Janet Napoles’ alleged giant JLN Corporation paid less taxes than a public school teacher

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By Raïssa Robles

Listening to Janet Lim-Napoles and her lawyers talk, you would get the impression she is the very busy head of a highly diversified conglomerate with overseas operations.

Yet records show that from 2009 to 2011, her flagship firm JLN Corporation paid less in yearly taxes than a public school teacher earning P21,500 a month.

Such a public servant pays P35,952 in yearly income tax, according to the Department of Finance.

By comparison, Napoles’ JLN Corporation’s documents, submitted to the Securities and Exchange Commission (SEC), indicate it paid the following taxes:

in 2009 – P9,036.78
in 2010 – P25,164.69
in 2011 – P14,189.21

It was only for the year 2012 when JLN paid a bit more than the public school teacher. In a disclosure last April 2013, JLN said it set aside P57,960.44 for corporate tax after declaring a “net income before tax” of P193,201.48 in 2012.

In a later post, I will discuss the possible reason for the sudden jump in JLN’s most recent tax payment.

The point is, where are the numbers that show that Napoles’ JLN Group is a giant, highly profitable conglomerate?

Her lawyer, Bruce Rivera, indicated to ABC5 that the root of her wealth was inheritance and her businesses. Rivera said:

“She’s the daughter of a Chinese businessman. “Hindi siya mahirap. Thirty years ago they started their own business…General trading siya. She does stock invesments.”

But the financial papers their companies submitted to the SEC from 1999 to this year show that under the standards of the Department of Trade and Industry (DTI), JLN is only an SME – a small and medium enterprise. DTI defines a “medium” company” as one whose total assets (excluding land) is valued at less than P100 million.

And most of her other companies are “micro” or “small” enterprises – owning assets of only up to P15 million.

To read the DTI definition of SMEs, please click on this link.

Why would Napoles and her lawyers be eager to describe her company as highly successful? Perhaps it’s a way to explain why they can afford a luxurious lifestyle.

Below is an excerpt from a GMA News report, quoting her lawyer Lorna Kapunan:

“Ang mother niya was masipag. (Her mother was hard-working.) She has a small fortune sa (in the) province. Hindi naman malaki (It wasn’t that big) but they were smart enough to invest in small venture businesses.”

Among the businesses that did well was the selling of pork and chicken, Kapunan added. “It is so ironic that now she is being blamed for everything.”

She said that humble beginning eventually became JLN Corporation, which various whistle blowers have said was a conduit for billions in pork barrel funds. Kapunan insisted it is a trading company engaged in legitimate businesses, but was vague about the goods it currently trades in.

Examining the financial disclosures submitted to the SEC by the various corporations that she and her husband own, I found out several curious things about their holdings.

Recall again what her first lawyer Bruce Rivera told ABC5 TV – that Janet Napoles became highly successful after 30 years in business. You can watch the video of that ABC5 interview at the end of this piece.

When I searched SEC’s records I found Janet and Jaime Napoles had incorporated 13 companies from 1997 to June 2013.

On the face of it, 13 corporations are a lot.

However, a closer examination of their corporate records submitted to the SEC shows that of the 13, only TWO companies are currently operating:

JLN Corporation
RLG Solutions Corporation

RLG Solutions Corporation, a start-up, is operating at a loss.

TWO other companies appear to be ongoing but have never submitted to SEC any financial statements for any year of operation:

Riserva ’08 Food Corporation
Kates Marine Contractors

TWO of the Napoles companies have had their corporate licenses “REVOKED” by the SEC:

Wingold International Trading Corporation
Lucky 4J

FIVE companies have separately submitted to the SEC an “Affidavit of Non-Operation” which stated they had never been operational since their incorporation:

JC World Travel Agency, Inc.
Jo-Chris Communications Inc.
JLN Construction and Development Corporation
Asia Prime Energy Development
Asia Star Power Resources

Finally, the two companies that the Napoles couple incorporated only last December 2012 and this June 2013 are still in their start-up stage:

Solution Strategies Asia, Inc.
Sur Mine

Below is a run-down of the 13 companies they are involved in, based on the year of their incorporation:

1997 – Wingold International Trading Corporation
SEC Registration No. A199704209
primary purpose: Trading
no financial statements submitted to SEC
REVOKED by the SEC

1998 – Lucky 4J
SEC Registration No. A199812824
primary purpose: Unknown
no financial statements submitted to SEC
REVOKED by the SEC

1999 – Kates Marine Contractors
SEC Registration No. A199901877
primary purpose: Ship repair, maintenance
Authorized capital stock – P5 million
Paid-Up – P312,500
no financial statements submitted to SEC

1999 – April – JLN Corporation
SEC Registration No. A199906532
primary purpose: Wholesale trade and commission trade, except motor vehicles and motorcycles
Original authorized capital stock – P5 million
*It was only in 2009 – or after 10 years in operation – that the entire P5 million capital stock was fully paid-up.

2001 –JC World Travel Agency, Inc.
SEC Registration No. A200102860
primary purpose: Travel
Original authorized capital stock – P2 million
Paid-Up: P125,000 as of 2011
*In 2011, Janet Napoles filed with the SEC an affidavit saying the company was never operational since the date of incorporation in 2001.

2003 – Jo-Chris Communications Inc.
SEC Registration No. CS200301747
primary purpose: Trading of communications supplies and equipments, Information Technology Systems , Surveillance Systems, radio antenna, radio transceivers
Authorized capital stock – P8 million
Paid-Up as of 2011 – P500,000
*In 2012, Janet Napoles filed with the SEC an affidavit saying the company was never operational since the date of incorporation in 2003.

2007 – Riserva Food ’08 Corporation
SEC Registration No. CS200713622
primary purpose: Restaurant, cafe, cabaret business, cigar stand, lunch room, soda fountain
No financial statements submitted to the SEC

2008 – JLN Construction and Development Corporation
SEC Registration No. CS200816528
primary purpose: General construction, building roads, bridges, highways, wharves, airfields, manufacturing plants
Authorized capital stock: P100 million
Paid-Up: P6.25 million from the start until 2011
*In 2012, Janet Napoles filed with the SEC an affidavit saying the company was never operational since the date of incorporation in 2008.

2010 Aug 26 – Asia Prime Energy Development
SEC Registration No. CS201013649
primary purpose: Selling power-related equipment and putting up power plant
Authorized capital stock: P50 million
Paid-Up as of 2010: P3.125 million
*In 2012, the company submitted to the SEC an affidavit saying the company was never operational since the date of incorporation in 2010.

2011 April 8 – Asia Star Power Resources
SEC Registration No. CS201106281
primary purpose: Trading, import or export of coal and similar products
Authorized capital stock: P50 million
Paid-Up: P3.125 million
*In 2012, the company submitted to the SEC an affidavit saying the company was never operational since the date of incorporation in 2011.

2012, Feb 9 – RLG Solutions Corporation
SEC Registration No. CS201202273
primary purpose: Trading and installation of security systems; providing services in website development and hosting and other Information Technology Project management
Authorized capital stock: P10 million
Paid-Up: P625,000
Operating at a loss. Its net loss for 2012 was P383,340.94

2012, December – Solution Strategies Asia, Inc.
SEC Registration No. CS201222717
primary purpose: Consultancy services to business ventures
Authorized capital stock – P10 million
Paid-Up – P125,000
*Only company with a foreign partner – a Korean named Man Hwan Park

2013, June – Sur Mine
SEC Registration No. CS201311365
primary purpose: Metallic core mining
Authorized capital stock: P100 million
Paid-Up: P6.25 million
*Note – Contrary to what Janet Napoles told Philippine Daily Inquirer, that former Congressman Prospero Pichay was a previous partner a long time ago, this company – incorporated only last June 20, 2013 –  shows Prospero Pichay as a majority partner owning 30% of Sur Mines. Jaime Napoles owns 10%.

Recall the exchange between PDI managing editor Joey Nolasco and Mrs Napoles during the recent PDI forum:

Nolasco: Ma’am, si Congressman Pichay (former Surigao del Sur Rep. Prospero Pichay) ba, kasosyo niyo? (Maam, is Congressman Pichay your business partner?)

Napoles: Ay, noon, noon pa. (Ay, a long, long time ago.)

And so from these data, we can reasonably conclude that as far as the Napoles’ local holdings are concerned, the family is only relying on three companies to generate their livelihood:

JLN Corporation
Riserva ’08 Food Corporation
Kates Marine Contractors

But only one of them – JLN Corporation – has complete financial records with the SEC.

Could these three companies have generated enough earnings for the Napoles family? Enough to justify, for instance, the purchase of a US$1 million condo in California. But more on the US$1 million condo later.

Probably not. JLN and Riserva only have a combined capital stock of around P100 million. The capital stock of Kates Marine is unknown since it never submitted any financial statements to the SEC.

There’s one other curious thing I noticed with the Napoles companies. There is a distinct pattern of forming new corporations and foundations and then declaring them “not operational since incorporation”.

As I said earlier, this is what they did with five of their 13 companies:

JC World Travel Agency, Inc.
Jo-Chris Communications Inc.
JLN Construction and Development Corporation
Asia Prime Energy Development
Asia Star Power Resources

This is also what their daughter Jo-Christine Napoles did with her lone company. In 2003, just before the 2004 presidential elections, she formed Multimedia Technologies, Inc. Its business was “digital large format printing tarps, billboards, panaflex and stickers.”

In 2005, Jo-Christine – the majority owner and treasurer – submitted to the SEC an “affidavit of non-operation” which said:

“I hereby declared under oath that from the date of Corporation with the Securities and Exchange Commission, on November 21, 2003 up to this date of the Special board meeting held only this year on March 4, 2005, Multimediatarps Technologies, Inc, remained inactive and had not conducted any business activity.”

For said reason, it filed no financial disclosures with the SEC.

The same pattern is also true with the two foundations, one sectoral party organization and one gun association that the Napoles couple caused to be formed. These are the:

Samahan ng mga Mangangalakal para sa Ikauunlad ng Ekonomiya (SMILE), Inc. – a sectoral group that tried twice to get elected to the House of Representatives

Magdalena Luy Lim Foundation, Inc. (original name – Lim Luy Kim Giok Foundation )

Magdalena Luy Limchu Charity Foundation in the Service of Divine Mercy, Inc.

Asia Pacific Gun Club

All in all, the Napoles family incorporated 10 entities with the SEC – all 10 went on to tell the regulatory body they were not submitting any financial statements because they never became operational.

Can you think of any reason why a businessman would do that? Is this the behavior of many local businessmen? To leave a trail of still-born corporations behind?

I wanted to ask Napoles’ lawyer, Atty Lorna Kapunan, why. But she was not picking up her mobile nor answering my text. I also e-mailed JLN Corporation requesting an interview but I have not received any answer to date.

From all these, it is probably safe to conclude that whatever money the Napoles family used to buy all their properties – including a US$1 million luxury condo in the US – did not come from SEC-disclosed business activities in the Philippines.

Because JLN, the mother corporation, only declared a “net income before tax” of:

P 30,122.60 in 2009
P 83,882.29 in 2010
P 47,297.38 in 2011
P193,201.48 in 2012

_________________

P354,503.75 – from 2009 to 2012

 

And as of end-2012, JLN’s accumulated retained earnings amounted to only P735,308.54. That amount is only enough to buy a repossessed mobile home in California. Not a luxury condo at the Ritz-Carlton Residences in Los Angeles.

NEXT: The links between Janet Napoles, her companies and the foundations that received the senators’ and congressmen’s pork barrel