Philippine mall tycoon faces plunder charge

By Rufi Vigilar

MANILA, Philippines (CNN) -- Philippine shopping mall tycoon Henry Sy is facing a charge for plunder over land-for-shares deals between his companies.

The plunder charge was filed before the government's Office of the Ombudsman, since the case involved three officials of the Bureau of Internal Revenue (BIR).

The case involves the transfer of five land parcels from Shoemart Inc. and SM Investments Corporation for shares in SM Prime Holdings.

The deals allegedly allowed Sy to evade taxes on income and documentary stamps in 1994, amounting to some 5.7 billion pesos ($111.8 billion).

The land parcels in both deals total almost 560,000 square meters in two areas in Metro Manila, where Sy's shopping malls now stand.

According to the complaint of tax informant Danilo Lihaylihay, Shoemart is not a controlling owner nor stockholder in SM Prime and is thus not exempt from the corresponding taxes.

But SM Prime Holdings vice president Jeffrey Lim told CNN that "Shoemart Inc. owns more than 50 percent of SM Prime Holdings."

"The deals qualify as tax-free transactions based on an amended BIR ruling." Lim said.

"We have yet to receive official communication from the Office of the Ombudsman before getting into details," Lim added.

Sy was also accused of understating the value of three of the five land parcels transferred to SM Prime, and that he had increased the company's authorized capital stock without declaring the increase in paid-up capital to the Securities and Exchange Commission.

Special favors were allegedly granted to Sy by BIR officials, according to Lihaylihay.

Deputy Ombudsman Maragrito Gervacio told CNN that a preliminary investigation will take place "only after documented evidence in the case is found to be sufficient."

Sy could be charged "as a co-conspirator" if he is found to have bribed BIR officials to evade taxes, Gervacio added.

Under Philippine law, plunder is a non-bailable capital offense that involves amounts of more than 50 million pesos ($980,000).

SM Prime is a publicly listed company with one of the largest market capitalizations in the Philippine Stock Exchange.

SM Prime's Lim said that the international magazines "Asia Money and Euro Money had voted SM Prime as the best managed company in the Philippines," in their December-January and February issues.