MercoPress. South Atlantic News Agency

Argentina targets yet another US company on alleged tax fraud

Allegedly GE carried out illegal operations that cost Argentina an unnecessarily large number of dollar reserves and a reduced taxation income

US corporation firm General Electric has “over-invoiced” imports in a financial maneuver designed to access additional dollars in the official foreign exchange market, claimed Argentine Cabinet Chief Jorge Capitanich. GE thus becomes the second large US company in less than a week to face accusations of financial trickery in order to obtain economic benefits.

Capitanich also pointed the finger at two other companies: Monte Verde, a pharmaceuticals manufacturer, and Maltería Pampa, from the beer-production sector.

Speaking at the Lower House during his traditional monthly report to lawmakers, Capitanich said that General Electric carried out illegal operations that cost the country an unnecessarily large number of dollar reserves and a reduced taxation income, after the company hid part of its profits as import costs.

Later in the day, General Electric insisted that Argentine officials had not asked for any information regarding its foreign trade transactions, stating that it complies with all Argentine laws and regulations.

News about General Electric being investigated comes just days after Argentina's tax office AFIP suspended Procter & Gamble license on similar grounds. The firm will not only have to deal with the courts, but also sit down at the negotiating table with the government to try to settle debt it's accused of evading.

During his Q&A session in Congress, Capitanich argued for the need to create a bilateral committee to look into “all economic groups, be they financial or commercial, that engage in economic terrorism.” His words echoed previous comments he made a fortnight earlier at the Senate, but carried a new significance given AFIP’s filing of a suit against Procter & Gamble.

“I would like to expose the ploy of a company, General Electric, which over-invoiced imported products by up to 350%, costing the country an excess loss of dollars and a reduction in the reported gains for the company’s local branch,” the Cabinet chief bemoaned. He also implied that the company had been involved in tax evasion.

The case is similar to the one against Procter & Gamble, which has been charged with funneling money abroad to hide income that was subject to taxation in Argentina, according to AFIP, and for overbilling imports to the tune of 138 million dollars.

The two additional cases involving Monte Verde and Maltería Pampa, from the beer production industry were related to under-billing of exports, the other side of the coin in the alleged fraudulent foreign exchange operations that have been surfacing in the Argentine media lately.

Monte Verde is the manufacturing plant of Laboratorios Raffo, one of the biggest Argentine pharmaceutical companies. The production plant, located in San Juan, is accused of “taking advantage of a trade agreement with Peru to set export prices at one third of the real cost of the product.”

Their illicit operations amount to 16 million dollars, according to Capitanich. The accusation against Maltería Pampa, part of the Brazilian-based multinational AmBev, was also fingered for carrying out a similar operation of “under-billing of exports.

According to Capitanich, the brewing company’s fraud amounts to 234m dollars after illegal triangulation movements between different subsidiaries in the region was detected, including in neighboring Uruguay.

All these alleged financial operations could be investigated by the congressional bilateral committee proposed by Capitanich, which would monitor “systematic speculative attacks to destabilize governments” and the manipulation of international trading prices to “evade the taxman to the detriment of the Argentine people.”