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Analysis

BIR applies Al Capone model on pork scam

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A new front was opened in the widening investigation into the alleged diversion of P10 billion in congressional pork barrel funds intended for public works across the nation into a syndicate of fake nongovernment organizations (NGOs) and foundations when the Bureau of Internal Revenue (BIR) announced last week that it had launched a separate inquiry into the biggest corruption scandal, involving public funds, that has rocked the country over the past 10 years.

The BIR inquiry is centered on whether the purported huge earnings of Janet Lim-Napoles and the JLN Group of Companies, which she heads, were reflected in their income tax returns filed during the past few years.

The probe comes separately from the investigations of the scandal conducted by the National Bureau of Investigation, for its criminal aspects, and the Office of the Ombudsman, an independent constitutional body with oversight functions on disbursements of public funds, thus expanding the scope of the government’s inquiry.

The BIR inquiry embraces the 20 NGOs, which allegedly received funds transferred from the pork barrel of five senators and 23 congressmen.

According to Internal Revenue Commissioner Kim Henares, foundations, or NGOs, are registered with the BIR and issue official receipts, even though they are generally exempted from paying income tax. She said incomes, including those from illegal sources, are taxable under the tax code.

Nevertheless, she said, the BIR would use the net worth method, i.e., earnings that cannot be supported with documents will be considered hidden wealth subject to income and business taxes.

She added that the BIR would also use reports on the racket from various agencies in assessing the tax liabilities of Napoles and others implicated in the pork barrel diversion.

Pandora’s box

The BIR investigation followed a series of articles on the alleged diversion of pork barrel funds to ghost projects of bogus NGOs.

Henares said: “Napoles claimed she had many properties …. If you have many properties there won’t be any problem if you are paying the right taxes …. If what Napoles said is true that these are legitimate income and she paid taxes for it, then there is nothing to fear.” But she did not rule out investigating Napoles’ reported properties in the Uniited States.

If Napoles and her lawyers think that she can easily get off the hook in the income tax examination, they might be deluding themselves, Henares said.

Henares warned that the inquiry could open up a Pandora’s box, leading to criminal prosecution. “We can’t really tell you where we are now and what is going on in the investigation,” she said. “All I can assure you is it’s a comprehensive investigation.”

Napoles has claimed a mouthful in her public statements providing the BIR with plenty of fodder to work. She has claimed that her reported mansions, hotels, upmarket condos and bank accounts came from coal trading.

Al Capone model

The deployment of the BIR in the investigation takes the tack of US authorities who used tax evasion charges as the cutting edge of their effort to send the legendary Chicago gangster Al Capone, alias “Scarface,” to jail for criminal offenses linked to gang war murders related to bootlegged alcoholic drinks banned by the Prohibition laws in the United States during the 1920s.

The evidence on tax evasion came from ledgers detailing moneys received by Capone from his rackets seized by US Treasury agents in raids on one of his hideouts. Accountants set out to scrutinize entries of cash flows from his rackets in gambling, prostitution, liquor and extortion.

Some books on gangland rule by mobsters in Chicago write that when money made its way to Capone, it was almost all in cash. There was talk of many bags of cash in the Capone Florida mansion, most of them at the foot of Capone’s bed.

The other sums were divided among the gangsters, and the rest were put back into running mob operations. Capone was spending a lot of money bribing officials to look the other way on his bootlegging and gambling operations, according to the accounts.

Obviously, the BIR is using the Al Capone model to pin down down Napoles on criminal offences while the NBI is plodding to make a criminal case on pork barrel diversion in transactions mostly carried out in cash.


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Tags: Al Capone , Bureau of Internal Revenue , Janet Lim-Napoles , JLN group of companies , Philippines , pork scam

  • GMGUERRERO

    Filipino politicians are wiser than Al Capone or all of the Mafia. Imelda and Gloria can tutor the Mafia kingpins.

    • KapitanBagwis

      Scammers in the Philippines are not wiser or smarter than Al Capone. Unlike in USA, the hoodlums in robe here can be bought if the price is right. They used the money they stole from the people to buy their freedom.

  • batukan

    hearing and reading the napoles camp including their lawyers statement, isn’t it about time to include lawyers on any punishment for criminals that will be found guilty? These lawyers rather than, helping the law and the justice system at most times tell/help these criminal clients find ways to circumvent the law hence, criminals are hard to prosecute. A law should be passed that lawyers who helped their clients tell lies and ‘tall tales’ should also be meted prosecution equivalent to at least half of the sentence given to proven guilty clients.

    • lolo_Jose

      tama ka apo, at halimbawa nahatulan ng guilty si napoles dapat parehong parusa sa abogadang si kapunan, para mabawasan ang mga sinungaling na mga abogado sa pilipinas!!!

  • koolkid_inthehouse

    PDI has almost documented all about this scam and still nobody was charge or assets frozen.
    WTF is going on?

    • http://www.yahoo.com JOSE RIZAL

      Nope, I beg to disagree. One can read in between the lines…and it all boils down to tabloid gossip type reporting, connecting the already drawn (by oligarchs) dots to come up with the picture… If it is, indeed, well documented and that documents, if any, can stand under the scrutiny of the competent dignified court of law, then the investigating body (NBI) would use them as fool-proof evidence and not just doing the signature de Lima yellow media stunt…
      I bet these whole PORK scam, if any, cannot be done by someone alone without the blessing of the Dept of Budget and other government authorities…
      The problem is that Napoles is the weakest link…hahahaha!

      • koolkid_inthehouse

        Are you telling me PDI is investigating and NBI/DOJ waiting in the sideline? Any PDI produced evidence thru investigative journalism is being gathered up by the NBI and will be used later in the court of law?

        Why not the government pay PDI for their jobs well done?

      • http://www.yahoo.com JOSE RIZAL

        It is what you’ve digested. And no one is “telling” you how you would do it.

      • koolkid_inthehouse

        dumb donkey spreading donkey manure

      • http://www.yahoo.com JOSE RIZAL

        Do you now see what I meant?
        Hahahahaha!

  • http://www.yahoo.com JOSE RIZAL

    But no one wants to make it public the whole oligarchs siphoning of govt funds thru onerous contracts on public utilities and other govt concessions…It is the mother of all scams since the time of Marcos. The difference between now and Marcos time is that Marcos cannot be outsmarted by the oligarchs. He proves himself that he is in control. But nowadays, the oligarchs are, indeed, in control…making the current admin an oligarch puppetry…media-trigered hypes and spins are here and there…thanks to the oligarchs financiers…
    Hahahahaha! Siphoning of govt funds are worst at oligarchy. I would prefer good dictatorship…

  • http://www.yahoo.com JOSE RIZAL

    How to siphon the wealth of the country 101:

    1) Be an oligarch (the first level of corruption food chain) and control all the public utilities contract/govt concessions by financing top politicians, senior generals and the media and make an onerous contracts. Make a media spin that the govt cant run business and take-over (e.g. the Phil Ports Authority, Privatization of National Funded Hospitals, Privatizations of Large GOCC’s);

    2) If you’re not an oligarch, but on the second level of the “corruption food chain”, make friends with all top senators and congressmen/women, create a bogus foundation/non-stock nonprofit organization that would siphon the PORK and other business dealings to get the PORK. Make sure that the Dept of Budget and other gov’t organizations, that has something to do with the screenings of the beneficiary foundations, have that “significant cut” upon the release of it. But this level of the food chain is vulnerable to attack by media (if the 1st level of corruption food chain thinks that you have eaten almost all of the resources — if your dealings are in billions). Just make sure you remain something for them;

    3) Enter into dealings with C us t o m s bribery, NFA (thru illegal sourcing of rice and rice hoardings), and other Dept/Agencies;

    5) Enter into dealings with the L G U’s so that your line of dark businesses, w/c do not have that national impact, would not be hampered (e.g. illegal loggings, business permits on real estate with no proper clearances, etc)

    And I can go on and on and on.

    Hahahahaha! Gets na ba?

  • disqus_EWrSdjV1nv

    KAY BILIS NAKUHA ANG BANK ACCOUNT NI CORONA NUNG PANAHON NYA. BAT HINDI PA NAKUKUHA ANG MGA BANK ACCOUNTS, SALN AT LAHAT NG DOKUMENTO NG MGA INVOLVED.
    MAKUKULONG NYO BA SI ENRILE? OBVIOUSLY NOT. :)

  • Pablo Juan

    Alam ko na ang response ni Napoles.. “hindi po ma’am. sa ano ko po yan na ano…”

  • coladu

    With all the links and the pieces of evidence already uncovered, finalizing is what is being awaited. Will the agencies concerned finalize their work or will they not is what we will need to watch out for. If they are afraid to do this, they may want to give the assignment to the SGV and Punongbayan CPAs and the Integrated Bar of the Philippines to do the work for them.



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