More than 900 individuals and companies linked to the Philippines have appeared in thick files on offshore accounts leaked from unnamed finance providers, which journalists from 117 countries recently investigated, according to the International Consortium of Investigative Journalists (ICIJ).
The report for the country, produced by the Philippine Center for Investigative Journalism (PCIJ) and Rappler, features the offshore companies linked to more than 35 Filipino politicians, contractors, bankers, and business professionals.
Their profiles are based on a cache of leaked documents from offshore service providers, namely, Trident Trust, Commence Overseas Limited, Overseas Management Company Trust Limited, Asiaciti Trust, and Alcogal.
The documents were shared with PCIJ and Rappler by ICIJ, which led a global investigation with more than 600 journalists in 117 countries.
PCIJ and Rappler found more than 940 individuals and companies with Philippine addresses in the leaked files.
“We sifted through hundreds of emails, documents, and corporate records and selected names that were in the public interest. There are legitimate uses of offshore companies, and we do not intend to imply that all of the individuals or companies included in this page were in violation of the law,” PCIJ and Rappler said.
The two agencies said they sent requests for comment to all those on the list. The answers they received are included in the profiles.
On a global scale, the Washington, DC-group found that fugitives, con artists, murderers, and world leaders used offshore accounts to hide wealth and buy properties – in the report it called the “Pandora Papers” which it said “reveal the inner workings of a shadow economy that benefits the wealthy and well-connected at the expense of everyone else.”
An extremely small number of these accounts are tied to big businesses with legitimate sources, and whose reasons for moving and keeping their wealth overseas may indicate how the Philippine financial system has been slow on reforms, the journalists said.
They added that the rest of the Philippine-linked accounts are mysterious at the very least.
Another page found in the investigation was that a high-ranking Cabinet official in the Duterte administration, Transportation Secretary Arthur Tugade, has his name listed as keeping an offshore firm off the business list.
Despite repeated attempts by the PCIJ and Rappler to send questions to Tugade, neither he nor his staff had responded as of press time.
PCIJ and Rappler quoted a former finance undersecretary as saying that since the Philippine government taxes resident citizens on worldwide income, the Bureau of Internal Revenue should be investigating if Tugade’s British Virgin Islands firm has undeclared earnings.
Tugade has been keeping an offshore company while he occupied government posts in the last eight years, but didn’t declare it in his list of businesses, as required of public officials, PCIJ and Rappler said.
Also cited in the Pandora Papers is businessman Dennis A. Uy, who donated P30 million to Rodrigo Duterte’s presidential campaign in 2016 and was later appointed presidential adviser for sports.
Uy has also been serving as honorary consul to Kazakhstan since 2011,
PCIJ and Rappler said, but also has not responded to their requests for comment.
Under the Constitution and the Code of Conduct and Ethical Standards for Public Officials and Employees, the failure of government officials to declare their assets, including business interests and financial connections is an administrative and criminal offense.
Other prominent Filipinos uncovered by the investigation include former Presidential Commission on Good Government and Commission on Elections chairman Juan Andres Bautista and business leaders Jose Carlos Reyes Antonio, Joselito “Butch” Campos Jr., Helen Y. Dee, Rolando C. Gapud, Oscar J. Hilado, Enrique K. Razon Jr., Peter Y. Rodriguez, Elmer B. Serrano, and Delfin J. Wenceslao Jr.
The business families of Aboitiz, Gaisano, Gatchalian, Olivarez, Sy, and Tantoco were also cited in the report by PCIJ and Rappler. It also cited Monte Oro Resources & Energy Inc., a corporation wholly owned by Apex Mining Co. and where Dennis Uy and Razon are also stockholders, among others.
Bautista, Antonio, Campos, Gapud, Hilado, Rodriguez, the Gaisanos, the Gatchalians, and Monte de Oro have replied to PCIJ/Rappler, while Wenceslao passed away last Sept. 22 and the rest have not yet replied to queries for comment.
ICIJ, which led 140 media outlets in 117 countries in this latest investigation on offshore accounts, said: “Some individuals, who are either previously unheard of in elite circles or never found in legitimate databases, turned out to be the beneficiaries of multiple accounts but the purpose of many accounts could not be ascertained.”
Rappler and PCIJ analyzed all names and companies from documents collectively known as the Pandora Papers.
“We found very little information about the persons with the most links to offshore accounts found in the documents from ICIJ,” PCIJ said but asked readers to check the complete list in their news link.
Details were scant to be able to identify the purpose of 259 offshore companies, while at least 282 names from the list could not be linked to registered or active companies.
While Rappler and PCIJ do not necessarily imply that illegal transactions were done through these companies of unknown individuals, they raised questions on the purposes of keeping these offshore.
There was no immediate reaction from Philippine government authorities on the report, which coincided with the week when candidates for national office were filing their certificates of candidacy for posts in the May 2022 elections.
“It is legal for Filipinos to set up offshore accounts. These companies, however, operate in various shades of gray areas that are worthy of scrutiny from regulators,” PCIJ and Rappler said.
The media groups said a corporate lawyer, who spoke on condition he would not be named but claimed to have wealthy clients, acknowledged in an interview that companies in so-called tax havens attract both high-net worth individuals and criminals.
For one, the British Virgin Islands is an established favorable taxing jurisdiction. While the Philippines has recent laws which reduced estate and income taxes, the British Virgin Islands still has significantly lower rates.
“We have this client, she’s a matriarch, she owns shares of high value. Now, her concern is that she does not want to burden her children and grandchildren with taxes related to inheritance. I think the tax could reach P30 million. What if you’re rich but not liquid?
Where will you get that money just to inherit the shares?” the lawyer explained.
“So, I advised her to establish a trust, because, when those shares go into the trust, the trust will hold the shares for the benefit of your children… and effectively cut what could have been perpetual taxes once it goes down to the grandchildren and their children. That saves a lot of money,” he added.
For another, the British Virgin Islands is very lenient when it comes to disclosure of ownership of companies. BVI companies can help in “layering” one’s wealth so as not to attract “too much” attention, PCIJ and Rappler said.
The lawyer, however, admitted that these functions operate within gray areas that corrupt individuals can abuse.
“It’s not wrong per se, but, like all other things, it can be used for bad purposes. For example, if you’re a politician who got kick-backs, then you have lodged your funds here in the Philippines, it’s quite possible that the bank secrecy can be lifted during a litigation.”
“But if you lodge it abroad, it would mean that the court may have to ask for cooperation from that country, that company or bank – that’s a lot of steps,” the lawyer said.
PCIJ and Rappler said they reached out to the business executives they were able to identify from the list, but were told their offshore companies were either created for business deals or for cost and tax efficiency. Some remained dormant and were not used at all.
Moreover, corporate lawyers PCIJ and Rappler spoke with stressed the rich had every reason to move their money out, as the Philippines’ laws “unnecessarily” tax wealth several times over.
“While there have been reforms, the tax laws need to be improved further,” a corporate lawyer said.
Most importantly, moving assets abroad also provides some security for their legally-acquired wealth.
Then PCIJ and Rappler asked: “With the mix of the good and the bad operating within the BVI (British Virgin islands) system, how does one tell which account holds dirty money?”
“There really is no clear way,” said another corporate lawyer, who also wanted to remain anonymous so as not to “alarm” his high-profile clients.
“I have a client whose child was almost kidnapped because of their perceived wealth. Setting up an offshore account hides their money in a legitimate way from people who have bad intentions, while also keeping it accessible whenever they need the liquidity,” the second lawyer said.
Ex-BIR Commissioner Henares shared this view, saying prominent names on the list may “not be an issue,” as these individuals could easily justify their wealth.
“But if a name does not come up on Google, but has lots of offshore accounts,” the second lawyer said, “I simply ask: What are you doing there?”
After careful investigation, Rappler and PCIJ found that the purpose of the majority of the offshore companies linked to Filipinos on the Pandora Papers are unclear.
Moreover, the secrecy of the offshore system makes it impossible to distinguish which are tied to legitimate sources and which come from criminal activities.
ICIJ also pointed out that even legal transactions have to also be put into question. For instance, profits of businesses from high-tax countries are transferred to companies that only exist on paper in tax havens.