Another kick at the Chingkoe can

Repeatedly thwarted by Canada in its attempts to extradite a Richmond couple wanted in the "highest profile case" of its kind in the Philippines, the Philippine government is tapping its tax treaty with Canada to bring home the alleged masterminds of a controversial tax credit scam of more than a decade ago.

According to documents obtained by The Filipino Post, Manila has dusted off the 1976 Canada-Philippines Income Tax Convention in an attempt to again try to extradite Faustino Chingkoe and Gloria Chingkoe, primary suspects in an elaborate scam that defrauded the Philippine government of more than $75 million.

And according to the Canada Revenue Agency, Manila's novel ploy may well work.

• • •

The Chingkoes – who reportedly own a million-dollar executive home and four expensive strata properties in Richmond, British Columbia – are currently facing 83 criminal cases in the Philippines, in addition to cases filed against them with the Philippine Office of the Ombudsman which include plunder, falsification of public documents and grave misconduct involving four textile companies and as many as 60 subsidiary companies.

The cases stem from an infamous tax credit scam the Chingkoes allegedly masterminded between 1995 and 1998 in their native Philippines.

The Chingkoes – whose three daughters were privately educated at Vancouver's exclusive Crofton House university-preparatory school – allegedly sold to other companies tax credit certificates they obtained from the Philippine government through fraudulent means. Those other companies then used the bogus credits to meet their own tax obligations.

Both dual Philippine-Canadian citizens, Faustino Chingkoe is currently a frequent flyer free on bail as the anti-graft and corruption cases against him grind on into their second decade back home, while Gloria has reportedly not returned to the Philippines since charges were first lodged against her in 2001.

• • •

A first attempt by the Philippine Department of Foreign Affairs to extradite Gloria Chingkoe in 2003 faltered on Ottawa's stringent requirements on documentary evidence, a common complaint from Canada's extradition partners in Asia, where legal procedures do not necessarily mirror those of Commonwealth countries like Canada.

But the Philippines' Bureau of Internal Revenue (BIR), a division of the country's Department of Finance, believes it has found another way of getting the Chingkoe couple extradited to face justice in the Philippines.

Under the Canada-Philippines Income Tax Convention, either government may ask the other party to extradite citizens if there are sufficient reasons to suspect they have unpaid taxes.

Because of their dual citizenship, Philippine BIR Deputy Commissioner Gregorio Cabantac says the Chingkoes "may declare income and pay taxes in either country."

According to Cabantac, the Chingkoes most certainly did not declare their income from the sale of those long ago fake tax certificates in the Philippines.

• • •

In fact, to bolster its latest kick at the Chingkoe extradition can with Canada, The Filipino Post has learned that the Philippine BIR has just this month filed 26 counts of tax evasion against the Chingkoes, citing the respondents alleged failure to disclose their earnings from 1995-1998.

Citing the longstanding tax treaty, Manila now wants to know if the Chingkoes declared their multi-billion-peso income for that period with Canada's taxman.

In a letter obtained by The Filipino Post, Philippine Commissioner of Internal Revenue, Lilian Hefti, cites "our income tax treaty" in a request for assistance from the Canada Revenue Agency's International Tax Office.

In the three-page document, Hefti asks for "assistance in obtaining information which (is) vital in strengthening evidence for the filing of tax cases against the aformentioned (Chingkoe) spouses."

Hefti wants to know:

• if the Chingkoes are registered taxpayers in Canada

• if they declared their multi-billion-peso income from 1995-1998 in Canada

• if Ottawa can confirm ownership of the four Chingkoe properties in Richmond

• if there are available business records under the Chingkoe names

• if Ottawa can provide income tax returns and other tax returns filed by the Chingkoes

• if Ottawa can provide tax documents in relation to the Chingkoe's Richmond properties

"We have information that part of the proceeds of the illegal sale of the fraudulently obtained tax credit certificates were diverted by the spouses Chingkoe to Canada and were used by them to fund certain business transactions and to purchase properties in the same foreign state," Hefti continues, in the letter dated July 22, 2008.

If Revenue Canada were to find that the Chingkoes have not been declaring income in Canada, BIR Deputy Commissioner Cabantac said he believes that the Canadian government may be convinced to have them extradited to the Philippines to face tax evasion charges.

• • •

Citing the confidentiality provisions of Canada's Income Tax Act, the Canada Revenue Agency said it could not discuss the particulars of the reinvigorated Chingkoe case.

But CRA communications manager Bradley Alvarez told The Filipino Post: "Tax laws can be used to extradite people, and they have been."

Alvarez referenced a case last year in which UK citizen Stanley Nisbet was extradited to Canada on fraud and income tax evasion charges involving clients he engaged on B.C.'s Sunshine Coast during a decade spent working in Canada before returning to the UK in 2004.

"He was escorted by the RCMP and he's now in jail here," said Alvarez.

However, stressed Alvarez, the Canada Revenue Agency is not in the business of executing extradition requests from requesting nations.

"Ours is a consultancy role only," he explained, adding it is up to Canada's Justice Department and ultimately the federal Department of Foreign Affairs to grant or refuse extradition requests.

• • •

Felix Chingkoe, who turned state's witness against his brother (whom he alleges transferred $40 million of the $75 million he allegedly stole through "middle persons" to Canada and Hong Kong) told The Filipino Post that, "the offensive against Faustino and Gloria is a good sign that somehow the Philippine government is doing something at last."

Felix maintains that he was "booted out" of the Chingkoe empire in 1994 by his older brother, whom he says accused him of engineering the tax scam.

He claims his brother owes him 500 million pesos (about $12 million Cdn) and Felix is now working closely with the Philippine government in its ongoing cases against the Chingkoes.

"Whether or not (the tax treaty extradition) will go places is something we will just pray for," he added.

Felix said he is concerned that Ottawa will not "act firmly" on the request, and simply shrug off the Chingkoe's failure to file the proper taxes in Canada.

"If proven they did not pay the correct taxes, then the Canadian government should file a tax evasion case against them also," he fumed, adding Canada "should not cuddle these fugitives."

• • •

Dr. Gary Botting, a B.C.-based author of two textbooks on extradition, told The Filipino Post that in taking another kick at the Chingkoe extradition can through an aging tax treaty, the Philippines may actually be opening up a can of worms.

"It sounds like a clear-cut case of disguised extradition to me," said the famed lawyer. "As long as Canada and the Philippines have an extant extradition treaty (however flawed), extradition should be the vehicle to be used in sending alleged criminals back to face justice."

Key to this case, added Botting, is the fact that Faustino and Gloria Chingkoe are Canadian citizens and as such, are afforded the protection of Canada's Charter of Rights and Freedoms.

Canada, he added, does not remove, exile, deport or extradite its citizens except for very good and extraordinary cause.

• • •

Ottawa has yet to respond to the Philippines' tax treaty extradition ploy against the Chingkoes, who live free and comfortably in suburban Richmond.