Mining stakeholders are upbeat over the government’s decision to revise sections in the implementing rules and regulations (IRR) for Executive Order 79, or the Mining EO following an uproar from industry players who threatened to seek legal action regarding the IRR provisions. A questioned section involves continuity and conditions of mining contracts up to the second contract renewal usually occurring during the next 25 years under a 50-year agreement.
Under previous rules, contract renewals (after the first 25 years) made them subject to prevailing laws and regulations at the time of renewal. Industry players, however, say the IRR on renewals are unclear and that the new provisions could be different from the prevailing terms and conditions at the time the contract was first drawn. In any case, revisions to the questioned IRR sections encourages potential investors, including those whom President Noy will most likely meet during his official visit to Australia and New Zealand scheduled at the end of October. Two sets of 57 top businessmen will be joining President Noy on the five-day official visits, with the first 57 scheduled for Australia while the other 57 will be part of the New Zealand leg.
Mining insiders said they also expect more “gold news” today from Philex Mining Corp.’s press conference on the company’s cleanup efforts following an accidental leak at its tailings storage facility in Padcal, Benguet. We were told the cleanup has resumed and that the facility has been plugged fully. The mining company voluntarily suspended operations in Padcal mine last August following heavy rains that caused the accidental discharge of sediments, affecting Balog Creek in Benguet and Agno River in Pangasinan. An examination by Mines and Geosciences Bureau officials, however, confirmed that the sediments were non-toxic since chemical compounds used by the mining company are biodegradable.
Philex corporate affairs chief Mike Toledo affirmed the company’s commitment to fulfill its obligations regarding rehabilitation and other remediation efforts, but stressed that they will question punitive penalties that would be imposed since the spill was caused by force majeure. “We’ve been tested by fire,” Toledo said, likening the accidental discharge to a “refiner’s fire” that consumes the dross (worthless mineral waste) and separates it from the gold, “but we’re going to come out of this crisis pure as gold” – a statement that seems to be borne out by analysts’ assessments that now would be a good time to buy Philex shares.
Wells Fargo faces lawsuit
Wells Fargo, one of the biggest banks in the US with over $1.3 million in assets and stock market value of over $176 billion, is facing charges of mortgage fraud filed by the US Attorney of Manhattan. The suit alleged that in the last 10 years, the bank had issued fake mortgage/loan certifications that defrauded the government of hundreds of millions in insurance claims. The bank reportedly hid evidence of its failure to comply with requirements for government-insured housing loans, hiring incompetent underwriters who allowed people to obtain the loans despite questionable ability to pay. The sloppy underwriting increased the volume of “extremely poor quality” loans which profited the bank but resulted in losses for government, the allegations went, and this practice was encouraged by Wells Fargo’s incentive plan that gave bonuses to underwriters based on the number of loans approved. “It was an accelerant to a fire that was already burning,” the Manhattan US attorney fumed.
The bank denied the allegations, saying they acted in good faith and complied with housing rules and regulations. Many Filipinos including the wealthy have been using the New York-based bank for deposits and other transactions with a number of them having acquired loans and mortgages before the US housing bubble burst. It is not certain however if any of them are among those who defaulted on their loans.
Money must be really tight, since the US government has been vigorous in filing lawsuits to recover losses from bad loans/defaulted mortgages insured by the Federal Housing Authority. In February, Citigroup paid a $290 million settlement for a similar case while last May, Deutsche Bank forked out $202 million to settle charges that its mortgage arm lied to approve risky mortgage applications. Next target: Allied Home Mortgage Corporation.
Long arm of the IRS
It won’t be surprising if in the months to come, more Filipino-Americans will be renouncing their American citizenship in a bid to evade the long arm of the US Internal Revenue Service (IRS) with the Foreign Account Tax Compliance Act (FATCA) taking effect in January 2013. Under the FATCA, US citizens and Green Card holders with accounts in foreign banks and other foreign financial institutions (FFI) will be required to disclose these accounts and other foreign income for which they will be subjected to taxes.
Americans who have been living abroad are denouncing the measure, saying this is tantamount to double taxation since they are already paying taxes in the country where they are based. But the IRS has issued an ultimatum saying penalties for those who refuse to comply will be imposed starting January 2014. Under the FATCA, FFIs (which include insurance companies, asset management firms and the like) are obliged to disclose information on American account holders – which will then be used to double check with other information to make sure the account holder is not engaged in tax evasion. Non-compliant FFIs face stiff penalties of up to 30 percent of payments, plus other sanctions. So far, several offshore “tax havens” such as Guernsey, Jersey and the Isle of Man have signed up for arrangements that will “prevent tax evasion.”
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