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Article

20 Jun 2019

Author:
El Universo (Ecuador)

Ecuador: Journalists investigate cases of Chinese companies failing to comply with tax and legal regulations; with company comments

[Excerpt translation from Spanish provided by Business and Human Rights Resource Centre]

Roberth Simisterra cannot sleep thinking about how they will pay for the tuition of their 6-year-old daughter. He lives with her and his wife in a rented room on Isla Trinitaria, in the south of Guayaquil. He is a guard, but he has been a builder, candy-maker, shoe-shiner, and an informal salesman. “Everything, except a businessman”, he says, and laughs ironically…The clarification is opportune. Under the Superintendence of Companies, he is the owner of four companies that have reported a $ 41, 5 million income. They are societies that the Service of Internal Revenues (SRI) declared “fake” companies…El Universo acceded to the taxes declarations submitted until 2017 by Chinese companies that had concentrated public contracts in Ecuador…and found that seven Chinese companies presented invoices from apparent transactions with 84 “phantom” companies for a total of $ 21,2 million (without including VAT)…The biggest case refers to China CAMC Engineering, which submitted this type of invoice for $ 11,6 millions…followed by China International Water & Electric (CWE) with $ 7,3 million; China Gezhouba Group with $ 1,5 million; Harbin Electric International with $ 439.000; China National Electric Engineering (CNEE) with $ 327.000; China Electronics Import & Export (Ceiec) with $ 40.000; and the two Sinohydro Ecuadorian branch offices with $ 23.000…El Universo requested interviews to the neighbours of these companies. Four responded. CAMC, Gezhouba and Ceiec said that their representatives are not in the country, and Sinohydro, saying that it meets its tributary obligations…The fake companies most used by the Chinese contractors were Construestilo S.A., Comexito S.A., Highstrategy S.A., Gotoconstru S.A. and Divina company S.A…