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Senators scrutinize tax returns of Pharmally, execs

Bella Perez-Rubio - Philstar.com
Senators scrutinize tax returns of Pharmally, execs
Senate Minority Leader Franklin Drilon presents tax records submitted by the Bureau of Internal Revenue to the Blue Ribbon Committee on October 28, 2021.
Screen grab / Senate of the Philippines YouTube page

MANILA, Philippines — The Senate Blue Ribbon Committee on Thursday made public a summary of the tax returns of Pharmally Pharmaceutical Corp., its executives and former government officials linked to its deals with the government. 

The tax records were submitted by the Bureau of Internal Revenue to the panel under executive session but were shared with the public upon the motion of Senate Minority Leader Franklin Drilon.

Along with Drilon, Blue Ribbon chairman Richard Gordon and Sen. Panfilo Lacson said they studied Senate rules to make sure it was proper to publicize BIR's submissions.  Under Senate rules, matters taken up in an executive session are confidential "until the Senate, by two-thirds vote of all its members, decides to lift the ban of secrecy."

Drilon presented a summary of the records as the panel resumed its inquiry into deficiencies in pandemic spending flagged by state auditors. 

He said Pharmally, the government's largest pandemic supplier by far, claimed in its 2020 Income Tax Return a tax credit of P96.09 million and listed an overpayment of P589,163 in the same year. It bagged contracts worth over P10 billion in 2020 with the Department of Budget and Management's procurement service. 

“May utang [na,] may reimbursement pa (The government already owes them and they will be reimbursed as well)" Drilon said in disbelief. 

Jeff Mariano, the accountant Pharmally outsourced to draft its financial statement, told the Senate panel that the P96 million in tax credit was withheld by the PS-DBM but could not produce the BIR forms to support this. 

Asked by Drilon if this tax credit and overpayment claim from Pharmally was in order, certified public accountant Mon Abrea said "its subject to review assessment of BIR because...tax credit should be supported by BIR Form 2306." 

Mariano said he no longer has access to Pharmally's source documents, which the Senate panel has been trying secure copies of for weeks now. The auditor who signed off on Pharmally's financial statement, Iluminada Sebial, previously said she never saw the firm's source documents. 

No ITRs for Lao, Michael Yang

Meanwhile, the presidential appointee who awarded a bulk of Pharmally's contracts, former PS-DBM chief Lloyd Christopher Lao, did not file his ITR for 2020, according to records submitted by BIR to the Senate panel. 

President Rodrigo Duterte's former economic adviser, Michael Yang, who was identified by Pharmally as its financier and guarantor to suppliers, did not file ITRs for the taxable years of 2014 to 2017. He earlier told senators that he has been conducting business in the Philippines since 1999. 

For the year 2018, Yang declared a taxable income of P208,000 and paid P7,600 tax. His records for 2019 and 2020 are unreadable, Drilon said. 

Pharmally's chairman Huang Tzu Yen, wanted in Taiwan for alleged financial crimes, has no records available with the BIR for the taxable years of 2019 onwards, according to a certificate submitted by the agency to the Senate. 

Pharmally corporate treasure Mohit Dargani paid P97,241 in 2020 but the BIR marked it "suspended status." The year prior, he paid only P22,062. 

Senators earlier bared that Dargani bought luxury cars for himself and his sister, Pharmally president Twinkle Dargani. He claimed at the time that the money to buy his sister's car was a shareholders' advance approved by Pharmally's board. The firm's outsourced accountant, Mariano, said he never saw records reflecting this. 

Abrea affirmed that a board resolution would have been required for such an advance. 

Twinkle Dargani paid P29,187 in taxes in 2018 and just P1,000 in 2020. There was no information available for taxes she paid in 2019. 

The Dargani siblings were ordered detained by the Senate panel last week for refusing to submit subpoenaed source documents. However, Senate security told Philstar.com that the warrants have still not been served despite four attempts to arrest them in their condos and residential subdivision. 

Out of the total P42 billion transferred by the Department of Health to the PS-DBM in 2020 for the procurement of pandemic supplies, Drilon estimates that some P7.56 billion in income taxes can be collected by the government. 

PHARMALLY PHARMALLY PHARMACEUTICAL CORP RODRIGO DUTERTE SENATE XUZHOU CONSTRUCTION XUZHOU CONSTRUCTION MACHINERY GROUP LTD
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