New Watchdog to Press 10 Graft Cases vs Arroyo Gov't

Ten corruption issues involving the Macapagal-Arroyo government and influential private corporations will be the subject of a campaign set to be waged by a new broad multisectoral watchdog. Romy Abaya, Plunderwatch convenor, announced last week that the broad alliance against corruption is to be launched this week.

By Alexander Martin Remollino
Bulatlat.com

Ten corruption charges involving the Macapagal-Arroyo government and influential private corporations will be the subject of a campaign set to be waged by a new broad multisectoral watchdog. Romy Abaya, Plunderwatch convenor, who is also with the Samahan ng mga Ex-Detainee Laban sa Detensyon at para sa Amnestiya (Selda), announced last week that the broad alliance against corruption will be launched this week.

In a forum sponsored by Plunderwatch at the Shalom Center of the United Churches of Christ in the Philippines last Oct. 28, Abaya said that the alliance will focus its campaign primarily on corruption in government and secondarily against corruption by private entities in conspiracy with government.

Abaya also said that the alliance has a list of issues on which to base its campaign: the Jancom garbage scam, the Public Estates Authority-President Diosdado Macapagal Avenue scam, the Pagcor anomalies, the scandal surrounding the Judicial Development Fund (JDF), the IMPSA energy contract, the Jose Pidal accounts, military corruption, the Peace bonds scam, the Piatco project, and election campaign funds.

Shady deals

The biggest corruption scandals affecting the Macapagal-Arroyo government involved infrastructure contracts alleged to be onerous. Historically, such contracts have been a source of kickbacks.

The Jancom controversy arose from a contract that dates back to the Ramos administration. It was for a $360-million (P18-billion) incineration project in which the Jancom Environment Corp. (JEC) would burn 3,000 tons of Metro Manila garbage a day, for a tipping fee of $10 per ton. Ramos did not approve the contract in deference to the next president.

President Joseph Ejercito Estrada, however, also refused to approve the contract because the JEC changed the tipping fee from $10 to $59 per ton.

The years 1999 and 2002 saw the passage of the Clean Air Act and the Ecological Solid Waste Management Act, respectively. Both laws ban the use of incinerators.

However, the Supreme Court (SC) in February 2002 declared the contract valid. It   is alleged that the Carpio, Villaraza and Cruz (CVC) law office had a part in the said SC decision. Antonio Carpio, one of the founders of the CVC law firm and a former legal counsel of Vivendi, partner of the JEC, was then already a SC justice, having been appointed by President Macapagal-Arroyo.

Another of these deals is the energy contract with the Industrias Metalurgicas Pescarmona Sociedad Anonima (IMPSA). The project began in 1994, when IMPSA submitted to the Ramos government a proposal to rehabilitate the Kalayaan hydropower plant, as well as the Caliraya and Botocan plants in Southern Tagalog. Costing $400 million the project was approved by Estrada.

Given, however, legal obstacles that remained unsettled the project failed to get the endorsement of the Department of Justice (DoJ), the Department of Finance, and the National Economic Development Authority.

Claiming to have been affected by the Asian financial crisis of 1997, IMPSA asked for a government guarantee to help the company finance the CBK project. The guarantee required the approval of the DoJ which IMPSA finally got on Jan. 24, 2001 or shortly after the installation of the Macapagal-Arroyo presidency following the Edsa Dos people's uprising. The approval was signed by then Justice Secretary Hernando Perez.

Apparently, the DoJ approval was used by IMPSA to pressure the National Power Corporation (NPC) to make payments. IMPSA received more than $50 million although it had invested only $9 million, and in addition tens of millions of dollars more in fees not provided for in the contract.

The contract with the PEA on the construction of the President Diosdado Macapagal Avenue in 2002 (PDMA) is another project alleged to be anomalous.  For this project, the PEA secured a P1 billion loan from the Government Service Insurance System (GSIS). PEA director Sulficio Tagud, Jr., however, later disclosed that the project had been overpriced by P533 million.

A document in the possession of the government employees' group Confederation for the Unity, Recognition and Advancement of Government Employees (Courage) reveals that the loan was approved by Avelino Cruz, then presidential legal counsel. Cruz is also a founder of the CVC law office.

Piatco

Another case involves the construction of Terminal 3 of the Ninoy Aquino International Airport (NAIA) by the Philippine International Air Terminals Co. (Piatco).

NAIA Terminal 3 was originally a project of Lucio Tan and five other taipans who formed, precisely for this project, the Asia's Emerging Dragons Corp. (AEDC). The AEDC submitted its proposal to the Ramos administration in 1994. But the project had to go through a bidding process, according to law.

The AEDC lost the bid to Piatco, as the latter offered a scheme more advantageous to the government. Construction of the terminal started in 1996. The AEDC, however, refused to let go without a fight.

By the time Macapagal-Arroyo assumed the presidency, the project had almost been completed and Piatco had paid a total of P780 million to the government.

The high court recently declared the contract "null and void" from the start supposedly because Piatco, before winning the bid in 1996, was unable to show that it had the financial capacity to carry out the project. The P780 million Piatco has invested has not been returned.

Mismanaged funds

Not to be left out however are issues regarding the alleged mismanagement of funds by the Philippine Amusement and Gaming Corporation (Pagcor), the GSIS, the SC and other state agencies.

Pagcor, which had a negative cash flow of P170 million in 2002, reported a negative cash flow of P850 million from January to April 2003.

The net profit of Pagcor, which goes to the President's Social Fund, reached P1.1 billion last year. Surprisingly from January to April this year its profit came to only P170 million. At its present rate, the 2003 PSF would amount to only P510 million or less than half of the 2002 total.

A Pagcor manager, interviewed by a national daily in September, gave among other things three sources of Pagcor's financial difficulties: "onerous" contracts, "profligate spending," and "massive, mindless" donations.

The GSIS, for its part, came under fire from government employees last May over the memorandum by its president and general manager, Winston Garcia, ordering its units to stop the processing of claims and loan applications. Garcia cited financial difficulty, among other reasons, for this move.

Garcia’s alibis proved to be incredible, however. In a letter to President Macapagal-Arroyo last March, the Kapisanan ng Manggagawa ng GSIS listed the following issues against Garcia: Garcia's cash advances amounting to P3.4 million (U.S.$ 61,818.18), the establishment of district offices worth Php4 million (U.S.$ 72,727.27) each, and the appointment of outside legal counsel for the cost of Php200,000 (U.S.$ 3,636.36) a month.

Aside from these, Garcia has also been denounced allegedly for using GSIS money to purchase the painting Parisian Life by Juan Luna. The painting is currently on a national tour sponsored by the GSIS.

Garcia is also said to earn P540,000 a month. Aside from hiring outside legal counsel at P200,000 a month, he is also said to have appointed some 130 vice-presidents who earn P70,000 a month.

The GSIS president-general manager is also accused of contributing at least P100 million to the campaign funds of Macapagal-Arroyo. Late October, the President said she would retain Garcia in his GSIS posts despite appeals for his removal by GSIS rank-and-file employees all over the country.

The judiciary, on the other hand, has always been exposed as a bulwark of corruption. The allegations assumed a face last July 8, when the Commission on Audit (CoA) revealed that some P300 million of the Judiciary Development Fund (JDF) for 2001 remained unaccounted for.

The JDF is a creation of Presidential Decree No. 1949 of the ousted President Ferdinand E. Marcos. It is derived from the increase in legal fees. Under the law, 80 percent of the fund is to be spent on the allowances of court personnel, with the remaining 20 percent on office facilities.

Court employees, including judges, have questioned the decrease in their cost-of-living allowances, and courts are known to be suffering from an acute lack of facilities. The SC led by Chief Justice Hilario Davide, on the other hand, is reported to have been spending for the construction of summer rest houses for its justices in Baguio City and for the purchase of luxury cars.

Peace bonds

The Peace bonds scandal, together with the IMPSA scam, is one of the first corruption issues to be raised against the Macapagal-Arroyo administration. Like the IMPSA deal scandal, the issue surfaced in 2001.

Described as Poverty Eradication and Alleviation Certificates issued by the government, the Peace bonds were conceptualized by the Caucus of Development NGOs (Code-NGO) supposedly to raise funds for the anti-poverty activities of its member organizations.

Code-NGO gained access to the corridors of power, through its links with Macapagal-Arroyo, after the People Power 2 uprising. Two of its leaders were appointed to the Cabinet: Corazon Soliman was appointed secretary of social welfare and development, while Teresita Quintos-Deles was appointed to head the National Anti-Poverty Commission.

Code-NGO is alleged to have used its political connections to make a profit of Php1.4 billion in a series of transactions in Peace bonds worth Php35 billion pesos.

Jose Pidal

By far the most explosive corruption case to erupt under the present administration is the Jose Pidal issue.

The case started with a privileged speech by Sen. Panfilo Lacson last August accusing First Gentleman Mike Arroyo of keeping more or less P110 million in various bank accounts, among them two fictitious Jose Pidal accounts. This money, Lacson alleged, came from contributions to Macapagal-Arroyo's campaign funds.

Allegedly, there are Php36 million in the Jose Pidal accounts, Php48.4 million in the account of the Macapagal-Arroyos' Lualhati Foundation, Php19.3 million in the account of Victoria "Vicky" Toh (the first gentleman's secretary and allegedly also his mistress), Php7.5 million in the account of Thomas Toh (brother of Vicky), and Php21.1 million in the account of Kelvin Tan (Vicky Toh's brother-in-law).

Lacson, a former national police chief during the Estrada presidency, also said that although Macapagal-Arroyo had received Php321 million for her candidacy in 1998, she reported only Php50.2 million to the Commission on Elections.

In his affidavit, Eugenio Mahusay - Lacson's would-be "star witness" in the Jose Pidal expose - named, among the donors to the Jose Pidal accounts, Pagcor chair Efraim Genuino; Transportation and Communication Secretary Pantaleon Alvarez; lawyer Ching Vargas of the finance division, Office of the President; and Kishore Hemlani, a rice trader in charge of the rice importation of the National Food Authority. Mahusay also said that the biggest amounts deposited into these accounts came from Genuino.

Military corruption

The subject of military corruption has always been talked about in the Philippines, but an armed protest action by some 300 young officers and enlisted men of the Armed Forces of the Philippines (AFP) brought it out in the open last July 27.

In the Oakwood mutiny, the rebel soldiers alleged that then Defense Secretary Angelo Reyes was involved in the sale of arms and ammunition to guerrilla and bandit groups. This was a charge corroborated by two officers of the Philippine Marines, Captains Danilo Luna and Ury Pesigan, in a separate venue.

Reyes was forced to resign from his position a few weeks later following a wave of public outrage. The Macapagal-Arroyo government, however, has resurrected him in another capacity - as anti-kidnapping czar.

This was not the first time that allegations of corruption in the military were so easily dismissed under the Macapagal-Arroyo administration. In 2001, Rear Adm. Guillermo Wong, then Flag Officer in Command of the Philippine Navy, exposed irregularities in the Philippine Marines' procurement of equipment.

Wong's expose created restiveness within the Marines. Reyes offered Wong the assignment of chief of the Northern Command. Realizing he was being demoted, Wong resigned from his post. Asked to comment on the matter, Macapagal-Arroyo said Reyes had done "the right thing."

TI report, 2003

In the 2003 report by the international anti-corruption watchdog Transparency International (TI), the Philippines has fallen from rank 77 to rank 92 in an index of 133 countries rated for corruption. On a scale of 1 to 10, the Philippines scored 2.5 points-just 1.2 points away from the world's most corrupt country, Bangladesh.

The Macapagal-Arroyo administration came to power in January 2001 through a popular uprising that broke out largely on the issue of corruption. Bulatlat.com

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