THE foreign exchange firm used in the laundering of funds stolen from the Bangladeshi central bank is now under scrutiny not only for its supposed role in the cyberheist, but also for failing to pay the proper taxes, Internal Revenue Commissioner Kim Henares said Tuesday.
Testifying in yesterday’s fourth hearing on the $81-million money laundering case, Henares told the Senate Blue Ribbon committee the taxes Philrem Service Corp. paid were wrong because it was functioning as a money changer and a foreign exchange company.
“The taxes they paid are wrong because when you are a money changer and a foreign exchange company, you are a non-bank financial intermediary, so you’re supposed to pay a 5-percent gross receipt tax. You’re not supposed to be paying VAT [value-added tax],” Henares said.
Philrem was the remittance firm used to channel the stolen funds from Bangladesh Bank that found its way into casinos in the Philippines.
Casino junket operator Kam Sing Wong, alias Kim Wong, maintained that about $17 million is still with Philrem, but this was repeatedly denied by its president Salud Bautista.
On several occasions, Bautista testified there is no more cash with Philrem and the funds from the Bangladesh Bank were all transmitted to the intended beneciaries.
Bautisa said they only got P10 million which they intend to return to the Anti-Money Laundering Council.
Bautista also denied that the company had any knowledge that the money was stolen, and denied being involved in any illegal transaction in their 18 years of operation.
But upon checking the records of Philrem, Henares said it was not registered as a remittance company with the BIR. She said Philrem was registered as a land transportation contractor and not as a remittance company.
“We looked at the registration of Philrem with us, I think there’s something wrong with their registration. Their registration with us is for other land transportation contractor, not money changer and remittance company,” Henares said.
“They amended their articles on incorporation in 2005, but they did not update their registration with us,” Henares told the senate panel chaired by Senator Teofisto Guingona.
Since the company is engaged in foreign exchange and remittance, Henares said it was subject to a 5 percent gross receipts tax, which Philrem didn’t pay.
The tax chief also said the receipts issued by Philrem to Weikang Xu were not registered with the BIR and a “clear violation of regulations.”
Rizal Commercial Banking Corporation head of legal and regulatory affairs lawyer Macel Estavillo admitted they failed to act on Bangladesh Bank’s three requests to freeze the stolen funds sent last February 9, 2016 because the messages were “vague and ambiguous.”
In all the three messages, she said there was nothing to indicate they were sent by the central bank of Bangladesh.
“We didn’t know that they were the central bank of Bangladesh, we just thought they were a regular bank,” she said.
Estavillo said that on February 9, the banking day after a three-day weekend, RCBC received a total of 790 messages in the SWIFT system, none of which suggested that it was an urgent matter involving a central bank.
SWIFT, or the Society for Worldwide Interbank Financial Telecommunications, is the messaging system used by banks worldwide to transmit funds.
She said all messages were deemed of “normal priority” and were thus opened sequentially because there were no apparent red flags.
She told the senators that at 11:22 a.m. on February 9, the bank’s settlements department opened and read an MT999, or a bank-to-bank text message, recalling funds sent to the account of a certain “Alfred Santos Vergara.”
The account was later discovered by RCBC to be fictitious. The MT999 was forwarded to RCBC Jupiter, Makati branch.
Estavillo said the “normal priority” message from Bangladesh Bank read: “Please be informed that this is a doubtful transaction. You are requested to stop the payment and if you already made payment then freeze the account of the beneficiary for proper investigation. We think the transaction is contradictory with the anti-money laundering law.”
However, she said that three minutes earlier at 11:19 a.m., $19.95 million was already transferred to the supposed account of William Go, which was also discovered later by RCBC to be an unauthorized account.
She said a similar recall message from Bangladesh Bank was read by the settlements department at 11:25 a.m. in relation to the “Enrico Teodoro Vasquez” account. It was also sent to RCBC Jupiter branch.
But she said at 10:24 a.m., $15.216 million from the Vasquez account was already transferred to another account. Estavillo said the receiving account refused to sign a waiver, and therefore hinders RCBC from discussing details of the transaction. At 11:34 a.m., or nine minutes after the message from Bangladesh Bank was received, another transfer from the Vasquez account, this time to Go’s account, was made for $9.76 million.
The third freeze order request from Bangladesh was read at 11:30 a.m. on February 9 pertaining to the account of a certain Christopher Lagrosas.mBut Estavillo said the transfer of funds of $22.7 million was already made from the Lagrosas account to Go’s account on February 5 at 3:16 p.m.
Another transfer of $7.23 million was made to Go’s account five minutes after the bank read the freeze order request at 11:35 a.m.
She noted fhat RCBC could have held the stolen $81 million if only the Bangladesh Bank sent “high priority messages.”
A visibly irritated Guingona scored Bautista for failing to bring to the Senate Philrem’s messenger, Mark Palmares, despite making a commitment during last week’s hearing.
Guingona issued a subpoena compelling Palmares to appear in the next public hearing on the $81-million heist from the Bangladeshi central bank.
“You have been making fools of us. And your credibility is running very, very low,” Guingona told Bautista. “I did not send a subpoena to your messenger last time because you made a commitment that you will bring him over.”
In the April 5 hearing, Palmares was allegedly not feeling well and could not attend the session. In the succeeding April 12 hearing, Bautista again said that Palmares was not feeling well and instead submitted an affidavit bearing the messenger’s testimony.
In earlier hearings, Palmares was alleged to have personally delivered the first tranche of cash to a certain Wei Kang Shu in Solaire casino in the company his employers. The latter presented signed receipts covering the transaction and others that followed.
But testimonies of dismissed RCBC Jupiter Branch manager Maia Santos-Deguito, Wong and Bautista do not tally, Guingona said.
Wong claimed that Wei Kang Xu, the supposed recipient and beneficiary of the cash delivery, was never in Solaire to receive the laundered money. Wong also collected subsequent sums from the Bautistas’s home but his name never came up in PhilRem’s earlier testimony.
Deguito has linked more RCBC officials into the alleged $81 million money laundering scam.
