Tobacco Giant Faces Huge Bill

Source from:  THE NATION 09/03/2009

Giant tobacco distributor Philip Morris has been accused by the Department of Special Investigation of breaking local laws by understating the prices of its imported cigarettes - a charge it strenuously refutes. "Philip Morris [Thailand] looks forward to the opportunity to demonstrate to the public prosecutor what has been the case from the outset of this investigation," executive Charonchai Salyapong said in a statement yesterday. "We remain confident that the prosecutor will conclude that Philip Morris' customs valuation practices are in line with international and Thai customs valuation methods." The firm could face prosecution by the DSI, which believes the company's alleged deceptive practices from 2003-2007 caused a loss of nearly Bt69 billion in taxes. Ten Thai executives have been summoned by the DSI to acknowledge the charges of breaching the Customs Act and the Tobacco Act on October 2. The DSI has obtained arrest warrants for four foreign executives who have fled. In his statement, Charonchai said the declared value of Philip Morris' products for customs purpose is consistent with Thai law and the World Trade Organisation Valuation Agreement and valuation methods previously agreed with the Customs Department. He said that since March 2008, the Customs Department has accepted Philip Morris (Thailand)'s declared customs values and thoroughly reviewed the relevant documentation over a period of almost two years. "The DSI's allegations concerning our declared customs values are no different than those first reported in the press in 2006 and we believe they have no merit," he said. The company will continue to cooperate with the investigation to bring this review to a conclusion as quickly as possible, he said. DSI expert Thawatchai Suanseeda submitted 21 cases of evidence to the Attorney-General's Office. The DSI probe covered the imports of Marlboro and L&M cigarettes made in the Philippines from 2003 to 2007. It found that the cost, including insurance and freight (CIF), for L&M was marked at Bt5.88 per pack, though - based on the foreign-exchange rates applied by other importers - the actual CIF should have been Bt16.81. For Marlboro, the CIF was quoted at Bt7.76 per pack, against the actual Bt27.46. In its report to the public prosecutors, the DSI said the firm had understated CIF figures for a long period without realigning the rate to foreign exchange rates. That deprived the Customs Department of Bt68.88 billion in import duty revenues. Apart from Philip Morris (Thailand) represented by Charonchai, other suspects include Paul Richard Dillman Jr, Sira-ek Suntaraphai, Udomsak Riewsanguanwong, Darad Varanakeyoon, Saowalak Aphabergban, Janyanee Visutkulpanich, Suchinda Trairatkeyoon, Thatsom Larpprasert, Varaporn Apisathiensuk, Piyaporn Banchongkit, Ann Marie Kaczorow Ski, Hermann Waldermer, and Matteo Lorenzo Pellegrini. Tawatchai said that aside from the Philippine case, the parties could have committed similar violations through the import of cigarettes from Indonesia from 2000-2002. The investigation into the new case should be completed soon, he added. Enditem