10 Biggest Accounting Scandals in Recent Years in The Philippines

By the time you finish reading about the biggest accounting scandals in recent years in the Philippines, you will be aware of the other side of the medal when it comes to this country. Usually advertised as the tourist paradise, the Philippines have a darker side, too. There is a lot more going on in these 7,000 islands than meets the eye. If you are keen on accounting, bank, and big companies’ financial scandals, you may have already read our article on 10 biggest recent accounting scandals in UK. Let me assure you, most of Philippines scandals have nothing in common with the British ones.

This archipelago has a long and interesting history. Ever since Magellan put his step onto one of its islands, there had been trouble. Poor Filipinos were striving for freedom for centuries until it finally came in 1946. Again, similar to other societies who were craving freedom, when it finally arrived they had a rough time organizing; the country also had a dictator in the past. We are taking a glance at history to point out the fact this is a relatively newly stabilized country and an ex-colony. Having said that, we can observe it has all the problems of an ex-colonial country: low incomes, high corruption levels, a market very suitable for foreign investment, and small gullible local investors. Accounting incidents from our list brought us to this conclusion. They are a good parameter for the country’s actual state. To give you an even clearer picture, let us compare them with the USA. Firstly, the national currency is PHP, Philippine Peso. One PHP is almost 20 cents, which means that you would get 50 Philippine pesos for one dollar. The gross national product of the USA is 63 times higher than the Filipino’s. It is no wonder why so many Filipinos are seeking jobs outside their own country, and it is the country itself that is enticing them to do so. Apparently, overseas remittances are a valuable asset to the Philippines economy, as confirmed by Philstar.

Hopefully, this data has given you a clearer image of this above all wonderful country (and we are not saying that just for the sake of tourism).

As for the largest financial incidents that occurred in the recent years in the Philippines, it comprises various frauds and scams. There are tax evasions, pyramid or Ponzi scams, even a hackers’ attack which has been the most prominent nowadays. Filipino’s Securities and Exchange Commission has its hand full when it comes to investment companies. There are so many of them it is hard to differentiate the real ones from the unscrupulous deceivers. The proper information is hard to find, but we managed by consulting with Marvin Germo, Finance Manila, Philstar, Inquirer, CNN Philippines,  World Socialist and the good old Forbes. Apart from the latest incident with Bangladesh, all the other data is scarce, which justifies why the archipelago is a heaven for Ponzi schemes and fake investors. But we are getting ahead of ourselves.

The criteria the financial affairs are listed is the amount of money which was/is in question. The order of financial crimes corresponds to the amount of money which was illegally obtained, or on one occasion, almost obtained. That was the main criteria, while the years are given to justify the “recent” in our headline.

Without further ado, here are the 10 biggest accounting scandals in recent years in the Philippines.

10.  Five Businessmen Tax Evasion

Amount: $3.3 million

Year: 2015

The Bureau of Internal Revenue (BIR) accused Lebite, Purdura, Sano, Core, and Stardent for avoiding paying taxes. The enterprises come from various economy areas, from sales of general merchandise to port terminal support services. Obviously, the owners had one thing in common.

9. Royal Manchester Five Trading Corporation (RMF) Pyramid

Amount: $4 million

Year: 2008

This is the first of the pyramid schemes to encounter on this list of biggest accounting scandals in recent years in the Philippines. How does it work? It is a rather simplistic, but eventually unfair principle. A company, such as this one, promises to deliver its investor a certain amount after the defined period. How does he/she get the revenue? By asking friends, relatives, acquaintances to join in and invest. The company initially is able to provide regular payments to its investors. However, this course of action must come to an end since it is practically impossible to sustain forever. It usually lasts for a couple of years at best until the founder(s) takes what money is left (usually a very high sum) and flees the country. Fun fact: such companies usually have an eye catching and appealing names.

 

8. Legacy Group Scam

Amount: over $9 million

Year: 2008

This “swindling syndicate” contributed to the collapse of 12 rural banks and 3 pre-need companies. Late Celso Delos Angeles was behind it all (no angel there, that’s for sure). Once again, another money grabbing “hybrid five years” scheme was introduced and lured the naïve Filipinos to “invest” their money in a program which was to ensure their financial future. Now, let’s see what else we have on the list of biggest accounting scandals in recent years in the Philippines.

7. Franc Swiss Fraudulent Investments

Amount: almost $20 million

Year: 2007

One more HYIP, or a high-yield investment program that went completely wrong for the ones who trusted it. It offered 4.5% interest per day for 60 days on a minimum investment of $1,000. Far from being modest, Franc Swiss promised to make millionaires from its unsuspicious customers. The headquarter was actually located in the States, in Utah. The same ending as for the other ones. The website crashed along with the shattered dreams of getting rich quick for the customers, and the founder.

6. Manny Pacquiao Tax Evasion

Amount: $75 million

Year: 2014

Just when you were getting bored of all those (un)believable schemes and frauds, here is a celebrity in the list of biggest accounting scandals in recent years in the Philippines. Manny Pacquiao was a boxing champion with senatorial ambitions. He has won world championships in eight weight classes, a fact which is beyond impressive. In a nutshell, he used the fact that he had some fights in the USA as an excuse for not paying the taxes neither to the Philippines government nor to the US. For his country, he argued that the fights were abroad. As for the IRS, his arguments was that he is not a US citizen. The Bureau of Internal Revenue was not too happy with the explanation, and neither was the IRS, which led to BIR to sue Filipino’s favorite athlete for $75 million.

5. Bangladesh Bank Hacking Scandal

Amount: $81 million

Year: 2016

This amount represents the sum which ended up at the Philippines. Chinese thieves hacked into a server of Bangladesh Central Bank (!) and actually tried to withdraw $951 million which now makes it one of the biggest accounting scandals in recent years in the Philippines. Fortunately, their plan failed. The $81 million went to four accounts of RCBC, a commercial banking corporation. This crime was mostly covered by the media since a country was being robbed, not just a random individual. The attempted crime did come with prospective consequences for the Philippines market since it appears unreliable with having such a large sum transferred onto their accounts. It created a really bad image for them, to say the least.

4. ZTE-NBN Network Bribery Case

Amount: $197 million

Year: 2008

The above number stands for how much the contract with the Chinese government was overpriced. Naturally, the money was intended to go to the criminals’ pockets. ZTE stands for Zhongxing Telecommunication Equipment Co., a Chinese government-backed corporation, and it was supposed to develop a nationwide broadband network (NBN). The whole deal’s worth was $329.4 million. In short, something went wrong with the plan and suspicions arose when the contract mysteriously vanished into thin air just one day after it was signed.

3. PDAF Pork Barrel Scam

Amount: over $197 million

Year: 2013

And now, for some politics on our list of biggest accounting scandals in recent years in the Philippines. The Priority Development Assistance Fund scam, or PDAF scam, is a political scandal involving several members of the Congress and Senate. PDAF is a fund originally intended to be spent on government priority development projects. However, a businesswoman Janet Lim Napoles had her well-being in the first place and robbed the government of some P10 billions of taxpayers’ money.

2. PIPC Ponzi Scheme

Amount: $250 million

Year: 2007

We are slowly getting to the top of our list of biggest accounting scandals in recent years in the Philippines, and here it is again. As we have mentioned before, the Philippines are a Mecca for pyramid and Ponzi schemes. Different types of people fall prey to them: farmers, the well-educated, athletes, experienced businessmen etc. The dream of getting rich quick is something most Filipinos believe to be possible and deserved.

1. Aman Futures Pyramid Scam

Amount: $295 million

Year: 2013

This is officially the biggest rip off in our list of biggest accounting scandals in recent years in the Philippines. The huge sum was collected by duping some 15,000 people. Its owner fled the country, naturally, but was later arrested. How did he do it? Manuel K. Amalilio promised a return of their investment within eight days and a 50 percent to 80 percent profit for 17 to 20 days. Among those 15,000 victims, there were farmers, drivers, overseas workers, but also politicians and government employees. Ironically, some of them were police officers. Actually, it was them who first filed a complaint against Aman Futures and caused the project to finally crumble.