Mighty row brewing in the Philippines

Philip Morris Fortune Tobacco Corp. (PMFTC) wants the Philippines government to take action against Mighty Corp. after the publication of a report by the Senate Tax Study and Research Office (STSRO) alleging ‘evidence of systematic and endemic fraud’ by Mighty, according to a story in The Philippine Star.

In a briefing on Friday, PMFTC president Paul Riley alleged the key findings by the STSRO confirmed suspicions of fraudulent activities by Mighty.

“A great deal of what we have suspected for a long time now is finally out in the open,” Riley was quoted as saying. “The STSRO uncovered several pieces of evidence that shed light on Mighty’s ability to sell all their products below tax and cost for almost 18 months now, while still enabling them to stay afloat.

“This remarkable, and I would contend explosive report, offers what was highlighted by a member of Congress as evidence of systematic and endemic fraud. The evidence may potentially expose Mighty to very serious liabilities as a consequence of the various practices discovered by the STSRO.”

But Mighty’s executive vice-president Oscar P. Barrientos rebutted the findings, which he said were preliminary and still subject to validation by the Congressional oversight committee.

“It is inaccurate and unfounded,” he said. “Let’s just wait for the official records and the truth will set us free. The committee has asked government agencies like the Bureau of Internal Revenue to submit official data to ensure fairness.”

In its report, the STSTRO alleged that Mighty had been undervaluing the cost of tobacco and imported raw materials to evade customs duties and import value added tax.

The STSTRO alleged that Mighty had been using imported materials to make products for export but diverting these products to the domestic market without paying duties and taxes.