GMA Faces New Suit Over Maynilad Bailout

Like a troubled ship in the high seas, the Macapagal-Arroyo government is facing a wave of charges for alleged midnight deals, appointments and election cheating. If any of the seven graft cases that have been filed so far succeed, Macapagal-Arroyo may kiss her presidential bid goodbye come May 10.

By Alexander Martin Remollino 
Bulatlat.com

Like a beleaguered ship in the high seas, the Macapagal-Arroyo government is facing a wave of charges for alleged midnight deals, appointments and election cheating. If any of the seven graft cases that have been filed so far succeed, Macapagal-Arroyo may kiss her presidential bid goodbye come May 10.

And now this one.

A broad coalition of political groups is set to file charges against the Macapagal-Arroyo government in connection with the debt-to-equity deal between the Metropolitan Waterworks and Sewerage Systems (MWSS) and the Lopez-owned Maynilad Water Services, Inc. that took effect last March 18.

The legal action was announced March 26 in a news conference in Quezon City by the Water for the People Network. The network is composed of Bagong Alyansang Makabayan (Bayan), Ibon Foundation, Confederation for the Unity, Recognition and Advancement of Government Employees, Kilusang Magbubukid ng Pilipinas (KMP – Peasant Movement in the Philippines), Cordillera Peoples’ Alliance, Center for Environmental Concerns (CEC), Kalikasan-People’s Network for the Environment, the Gabriela women’s alliance, Kalipunan ng Damayang Mahihirap (Kadamay – urban poor alliance), and community-based organizations.

Earlier, Alyansa ng Pag-asa senatorial bet Melanio “Batas” Mauricio, Jr. had filed a case against the government over the same MWSS-Maynilad deal.

In the news conference, Arnold Padilla, IBON Foundation’s advocacy officer on water, said the charges are being prepared with their lawyers. “We are preparing our documents carefully because we don’t want to file a haphazard case,” he told reporters.

Bailout

The debt-to-equity deal between MWSS and cash-strapped Maynilad converts some P8 billion in unpaid concession fees into a 61-percent government stake in the water company. Under the agreement, the Lopezes’ foreign corporate partner, the French company Suez through Ondeo Philippines will remain part owner of Maynilad with a 19-percent share. Benpres Holdings, which used to control majority shares, will continue managing the water company. Ondeo previously owned a 40 percent share in Maynilad.

Maynilad, which obtained the MWSS concession for its west zone in 1997, stopped paying its concession fees in March 2001. Even so, it has not stopped collecting from customers the Foreign Currency Differential Adjustment and the Accelerated extraordinary Price Adjustment, mechanisms which enable it to recover foreign-exchange losses related to the concession agreement.

Macapagal-Arroyo last week defended the government “take-over” of Maynilad as being in the interest of consumers. “We are doing this because we cannot sacrifice the providing of water for the people,” she told reporters during one of her campaign sorties.

Likewise, Justice Undersecretary Manuel Teehankee has claimed that consumers will benefit from the deal. This has been echoed by presidential spokesperson Ignacio Bunye, who described the MWSS-Maynilad agreement as “a win-win deal.”

Outstanding debts

But Bayan and Ibon Foundation reveal that under the debt-to-equity deal, the government had also agreed to shoulder Maynilad’s outstanding debts amounting to some P11 billion.

The Water for the People Network, in a statement released to the media last March 21, has also disclosed that to enable Maynilad to pay its outstanding debts, the government will allow the water company to raise its rates by 32 percent. Since it took over the metropolitan west zone in 1997, contrary to government promises of lower water rates under privatization, Maynilad has increased its rates by 226 percent—while the Ayala-owned Manila Water Company has hiked its rates by 350 percent - studies by Ibon Foundation revealed.

Anakpawis party-list nominee Carmen Deunida, who does laundry work for a living, also assailed the government’s shouldering of Maynilad’s debts. In a statement last March 26, Deunida said: “Maynilad is a private business corporation, and the Lopezes are entrenched business monopolists. They know the risks of the business. They have no right to pass on their debts to the government; and for its part, this government has no right to pay for these debts using taxpayers’ money.”

The Water for the People Network has termed the MWSS-Maynilad deal as a bailout, which Maynilad chairman Oscar Lopez has denied. “How can it be a bailout when the Lopez Group is completely writing off its equity investment of $80 million?” Lopez asked in a statement recently issued to the media.

Reacting, the Network said: “If we convert the $80 million in equity investment, its peso equivalent is only P4.5 billion. This amount is not enough to pay for its P8-billion debt to the government. “The Lopez family should be ashamed of themselves if they ask for a reimbursement!”

On the other hand, Bayan spokesperson Renato Reyes, Jr. has called the MWSS-Maynilad agreement a “sweetheart deal.”

Sen. Loren Legarda, a vice presidential bet of the Koalisyon ng Nagkakaisang Pilipino and a host of one of the programs of the Lopez-owned ABS-CBN, has described the deal as one that “stinks to high heavens.”

Mismanagement

The Maynilad chair has also denied that the water firm was mismanaged. “We are not leaving a desolate and financially unsound company as the misinformed wish to believe,” said Lopez, “and definitely, there was no mismanagement of the water utility.”

But by its own admission, Maynilad’s total liabilities amount to some P19.1 billion as of December 2003, while its assets reach only P16.9 billion. “Maynilad sought corporate rehabilitation because it is desolate and financially unsound,” the Water for the People Network avers.

The Network adds: “Maynilad has been mismanaged from the start as Benpres and Suez made the concession a milking cow. From 1997 to 2001, it overshot its projected expenses by around P800 million due to questionable expenses.”

To illustrate, the water firm has been outsourcing its consultancy and management development to firms associated with Benpres and Suez. From 1999 to 2000 alone, it spent P1.2 billion for such services. It has also been importing computers, brass fittings for water meters, etc. from French companies affiliated with Suez.”

The Water for the People Network has also refuted Maynilad’s claims of having accomplished a lot in its six and a half years. According to the network, more than 43 percent of Maynilad’s customers do not enjoy a 24-hour water supply, while some 1.5 million people in its service area have no water supply at all.

The network further notes: “The outbreak of water-related diseases in Tondo, which claimed the lives of several people and hospitalized many others, was due to Maynilad's failure to repair and improve its infrastructures.”

Campaign

Meanwhile, Bayan and the other organizations in the Water for the People Network are set on a campaign against the MWSS-Maynilad deal. They are demanding a complete government take-over of Maynilad and the scrapping of the privatization policy, which was started by the Ramos administration in accordance with International Monetary Fund-World Bank prescriptions.

Preparations are being made for various campaign activities, including petition-signings in communities.

“In the final analysis,” said Reyes in a statement, “it is the people who will suffer the most from the ‘sweetheart deal’ as they will be the ones who will pay for the rehabilitation and debt payments of Maynilad.”

Deunida, for her part, said: “Privatization is killing the people.” Bulatlat.com

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