PMFTC to Mighty: Stick to issue

MANILA, Philippines - Philip Morris Fortune Tobacco Corp. (PMFTC) asked closest rival Mighty Tobacco Corp. to stick to the issue and prove its innocence from allegations of business irregularities.

In a statement, PMFTC president Paul Riley said the company has no intention of letting up in its relentless efforts to help the government curb tax evasion.

Riley challenged Mighty to face the issue head on and disprove allegations of “systemic and endemic fraud”  which were uncovered by the Senate Tax Study and Research Office (STSRO).

“Mighty can no longer hide from the facts which expose their questionable business practices, described by a Senator as a clear act of fraud.  The congressional inquiry highlighted the questionable business practices by Mighty,” Riley said.

According to the STSRO report, Mighty used imported materials to make cigarettes for export but diverted them to the domestic market without paying duties and taxes.  It was also found to have undervalued the cost of tobacco and filter imports to evade customs duties and import VAT (value-added tax).

“The STSRO report is a government report and is a compilation of official data and facts collected from multiple agencies including the Bureau of Internal Revenue, National Tobacco Administration, and the Department of Trade and Industry,” Riley said as he debunked Mighty’s claim that the report was based on an earlier Oxford Economic study which was commissioned by no less than PMFTC.

“The STSRO director general made this perfectly clear during the public hearing in Senate. All the members of the Joint Congressional Oversight Committee have copies of the report and there is not a single mention of Oxford Economics anywhere.”

“We will not apologize for trying to help the government recover what are rightfully public funds. We will also not be intimidated by ridiculous statements and false comments aimed at masking the facts – this and other evidence will be pursued until something has been done about it. Enough is enough,” Riley said.

Riley likewise pointed out that PMFTC fully supports the sin tax law and just wants to ensure fair administration.

He also challenged Mighty to explain its declaration of very low import prices of filter material with two US suppliers certifying that they sold said filter materials at a much higher price range.

The report likewise noted that 99 percent of Mighty’s importation of tobacco leaf and cigarette filter materials were declared for use in the manufacture of cigarettes for export only and virtually none for domestic use.  Yet, Mighty itself admitted to exporting only 1.5 percent of its total production.

Riley said the government needs to further step up enforcement against Mighty given the new compelling evidence against the Filipino-owined cigarette company’s questionable business practices.

“This deserves more careful scrutiny as it could likely merit wider and stricter enforcement action by the government,” Riley said.

Riley said the government should not hesitate to enforce the full weight of the law, which includes criminal penalties, to encourage everyone to pay their fair share of taxes.

PMFTC, which used to be the dominant leader in the local industry, has seen its market share drop to 70.9 percent in June this year from 77 percent in the same month a year ago as smokers turned to low-priced cigarette brands.  Downtrading allowed Mighty to enlarge its market share to more than 20 percent from a mere seven percent in 2012.