Chinese Shell Corporations Evade Taxes in Ecuador

first_imgBy Gustavo Arias Retana/Diálogo August 13, 2019 At least seven Chinese companies the Ecuadorean government hired for public works projects in the construction, mining, telecommunications, and oil exploitation sectors made payments to companies the Ecuadorean Internal Revenue Service (SRI, in Spanish) considers shell corporations.This information is the result of an investigation by Ecuadorean daily El Universo, which compared SRI’s shell corporation database from April to tax returns of Chinese companies the country hired between 2010-2018.According to Jorge Rodríguez, an Ecuadorean economist and a representative of the country’s National Anti-corruption Commission, the use of shell corporations is long-standing in Ecuador. He said these companies are usually hired to launder money, simulate expenses, artificially lower their earnings, and pay kickbacks to authorities for acts of corruption.“The problem started in the 1990s, when banks tried to move the sucre and the dollar, so businessmen built shell corporations in the names of their drivers or assistants to launder cash and gain advantages over the exchange rates. That practice was reborn in 2007, as a way to pay kickbacks for corruption. Shell companies have fake receipts to collect money from public funds. They invoice, collect the funds, and then distribute it,” Rodríguez told Diálogo. “They use that same scheme to launder money that must go through the banks; they open accounts under the names of fake companies. It’s a great business because they artificially decrease their earnings, but in reality they channel all public funds to their pockets.”Chinese CompaniesEl Universo’s investigation revealed that seven Chinese companies hired by the Ecuadorean government reported charges for supposed transactions with 84 shell corporations. Those amounted to close to $22 million.The implicated Chinese companies include China CAMC Engineering, China International Water & Electric, China Gezhouba Group, Harbin Electric International, China National Electric Engineering, China Electronics Import & Export, and two Ecuadorean branches of Sinohydro. The most commonly used shell corporations were Construestilo S.A., Comexito S.A., Highstrategy S.A., Gotoconstru S.A., and Divinacompany S.A., according to El Universo.“The Chinese learn quickly when it’s about corruption; we have many companies from that country that used corporations built specifically to steal money from the government. That’s how they concealed many companies. The signed contracts included restrictive clauses on access to information, a situation that favors corruption because it made it impossible for civil society to triangulate the information,” said Rodríguez.Transparency in contractingAccording to a June 6 report on the online news daily Ecuador en Vivo, Ecuador signed 74 contracts with Chinese companies between 2008 and 2018, for a total of about $8 billion. “However, what’s disturbing about the Asian country’s increased investments, which only amounted to about $7 million in 2007,  is the shady contracting, financing terms, delivery terms, and even the quality and material specification,” says the news site.Between 2010 and 2018, Ecuador’s Internal Revenue Service found that 84 Chinese businesses evaded taxes worth approximately $22 million. (Data: SRI/Graph: Raúl Sánchez-Azura)In a November 2018 inspection of Coca Codo Sinclair, the country’s largest hydroelectric plant, Ecuadorean authorities found 7,648 cracks in the distributors that inject water to the turbines and structural damages worth more than $1 billion. Chinese Company Sinohydro built the massive work in 2016.Ecuador en Vivo adds that “there are similar cases in other countries, especially the Bolivarian axis: Bolivia, Venezuela, Nicaragua, and Cuba. Chinese Company China CAMC Engineering, which according to its website conducts industrial, hydraulic, electric, and transportation engineering projects, has been under investigation by Bolivia’s Assembly, Comptroller, and Public Ministry for the last two years, and has several restrictions to information access.”Ecuador’s SRI began to verify the data its researchers provided. “That’s how it uncovered which companies were built specifically for that purpose and labeled those that had billed the government but never reported the earnings in their tax returns as shell companies,” Rodríguez said. “These cases were uncovered as a result of the government’s detailed data inspection.”Chinese businesses have a foot in Ecuador’s most important development areas. “All these contracts were covert, and now the use of shell companies becomes clear. Chinese businesses don’t seem to portray any ethical principles, and corrupt authorities will always be there to help and make money,” Rodríguez concluded. “It’s not fair that businesses hired to improve the country’s conditions conduct shady financial moves to swindle the government. We must demand transparency, regardless of whether these are Chinese or Ecuadorean businesses, we must be aware of how our money is used.”last_img read more

Salmonella outbreak strain traced to Mexican farm

first_img “Frankly, I’d just like to hear what went wrong,” Cardoza said. The discovery of the first piece of produce actually linked to a case in the outbreak was announced just 2 days ago by Colorado officials, who found the outbreak strain in a jalapeno from the home of a southwestern Colorado resident who had been sick. Editor’s note: In a statement released late on Jul 30, the FDA said that the Mexican farm where the contaminated jalapeno pepper found in Texas last week was grown is not the same one where the contaminated irrigation water and Serrano pepper were found, contrary to the report below. The farm where the contaminated Serrano pepper and irrigation water were found is in the state of Nuevo Leon and was identified through the trace-back of products linked to clusters of cases in the United States, the agency said. The FDA said the contaminated jalapeno found at a produce distributor in McAllen, Tex., was traced back to a different farm in Mexico; the location was not disclosed. Today’s congressional hearing was the first of two this week scheduled to focus on the outbreak and the response to it. Members of the subcommittee sharply questioned Acheson and King about various aspects of the outbreak investigation. Though no contaminated tomatoes have been found, Acheson said, “We have found contaminated jalapeno and Serrano peppers and have found . . . common distribution points. We’ve also identified a farm where all three are grown. So the possibility exists that this was on more than one commodity; we already know it’s two, so it could’ve been three.” The FDA first warned about possible Salmonella in jalapeno and Serrano peppers on Jul 9, after investigations of several case clusters pointed in that direction. Certain kinds of tomatoes were previously the main suspects in the outbreak, and investigators have not yet excluded a possible role for them early in the outbreak. A warning against eating tomatoes was canceled on Jul 17. The outbreak has grown to 1,319 cases in 43 states, along with Washington, DC, and Canada, Dr. Lonnie King of the Centers for Disease Control and Preveniton (CDC) reported at the hearing, which focused on the problems in tracing fresh produce in connection with disease outbreaks. Acheson said the contaminated jalapeno found at the Texas distributor was traced back through two different facilities in Mexico and finally to the farm, whose location he didn’t disclose. He said the farm distributes produce to “a number of other places” and added that the FDA investigators would try to identify those. Jul 30 FDA statementhttp://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/2008/ucm116916.htm “Two hours ago we learned that we had got a positive sample in water used for irrigation” and also in a Serrano pepper on the farm, Acheson told the House Agriculture Subcommittee on Horticulture and Organic Agriculture, at a hearing that was streamed over the Web. Rep. Dennis Cardoza, D-Calif., chair of the subcommittee, set the tone at the beginning: “The investigation faltered almost from the beginning as investigators began asking patients what they ate before they became ill,” he said. “They used questionnaires that listed major food items but not all food items.” For example, the form included peppers but not jalapeno peppers specifically. When Cardoza asked if the warning on tomatoes was “an erroneous callout by your agency,” Acheson said, “No, there was a very clear, methodical scientific process whereby the CDC reached a statistical conclusion it was tomatoes.” “We found a positive in Serrano peppers and we’re recommending that consumers not only not consume jalapeno peppers but also Serrano peppers,” Acheson said. Jul 30, 2008 (CIDRAP News) – A Salmonella-tainted jalapeno pepper found last week in Texas has been traced to a Mexican farm, and investigators have found the outbreak strain of Salmonella in irrigation water there, a Food and Drug Administration (FDA) official told Congress today. House Agriculture Committee’s hearing schedulehttp://democrats.agriculture.house.gov/hearings/schedule.html Under questioning by Rep. Tim Mahoney, D-Fla., Acheson said there is no evidence that any tomatoes now on the market are contaminated, but the FDA can’t exclude the possibility that tomatoes played some role earlier in the outbreak. Under questioning by Cardoza, Acheson acknowledged that no contaminated tomatoes have been found, despite the weeks of warnings against eating certain kinds. See also: Later, he said about 1% of food items imported into the United States are “physically examined by an inspector.” Inspections and testing of imported foods are largely driven by the record of past problems, such as Salmonella in cantaloupe, he explained. David W. Acheson, MD, the FDA’s associate commissioner for foods, told a House subcommittee this afternoon that the contaminated jalapeno pepper found last week at a distribution center in McAllen, Tex., was traced back to the farm in Mexico. When Mahoney asked if there are any required inspections of the implicated farm in Mexico, Acheson said, “There’s not a requirement that I’m aware of for anyone to inspect those farms.”last_img read more

Protests spark virus fears in US

first_imgMIAMI – Protests around the United States against police brutality have sparked fears of a further spread of the coronavirus, while South Korea is reporting a steady rise in cases around the capital after appearing to bring the outbreak under control. People hold for a Black Lives Matter rally at the Caddo Parish Courthouse in Shreveport, La., Sunday, May 31, 2020. HENRIETTA WILDSMITH/THE SHREVEPORT TIMES VIA AP The often-violent protests over the death of George Floyd, a black man who was pinned at the neck by a white Minneapolis police officer, are raising fears of new virus outbreaks in a country that has more confirmed infections and deaths than any other.center_img The protests come as more beaches, churches, mosques, schools and businesses reopen worldwide, increasing the risk of cross-infections. (AP)last_img read more