Shell, Chevron among big-time tax cheats in Philippines

Shell, Chevron among big-time tax cheats in Philippines
By Carlos Conde on Asian Correspondent

One important snippet of news that was generally ignored this past week was the disclosure, by the Philippines’s Commission on Audit, that the Philippine government was duped (“shortchanged,” which the Philippine Daily Inquirer used in this report, is too tame a word to describe this anomaly) of more than 53 billion pesos (about $1.1 billion) between 2003 and 2009 from its share of the operations of the Malampaya project.

The Malampaya project is one of the largest natural gas explorations in the Philippines and held the promise of considerable revenue for the government. The main operators of the project are the US company Chevron, the Dutch oil giant Shell and the Philippines’s Philippine National Oil Corp.

According to the COA, the corporate incomes taxes of these companies were deducted from Manila’s 60-percent share of the profits. In effect, according to this report, these companies did not pay taxes for seven years.

Clearly, this is big money and more revenues are expected in the coming years, something that can immensely help the Philippine government to bridge its tax gaps. If Manila knows what’s good for its financial health, it should prosecute these companies and collect those taxes.

More than that, however, the government should really start watching out for its own welfare — not to mention the welfare of the people who bear whatever impact these projects have — in dealing with foreign companies such as oil and mining firms.

I am reminded of the exploration by ExxonMobil in Sulu province, which started after US troops were sent to the south supposedly to fight terrorism (nudge-nudge-wink-wink). I read somewhere that local officials had complained that they were not consulted on this project. One congressman even suggested a congressional investigation into the exploration, arguing that he wanted to make sure his people would benefit from the project, as they should.

In the mining sector, we’ve heard of countless tales of communities being displaced and damaged by mining operations but, in exchange, received paltry benefits, if at all.  This is one of the reasons why mining has such a bad rap in the Philippines – many mining companies are not only negligent of the impact of their projects on the environment but are often too greedy to share the profits equitably with the people in the affected communities.

It has often been said that the Philippines has some of the most abundant mining and oil resources in the world -– wealth that could easily lift millions of Filipinos out of poverty. But Filipinos are still mired in poverty, with the government being forced to borrow money from multilateral lending agencies such as the Asian Development Bank to give out to the poor. In the meantime, these companies not only make a fortune – they cheat the government of billions of taxes that could benefit Filipinos, particularly the poor.

The ProPinoy Project