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PERU: Logging Firm Accused of Using Workers’ Identities for Tax Fraud

Milagros Salazar

PUCALLPA, Peru, Jan 30 2008 (IPS) - Impoverished local residents of the Amazon jungle town of Orellana in Peru have filed a complaint against a logging company for using their identity documents to commit tax fraud in illegal timber sales worth more than 200,000 dollars.

The affected workers say they took no part in the swindle and never saw any of the money, and accuse the Consorcio Maderero company of hatching the entire scheme.

The company holds one of the 240 logging concessions granted by the National Institute of National Resources’ office on forestry and wildlife (Intendencia Forestal y de Fauna Silvestre) in a region which concentrates nearly half of all of the concessions awarded in the country.

Orellana is a two-day river journey from the city of Pucallpa, 850 km northeast of Lima, in the Amazon region of Loreto, an area of great biodiversity.

The Pacaya Samiria Nature Reserve, the most extensive area of flooded forest in Peru and one of the country’s richest areas in flora and fauna, makes up six percent of the region of Loreto and 1.5 percent of the national territory.

The chief economic activity in the region is logging, both legal and illegal.

In December, 10 Orellana residents filed a complaint against the company with the provincial prosecutor’s office in Ucayali, accusing it of using copies of their identity documents, without their knowledge, to evade tax payments.

According to the complaint, the firm used their identities to report to SUNAT, Peru’s tax authority, that the employees sold it hundreds of mahogany logs and boards for more than 200,000 dollars in 2003.

Consorcio Maderero gave SUNAT documents registering the supposed purchases of wood from the workers, in order to evade taxes, the employees told IPS.

They themselves did not find out about the apparent scheme until they began to receive notices in early 2007 from SUNAT asking them to account for commercial transactions that "we never carried out," one of them said.

Because of tax secrecy provisions, SUNAT cannot divulge information on the case. But a source close to the tax agency told IPS that Consorcio Maderero is under investigation for presenting too many purchase receipts, which according to the employees were forged.

Companies can use such receipts to register purchases only when the person selling the material is not a registered taxpayer and lives in remote, inaccessible parts of the country – a description that fits the Orellana workers.

The receipts can be presented to SUNAT as investment costs which, if accepted, offset the amount of taxes to be paid by the companies on their earnings.

"The company asked us for our identity documents to register us in the social security system in 2003, when some of us were working as log haulers for the Consorcio," Dennis Pizango, one of the affected workers, told IPS.

"They told us that they wanted our identity cards to insure us against accidents, and since there was no photocopy machine in Orellana, we had to give them the original documents. Several of us got our DNI (National Identity Document) back a month later. We never imagined that it would be used for wrongdoing," he said.

For the last two years, he and his wife and four children have been living in a five-by-seven-metre one-room hut in a slum in Pucallpa, where Consorcio Maderero has its main centre of operations on several hectares of land.

"I have not sold timber to that company; they forged my signature. I don&#39t even have a logging concession, to be able to do so. Do I live like a big businessman?" asked Pizango, holding up the document containing his forged signature, while his daughters sleep nearby on a makeshift bed consisting of boards held up by bricks.

He found out about the problem when he received a tax evasion notice in early 2007 and went to SUNAT to give his testimony.

His wife, Juliana Córdova, who was also accused of tax evasion, told IPS that in mid-2006 someone from the company had her sign a blank sheet of paper that she was told was necessary in order for her children to also benefit from social security.

But the document was used by Consorcio Maderero to show that "I sold them chunks of mahogany," she said.

Of the 200,000 dollars in supposed purchases from the workers, 138,000 dollars, or nearly 70 percent of the total, were registered in the names of Pizango and his wife.

The large amounts of money involved, and the quantity and frequency of the receipts for the purported purchases from local Orellana residents that the company filed with SUNAT, raised suspicions and prompted an investigation of the firm for tax fraud.

Although the state could have brought charges against the workers who supposedly sold the wood to the company, to hold them accountable for paying the taxes owed, the authorities decided not to do so after taking their statements.

Besides the documentary evidence, Pizango and Córdova showed officials how simply they live, on Dennis’ income of just 175 dollars a month.

His sister, Markley Pizango, who also forms part of the group of residents who filed the complaint, told IPS that she gave her identity card to the company "as a sign of support, because around that time there was a rumour that the authorities wanted to evict the company," for which three members of her family were working.

She also said the timber that Consorcio obtained in Orellana was illegally logged in the Pacaya Samiria Nature Reserve.

In addition, the company "had them sign blank papers and asked indigenous people from the neighbouring village of Shetevo for their documents," she said.

The Peruvian newspaper El Comercio reported in April 2004 that a shipment of 18,000 cubic feet of wood that had been illegally logged in the nature reserve was confiscated by the police, apparently from Consorcio Maderero.

"We deny everything that these local people allege. In any case, it will be the relevant authorities who will determine who is responsible," Consorcio’s general manager, Leovigildo Guzmán, told IPS after stating that his company is a respectable business that exports wood to the United States, Mexico and China. If it is proven that the receipts were forged, Consorcio Maderero will face charges of tax fraud, which is punishable by up to eight years in prison.

The chief prosecutor in the Ucayali provincial prosecutor’s office in Loreto, Julio César Barrientos, has already launched an inquiry in conjunction with SUNAT and expects to reach a decision soon as to whether the complaint filed by the Orellana residents will be shelved or formal charges will be brought in court.

Barrientos told IPS that a similar complaint against the company had been filed several years ago, but was shelved because of lack of evidence.

Sources with SUNAT said several irregularities have been detected, and that the company is under scrutiny.