CIVIL SOCIETY ORGANIZATIONS DECRY “FALSE PROMISES” OF DOF FOR TRANSPARENCY IN THE EXTRACTIVES SECTOR
CIVIL SOCIETY ORGANIZATIONS DECRY "FALSE PROMISES" OF DOF FOR TRANSPARENCY IN THE EXTRACTIVES SECTOR
Groups to press for government monitoring of mining companies
Leaders of mining affected communities and civil society groups decried Friday a government official’s statement that the Philippines can ensure transparency in the extractives sector following the country’s withdrawal from the Extractive Industries Transparency Initiative (EITI), a platform for monitoring mining companies’ performance.
In a meeting to discuss strategies to press for transparency and accountability in the extractives sector the civil society organization (CSO) leaders said the government should halt its “subservience to corporate interests in the mining industry.”
Finance Secretary Carlos Dominguez had earlier downplayed the withdrawal saying that the Philippine government will “continue to champion better resource and revenue management” in place of the global multi-stakeholder mechanisms of the EITI.
However, CSO leaders were doubtful of the Philippine government’s commitment to champion peoples’ interests vis-a-vis the mining industry, citing the abundant privileges and incentives granted by the government to the sector despite its long history of questionable practices, including environmental degradation, tax and labor abuses.
“It is appalling that the Philippine government refuses to be transparent in policies and in its involvement in the extractive sector, ,” said Lidy Nacpil, Coordinator of the Asian Peoples’ Movement on Debt and Development (APMDD. “The extractive industries have proven to be harmful and destructive to the environment and have significantly contributed to the climate crisis.”
Nacpil also said the sector is “a hotbed of illicit financial flows that result in foregone revenues and drain our economies of financial and other resources that should have instead been used for peoples’ needs.”
The Philippine government should prioritize peoples’ needs in the face of multiple crises and put an end to tax and human rights abuses of corporations in the extractives sector, she said.
Dr. Benito Molino, Chairperson of Zambales Lingap Kalikasan (ZALIKA) denounced the latest move of the Department of Finance (DOF) to abscond a platform involving government, mining corporations, and civil society that requires its members to publish financial information according to a standard.
“Withdrawing from the EITI only further shows that this government is a willing puppet of extractive industries, especially mining,” Dr. Molino said. “As the Philippine government plays the role of eager servant to mining corporations, we foresee intensified extraction of natural resources and continuing impunity for corporations’ tax, labor, and other abuses. This will aggravate the destruction of areas for food production and will worsen our current food and environmental crises.”
Dr. Molino is a veteran of a long battle mounted by communities in Sta. Cruz Zambales, calling on the Philippine government to sanction mining corporations for the irreversible degradation of agricultural lands and fisheries in the area.
In 2017, four of these mining corporations were ordered to close as a result of the government's investigation of their violations of environmental laws. However, these orders were overturned in 2019.
The companies investigated by the Department of Environment and Natural Resources were BenguetCorp Nickel Mines Inc., Zambales Diversified Metals Corporation, LNL Archipelago Minerals Incorporated, Eramen Minerals Inc.
More recently, the lifting of Executive Order 79 imposing a moratorium on the approval of new licenses for mining corporations “guaranteed a new lease on life for mining corporations in Zambales,” Dr Molino said.
Dominguez’s pronouncement to champion transparency in the extractives sector offers nothing more than “false promises,” according to Fara Diva Gamalo, Coordinator of women’s organization Oriang in Eastern Visayas. “Public officials like Dominguez who have vested interests in protecting profits of mining corporations hold no moral high ground to institute policies strengthening accountability in the extractives sector,” Gamalo stated.
“For as long as the DOF is hostage to corporate interests in the extractives sector, the demands of local communities to exact accountability from mining corporations will remain unheeded,” Gamalo said.
At the forefront of the anti-mining struggles in Eastern Visayas, Gamalo has stood witness to the widespread impunity in human rights violations committed against leaders of local communities who demand simply for the government to protect their homes and livelihoods by prohibiting the destructive operation of mining corporations.
Meanwhile, in a message sent to Philippine-based CSOs, Financial Transparency Coalition (FTC) Executive Director Matti Kohonen said the Philippine government’s recent withdrawal from the EITI is “a serious step back for transparency in the extractive sector, including financial transparency on ownership and taxes paid in the sector.”
The FTC is a global network of organizations working to help curb illicit financial flows with members in Europe, Africa, Latin America and the Caribbean, Asia, and North America.
Kohonen emphasized the need to maintain public registries of beneficial owners in extractive companies, and to regularly update and expand it to include fisheries and forestry.
A public beneficial ownership (BO) registry provides access to information on companies’ beneficial owners, the individuals who ultimately own, control or benefit from the companies’ profits. CSO leaders said that such registries can be important tools in fighting tax abuse and corruption and can aid in recovering foregone revenues from profits of mining corporations stored in offshore accounts.
The CSO leaders cited the 2021 State of Tax Justice Report saying untaxed wealth is but a fraction of the PhP 26 trillion lost to tax abuses globally of wealthy individuals and corporations. Aggressive and systematic tax avoidance practiced by extractive companies through transfer pricing and trade misinvoicing result in massive tax losses for the Philippines, they pointed out.
They said government inaction to address these issues prompted the tax justice movement to mount protests at the DOF in November last year, demanding public investigations into the tax and labor abuses of mining corporations exposed in the Pandora Papers. The prevalence of profit-shifting and tax avoidance in the extractives sector, whose profits prosper amidst financial secrecy, also points to the weakness of global standards of financial transparency and lack of public access to beneficial ownership information.
The longstanding demands by civil society for transparency and accountability are foregrounded by a history of unjust practices, including tax abuses and massive illicit financial flows (IFFs) in the Philippine extractives sector. These IFFs are jointly enabled by a domestic fiscal regime that encourages tax avoidance through decades-long tax incentives to mining corporations and a global tax architecture that continues to permit profit-shifting to low-tax jurisdictions. The Pandora Papers expose in 2021 implicated political and business elites across the world, including Philippines, in shady but systematic practices to hide wealth in offshore accounts to avoid paying taxes.
“It is imperative to transform global and domestic tax rules, to effectively curb IFFs and end the privileged status enjoyed by mining companies because of the generous tax and other fiscal incentives granted by many governments in Asia, including the Philippines,” Nacpil said. “Tax abuses by corporations and wealthy individuals and other types of IFFs significantly drain tax revenues and public resources urgently needed to fund public services.”