Philippines: TI’s CSR activities are a cheap white-wash

12 April 2017:

The second largest tobacco company in the Philippines, Mighty Corp., is currently under investigation by the Department of Finance for massive tax evasion and fraud. According to the Philippines Bureau of Inland Revenue, in just one case filedso far the tax evaded is worth P9.6 billion (US$193 million).

The Secretary of Education described what this amount of money can actually pay for:

  • Build 7,600 classrooms for grade and junior high school students, or 3,800 buildings for senior high school students; or
  • Help feed 4.4 million school children for 120 days under the department’s Feeding Program directed at under-nutrition and short-term hunger among schoolchildren from Kindergarten up to Grade 6; or
  • Procure computer packages for 3,800 schools; or
  • Set up 3,800 science laboratories; or
  • Hire 34,966 public school teachers.

According to the Secretary of Health, the tax liability could have been earmarked to procure medicines and pay for the medical treatment of poor Filipinos who are the most affected by smoking-related diseases.   

  • With an increase of a mere P1 billion to the Medicines Access Program, would be able to give medical attention to 3,975,421 patients with hypertension, and 1,705,030 with diabetes.    
  • Another billion pesos from tobacco excise tax could also benefit 3,826,155 patients being treated for hypercholesterolemia;  471,437 insulin dependent diabetics;  27,768 children being treated for cancer; 6,568 breast cancer patients; 33,333 stroke patients; 256,147 mental health patients and 14,059 patients undergoing treatment for colon cancer and rectum cancer.

Mighty through its charitable arm, Wong Chu King Foundation (WCKF), has been conducting CSR ‘good deeds’ among school children, poor communities and churches. These CSR handouts are actually minuscule when compared to what the BIR is claiming Mighty evaded in taxes.

For example in January 2017, WCKF handed out food, rice, water bottles to 75 families and gave food stuff and consumer products to families of the Missionaries of Charity in Aparri, Cagayan. In 2016, Barrio Dugayung received 2 water systems.

For these activities WCFK received magnified publicity in the Philippine press making them appear more than they really are. Journalists even described Mighty’s CSR handouts as “apostolic charities” (Apostolic – followers of Jesus), elevating them in the eyes of the public Catholic majority.

Tobacco companies are known to spend more on the publicity of their so called charitable handouts than the deeds themselves. Each month the publicity of Mighty’s CSR activities in the media have an estimated worth of P300,000 – 550,000. For the three months, September – November 2016, Mighty’s full-colour advertisements of its CSR activities in the Philippines media were worth an estimated P1.2 million ($25,000).

Tobacco companies conduct CSR activities to generate publicity and obtain public approval. In the Philippines, Mighty’s CSR handouts earned endorsement and approvals from the Catholic Church, Police personnel and high profile charities.

The WHO FCTC classifies these CSR activities as a form of sponsorship and that publicity given to these constitute advertising and promotions. The FCTC recommends they be banned. In the ASEAN region only Lao PDR, Myanmar and recently Thailand have banned TI-related CSR activities.

The FCTC Articles 5.3 and 13 Guidelines recommend governments obtain information such as how much the tobacco companies spend on marketing, promotions and sponsorship such as CSR activities. None of the tobacco companies operating in the ASEAN region provide this information to the governments.

It is time to end the cheap white-wash of the tobacco industry and ban its CSR activities.