$171b rice smuggling payoff in the Philippines unveiled

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A general view of newly planted rice seedlings is seen at a rice field in Gloria, Oriental Mindoro in central Philippines November 28, 2013. A Goliath in rice smuggling has cornered the trade in this grain by plying officials and rank-and-file employees with cash gifts that have amounted to 6 billion pesos (US$135 billion) over the last two years.

MANILA - A Goliath in rice smuggling has cornered the trade in this grain by plying Philippine Bureau of Customs (BOC) officials and rank-and-file employees with cash gifts that have amounted to 6 billion pesos (S$171.25 billion) over the last two years.

A former BOC official, who spoke on condition of anonymity, said one of the main challenges facing the new management at the bureau was whether it would dismantle the network built by a certain "David Tan" who was designated as point man when rice-smuggling transactions were centralised two years ago.

"David Tan operates behind various brokerage firms. If you want to bring in rice without paying the right taxes, you have to go through him because the BOC officials deal only with him. The BOC officials do not entertain any other rice smuggler except Tan," said the source, who described the rice smuggler as "young and with deep connections in rice exporting countries in Asia, especially Vietnam."

"They called these special operations or palusot because the rice shipments had no documents or import permit. After David Tan informs his connections where his shipments are arriving, the smuggling network goes into motion, from those who sign the papers to those who open the exit gates in the ports," the former official said.

It was not clear whether "David Tan" was the same as "Mr. T" who, according to a new BOC official who talked to the Inquirer last week, was one of three big traders whose under-the-table deals with corrupt examiners, appraisers and other frontline personnel at the bureau were the cause of the agency's failure to meet its revenue collection goals.

The new bureau official referred to the other two big traders as "Big Mama" and "Ma'am T."

Old-timers in the BOC told the Inquirer on Monday that there was no reason to go after "Big Mama," "Ma'am T" and "Mr. T" because the papers of the three traders "appeared to be in order."

The case is presumably the same with "David Tan."

The former BOC official said the scheme involved at least two top bureau officials (who get 10,000 pesos to 20,000 pesos each per container), at least one major port official (5,000 pesos to 10,000 pesos per container) and more than a dozen desk employees whose signatures (1,000 pesos per container) were needed in the release papers of the smuggled rice.

He estimated that Tan brought in an average of 1,000 TEU or 6-meter equivalent unit containers a week (a container can load 510 cavans of rice) or a weekly take of 37 million to 62 million pesos.

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