CDO faces Php 1.1B Smuggling case

An April 14, 2011 press release prepared by the Department of Finance
Fact Sheet/ April 14, 2011
Office of the Commissioner
Bureau of Customs

Subject: BOC files Php 1.1B smuggling case vs. makerrs of CDO food products
1)   The Bureau of Customs filed today a Php 1.1 billion smuggling case against meat processing firm Foodsphere, Inc. for undervaluing its buffalo meat importations from India by more than 32 percent.
2)   Foodsphere ,  the company behind such popular processed and canned  brands as CDO Karne Norte and Samba Corned Beef is  a leading  supplier of meat toppings to nearly all quick service restaurants in the country.
3)   Charged were ROLANDO JUAN CRUZ, Assistant Vice-President for Finance of CDO-Foodsphere Inc. and ROMEO G. LERIT, a customs broker based in Escolta, Manila. Also included in the charge sheet were several John Doe/s and Jane Doe/s who participated directly or indirectly in the release of subject shipments.
4)   Customs Commissioner Angelito Alvarez accused Foodsphere Inc. located at 560 West Service Road, Paseo de Blas, Valenzuela City of declaring a per kilo value of only US$1.50 (P66.00) for the 8,964,600 kilograms of buffalo meat it brought in between October 2009 and March this year.
5)   Alvarez said Foodsphere’s gross undervaluation attracted the attention of customs investigators because it was only slightly higher than the price of a half a kilo of galunggong.
6)   Other meat importers, disclosed Alvarez, declared a per kilo value of US$2.58 (P113.52) for similar imported products they sourced from the same supplier within the same period.
7)   According to Customs Deputy Commissioner Gregorio Chavez, concurrently the executive director of BOC’s Run-After-The Smugglers (RATS) Group, Foodsphere declared a combined dutiable value of only Php 675,740,705 for all its 207 buffalo meat import entries when the correct dutiable value was Php 1,094,124,221.
8)   As a result, the company paid only a nominal amount of Php 67,574,071 in customs duty when in fact, it should have been assessed Php 109,412,422.
9)   Chavez alleged that the respondents used falsified invoices to support the gross undervaluation of their various importations.
10)       Less the Php 67,574,071 the company paid based on its fraudulent declarations, the total amount the government lost from the respondent’s fraudulent declarations was Php 41,838,351.
11)       BOC’s position, however, was that it was not enough to simply require the respondents to pay the correct duties and taxes plus penalties and surcharges.
12)       Chavez said the proper restitution should be equivalent to the sum of the dutiable values of the entire 207 import entries totaling Php 1,094,124,221.
13)       Alvarez instructed the agency’s Post Entry Audit Group (PEAG) to check all importations made by Foodsphere before October 2009 to determine if the same scheme of deception was used by the company in the past.
14)       The customs chief also instructed Chavez to file as soon as possible an amended charge sheet that would include the names of brokers and customs employees who aided and abetted the fraudulent importations of Foodsphere.