Oilink

AN ANONYMOUS tip from a disgruntled employee. That, according to the Bureau of Customs, sparked its investigation into alleged smuggling activities by key executives of Oillink International Corp., a major supplier of oil products to the country’s independent oil players.

In the complaint for tax evasion it filed with the Department of Justice, the BOC accused Oillink of falsifying its records to evade payment of P700 million in duties and taxes for oil importations in 2004.

Customs Commissioner Angelito Alvarez said the BOC would also look into the company’s other importations to determine if similar tax evasion activities have been committed.

Whenever I read about people in the private sector disclosing adverse information about the activities they were once involved in, the first question that crosses my mind is: What is the motive behind the action?

Was the whistle-blower spurred by “love of country?” Or did reasons other than altruistic spur him to turn his back on his former colleagues?

If it was for patriotism’s sake, fine. He should be commended for living up to the ideals of good citizenship.

But the reality on the ground is, these so-called “seeing the light” incidents are often the result of frustration, envy or professional jealousy. To paraphrase a famous saying, hell has no equal to an employee scorned.

Consequences

Don’t get me wrong. I have nothing against people who spill the beans on their company or fellow employees that could redound to the country’s benefit in terms of additional taxes or prosecution of the guilty.

Never mind if the motivating factor was less than noble or based on greed, like, being left out or getting only a small slice of the promised pie. What matters is the net result of such action to the public.

It takes a lot of guts for a person to provide inside information to the authorities that could lead to the imprisonment of the people he once worked with or whose table he may have shared on several occasions.

The action would inevitably lead to the dissolution of social or inter-family relations that were built through the years. Worse, when millions of pesos are in play, the adversely affected parties may not be inclined to use gentle means to get even with their detractor.

The intensity of the recrimination or desire for revenge increases by several notches if the parties involved are members of the same family or have been associated with each other, socially or politically, for ages.

And once the whistle is blown, there is no assurance that the whistle-blower will not be caught in the maelstrom that his action may have caused.

Illegal acts

Sometime in 2007, an American employee of Switzerland’s biggest bank, UBS, turned over to the US Department of Justice documents showing that the bank assisted thousands of American depositors in illegally hiding their money in its coffers.

As a result of this revelation, the authorities sued UBS in a US court and sought the issuance of an order to compel the bank to disclose relevant information about those deposits.

Scared by the prospect of being held criminally liable, UBS entered into an agreement with the US authorities that, in effect, blew open the much-vaunted confidentiality of Swiss bank deposits.

This development resulted in the rest of the safe banking havens based in Lichtenstein, Cayman Islands and other exotic places into doing something similar under pain of being accused of money laundering and blacklisted in the international banking community.

So you think the whistle-blower was declared a hero for initiating the action that practically turned upside down tax haven banks?

No! Instead, he was tried and found guilty of abetting tax evasion and sentenced to 40 months in jail.

Under our laws, widely held companies and companies whose shares are listed on the stock market are required to maintain internal procedures that partake the nature of “internal whistle-blowing.”

The task of ensuring that the company keeps at the right side of the law rests, depending on the nature of itsbusiness, on its compliance officer or external auditor.

As its name denotes, the compliance officer is responsible for seeing to it that the company complies with the rules of the regulatory agencies that have supervisory responsibility over its operation.

If violations are found, he is obliged to report them to the board of directors and recommend the imposition of disciplinary action on the responsible parties, including the measures that should be adopted to prevent a repeat of the violations.

A similar function is given to the company’s external auditor who, in the course of his review of its financial statements, is required to bring to the attention of the audit committee (if there is one) or, in its absence, to the board of directors any act that appears to contravene the rules and regulations that apply to the company.
If any of these systems is in place and properly functioning, no corporate whistle-blowers are needed to make private companies toe the line.