchases – or nearly half of the P7.3 billion purchases Pharmally had declared in its audited financial statement but were missing in its income tax returns. 

Throughout previous hearings, senators also uncovered possible tax liabilities by the companies and personalities involved in the anomalous pandemic purchases of government. They flagged Pharmally officials, along with ex-presidential adviser Michael Yang and former chief of Procurement Service of the Department of Budget and Management Lloyd Christopher Lao for failing to file proper income tax returns for several years. 

Senate Minority Leader Franklin Drilon said documents could be made public in line with rules involving investigations in aid of legislation, where testimony taken or materials presented in an executive session “shall not be made public in whole or in part unless authorized by the committee.”

“The submissions of the BIR are critical to the ongoing investigation and it is to the public interest that these documents are made public and the committee authorizes its release, considering the fact that public funds are involved and anomalies have been discovered by this committee,” Drilon said. 

In response, Gordon ordered the BIR documents to be made public, as no lawmakers abstained or objected.

The BIR earlier said it provided 23 tax records the Senate had requested to complete its investigation. Outside the panel’s investigation, the agency had announced it launched its own probe in relation to the controversy surrounding Pharmally. So far, at least 76 individuals mentioned in the Commission on Audit’s 2020 annual report and in “other related issues [have been] contacted.” 

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Questions linger

The contents of all subpoenaed BIR documents were not immediately clear as of posting. Among the documents tackled during Tuesday’s hearings were certifications from the BIR that no tax records of some Pharmally officials, such as Krizle Mago, Pharmally’s former corporate representative, were available.

Confronted with these findings, Mago said she was not aware why her tax identification number might be considered invalid, adding that she secured it during previous work with a Korean company that had filed her income taxes on her behalf. 

Gordon, frustrated, suggested to Mago that she work this out with the BIR. Mago agreed to clarify the matter. “As of the moment I’m also clueless, Mr. Chairman, but I will check,” she said. 

During the hearing, Drilon again attempted to question Pharmally treasurer Mohit Dargani and director Linconn Ong about the company’s finances. The minority leader called particular attention to the company’s P3.2-billion purchases from two suppliers called “Evermore” and “Acme” whose officials the Senate had been unable to locate.

“We tried to subpoena Evermore but [the] addresses in government records appeared to be a fictitious address,” Drilon said. “We are concerned that about half of what appears to be cost of sales are from unknown suppliers. Is it possible they are not real suppliers?”

Drilon then asked both Ong and Dargani if they knew who these suppliers were, although both were unable to satisfy the committee with their answers. 

Dargani said he did not know Evermore personally, while Ong – upon the advice of his legal counsel – declined to answer Drilon’s query. The same pattern held for Drilon’s additional questions addressed to the two Pharmally officials.

“The advice of lawyers was to stop incriminating ourselves,” Ong said. 

Dargani, meanwhile, said he was also clueless as to why the BIR only had two suppliers linked to Pharmally in its records. “We have given others as well and we are also surprised as to why the BIR only has these two companies,” he said. 

Drilon, however, pointed out that the BIR’s records were based on Pharmally’s submissions to the agency. 

“We cannot help but come to the conclusion that these are fictitious sales. Evermore cannot be found in its address. Same with Acme, and you have P3.5 billion that cannot be accounted for, so you cannot blame the committee and the Senate for thinking that these are fictitious purchases,” he said. 

Asked to comment on Pharmally’s statements, Senate resource person and tax expert Mon Abrea reiterated that it was possible to conclude these were ghost purchases because “the burden of proof is on the taxpayers” to show these were legitimate transactions. 

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Both Ong and Dargani continued to maintain that they were not aware of the location of financial documents the Senate subpoenaed – even if they had earlier requested senators that they be allowed to speak with each other to figure out the information. This only made senators all the more suspect that they were trying to stall the investigation.

Drilon pointed out that even if Pharmally does not produce its financial documents for the Senate, it would eventually need to do so to defend its tax records with the BIR.

To this, Dargani answered, “I’m aware of that and we will answer them in a proper forum.” – Rappler.com

Sofia Tomacruz

Sofia Tomacruz covers foreign affairs and is the lead reporter on the coronavirus pandemic. She also writes stories on the treatment of women and children. Follow her on Twitter via @sofiatomacruz. Email her at sofia.tomacruz@rappler.com.