Ducky Paredes

“The President appoints anyone (relatives, cronies, childhood friends and classmates – in fact, just about anybody) to run these establishments.” 

by Ducky Paredes

A Senate resolution expresses shock over the “excessive and unwarranted” allowances, bonuses, incentives and other perks received by executives of government-owned and –controlled corporations. The Senate resolution asks the President to make these executives stop.

The resolution filed by Sen. Franklin Drilon, chairman of the Senate finance committee, also asked that the “directors’ fees, bonuses, stock options, allowances and other benefits of the representatives of the GOCCs and GFIs in the governing boards and subsidiaries where the said GOCCs and GFIs have investments or outstanding loans be turned over to the concerned GOCCs and GFIs.”

There was a time when this was not a problem. It used to be that what Drilon is now proposing as a solution was actually the prevalent practice. Persons sitting on boards as representatives of government corporations would turn over whatever they received from these companies to the government. As our society as a whole (and government) turned more and more dishonest, this practice (which was never set in stone) was, first ignored, then, later, totally abandoned.

In looking over the budgets of these GOCCs, the senators discovered the dishonesty practiced by officials and governing boards of various GOCCs and GFIs — the Metropolitan Water and Sewerage System, Government Service Insurance System, Social Security System, the Development Bank of the Philippines and Clark Development Authority, who, among others, “have been granting themselves unwarranted allowances, bonuses, incentives, stock options and other benefits.”

Notes the senate resolution: “Among the irregular and abusive practices uncovered during the inquiry were: (a) the representatives of the Social Security Commission (SSC) to the board of directors of Philex Mining earned, in addition to their bonuses, some P55 million by way of stock options; (b) three SSS representatives in the board of directors of Union Bank earned P46 million in bonuses, or around P15 million each; (c) the MWSS, despite incurring a loss of P3.5 billion in 2008, declared a bonus of P5 million for its board members in 2009 and granted 25 bonuses in one year; and (d) GOCCs have failed to comply with the requirement of R.A. 7656 to remit 50 percent of its net earnings to the national government.”

One has to ask, however, how it happens that, since the Senate has been looking over the budgets of these GOCCs and GFIs annually, why this anomaly seems to have been discovered only now. This is not a new thing; it has been going on forever.

Certainly, this needs reform; if the present President will succeed in leaving a better country than whet he inherited, he must find a way of reigning in the greed that pervaded in the last administration. Perhaps, though, there may also be a need for reform in how those who would run these government institutions and corporations are chosen.

The President appoints anyone (relatives, cronies, childhood friends and classmates – in fact, just about anybody) to run these establishments. The appointment paper from the Office of the President addressed to the Board of Directors of the GOCC begins with this:  “It is my desire that . . .” Thus, ultimately, the President is responsible for how his appointees do.

Perhaps, a President ought to instruct each appointee as to the limits of his emoluments.  Either that or there ought to be a law that establishes absolute limits on what these presidential favorites can take home. After all, they are political appointees whose primary qualification is that they are personally known to the President or one of his close associates. If they are over-qualified for what they will be making, let them treat the posting as a sacrifice for the country. If they are (as must will be) under-qualified, they ought to kiss the feet of the President every single day that they have such a posting in a country with possibly the highest percentage of jobless college graduates.

That this is happening (a few persons taking home millions) even as these government firms are still being subsidized by the government to the tune of more than P15 billion annually is a mark of how dishonest we have become, as evidenced by the presidential cronies of the last President.

What, to me, is truly condemnable is that this was also happening in the Social Security System (SSS) and the Government Service Insurance System (GSIS). These two GFIs oversee the contributions of private and government workers. They are handling, not government funds, but workers’ funds.  Thus, when Drilon reveals that outgoing SSS chairman Thelmo Cunanan received a total of P132.65 million compensation as a member of the board of directors of Philex Mining, First Philippine Holdings, and Union Bank from 2007 to 2010, one who contributed to the SSS as a worker, has a right to feel robbed.

Senator Drilon is right in saying this: “Thelmo Cunanan is a member of board of directors of Philex and Union Bank. His bonuses belong to the SSS because the social fund has investments with these private companies.”

The one good thing about the SSS is that the new P’Noy-appointed SSS chairman is a proven manager who ran multinationals locally and abroad and the new President, a veteran banker. This is a much better crew that that of a retired general and a government functionary who both were, besides being ill equipped for their positions, never even members of the SSS.

(One wonders though how much — in retirement benefits — they will be receiving from the workers’ fund.)

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“Is it less dishonest to do what is wrong because it is not expressly prohibited by written law? Let us hope our moral principles are not yet in that stage of degeneracy.” – Thomas Jefferson

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“I have sat at the sumptuous tables of power, but I have not run away with the silverware.”  – Diosdado Macapagal

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“There can be no tyrants where there are no slaves.“ — Jose Rizal 

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hvp (09.02.10)

Readers who missed a column can access www.duckyparedes.com/blogs. This is updated daily. Your reactions are welcome at duckyparedes@yahoo.com

“(I)t was the Presidents . . . that defeated Epira, the law that was created primarily to bring down our power costs.”

by Ducky Paredes

Rodolfo A. Morales, Jr. OIC Manager, Corporate Communication Division of the Power Sector Assets and Liabilities Management (PSALM) Corporation wrote us last week to react to our column on “Ben Evardone’s crusade.” I find interesting some of his explanations. Read on:

“We wish to clarify that the proceeds collected by the Power Sector Assets and Liabilities Management (PSALM) Corporation from the privatization of the assets of the National Power Corporation are intact and are not missing contrary to claims in recent media reports.

“These proceeds have been used and continue to be used by PSALM Corporation to service the financial obligations of National Power, as stipulated in Republic Act No. 9136, the Electric Power Industry Reform Act (EPIRA).

“Of the USD10.653 billion that PSALM has generated so far from the privatization of National Power’s assets, only USD4.65 billion has been collected as of 31 July 2010, with the rest of the amount due in deferred payments. The collected amount was used to pay off National Power’s financial obligations.

“Since 2004, when PSALM’s privatization program had commenced, total National Power obligations had continuously gone down from USD19.49 billion to where it now stands at USD16.36 billion.

“While National Power’s debt stood at USD16.5 billion before the enactment of the EPIRA in 2001, the figure ballooned to as high as USD22.9 billion in 2003 because of the costs arising from the new Independent Power Producer (IPP) contracts amounting to USD1.75 billion. These contracts include San Roque, Kalayaan Units 3 and 4, Mindanao Coal Plant, Bakun and Ilijan. The commissioning of these IPPs was necessary at that time to cover the shortfall in generation supply. 

“A presidential directive in 2002 to peg the Purchase Power Cost Adjustment to PhP0.40 per kilowatt-hour (kWh), which kept electricity charges down and was implemented until 2004, contributed to the decline of National Power’s fiscal standing. Thus, PSALM incurred borrowings to cover the widening annual deficit of National Power amounting to USD3.2 billion.

“Aggravating National Power’s fiscal woes was the implementation of the PhP0.30 per kWh mandated rate reduction for residential customers nationwide which translated to a PhP2.5-billion reduction in National Power’s revenues per year.

“Likewise, there was no rate adjustment or increase of power tariff until 2004. The sharp depreciation of the peso from PhP44.19 in 2000 to PhP54.20 in 2003 also contributed to the decline in National Power’s fiscal condition.

“And while the national government did absorb PhP200 billion in debts in 2004, National Power still ended up losing an estimated USD350 million in terms of foreign exchange from the debt absorption. This is because the conversion rate used in the transaction had already fallen to PhP56:USD1 in 2004 from PhP51 in 2001 (when EPIRA took effect).

“Also, because of the timing variance between the cash inflows from the privatization proceeds and the maturity of National Power’s debt obligations, PSALM still had to borrow to refinance maturing obligations.

“PSALM incurred borrowings amounting to USD2.2 billion in 2009 and PhP30 billion in 2010 to address National Power’s debts that would mature in 2009 and 2010.  The objective of the loans is to manage National Power’s liquidity risk by ensuring the availability of funds. From 2009 to 2011, PSALM is scheduled to settle a total amount of USD4.5 billion in maturing obligations, including interest.

“We also note that even the authors of the EPIRA recognized that the privatization proceeds would not be enough to cover the debts incurred by National Power. Thus, the EPIRA requires the collection of Universal Charges to recover stranded debts and stranded contract costs.

“Finally, we emphasize that PSALM’s accounts were disclosed to the ERC, contrary to statements claiming that PSALM refused to tell the honorable commission where the privatization and loan proceeds went, supposedly because the information was confidential. The allegation of lack of transparency is clearly unfounded. PSALM’s accounts were submitted to the ERC as part of documents required for the petition for the Universal Charge for stranded debt and stranded contract cost. The Commission on Audit (COA) likewise reports on its review of PSALM’s finances. These documents are publicly accessible from COA’s and ERC’s websites or from the offices of those agencies.”

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Clearly, it was the Presidents (Ramos on the IPPs and Gloria on mandated low rates on power sales) that defeated Epira, the law that was created primarily to bring down our power costs. Where do we go from here? At some point, the generosity of our presidents with what is basically our money to serve their own narrow ends has made the country and the consuming public even poorer that they were before these Presidents took office.

Ka-awa-awa talaga ang Pinoy. We all get poorer while those who become Presidents are usually richer when they leave the presidency than they were when they took office.  Sadly, this is also true of Senators, Congressmen LGU officials, Cabinet men and those appointed to the agencies and Government Owned and Controlled Corporations (GOCCs) and the government’s financial institutions GFIs).

Since most of those (if not all of them) appointed fto these agencies, GOCCs and GFIs are presidential appointees whose main credential consists of their being appointed by the President, why cannot the President insist on their taking only a portion of their salaries and benefits (i.e., Php 50,000 a month for board members and Php 100,000 for CEOs and COOs. who are supposed to know how to run the companies) and return the balance – including all other perks – to the National Treasury. I am sure that any President will find enough persons to fill all those posts and we would not have the scandal of political appointees making so much for dong so little.

As friends of the administration and the President, most should be willing to make a sacrifice, if in truth, they could be making more money working in private companies. Why not? A small sacrifice to serve the country is not too much to ask for?

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“After all, while pursuing the case against Viking Haulers may give the Boca some headlines, does it actually have a case that it can win?”

 By Ducky Paredes

Perhaps, the old way of doing things where the President started his term on January 1 of the year after the November elections was the better way to go instead of the present system where we begin a new administration mid-year on July 1. But, it is long past the time when things ought to be as they ought to be.

Now, we begin the term of an administration on July 1 and end it on June 30 six years later.

Sadly, now it seems now like June 30, 2006 seems a long way off.

Noynoy Aquino’s time as President now seems like too long a time for a presidency that may produce not much in relations to other presidencies that produced too little to matter.

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 When one pays what it owes government, one expects that the payment ends one’s obligations. Why is it that now it seems as though that what one has paid for vehicles brought in through the Bureau of Customs (BoC) on which were paid taxes, as computed by BoC personnel, were apparently less than what had to be paid. But, who could tell you how much you had to pay if not the BoC personnel themselves?

This is the situation that an independent car importer finds himself in, although in reality he is paying even more than what other luxury car importers are paying the BoC on their car importations.

But, how do these importers know how much they are supposed to pay? BoC personnel tell them how much they should pay. When their shipments come in, they are told the amounts they are supposed to pay. Thus, when they pay the amounts that are told them, they can bring their imported cars out of the BoC area and register their imported cars with the Land Transportation Office (LTO).

Thus, I cannot see how the BoC can now say that Viking Haulers, which has been in existence for several years now, can be accused of not paying the proper taxes when what an importer pays is whatever the BoC personnel tell them to pay.

Besides, someone in Viking Haulers tells me that they actually pay more than what other importers (PGA Cars, Prestige Cars and others) are paying on their importations of these luxury car importers.

Why is the BoC picking on a small imported car importer rather than the larger ones considering that the smaller importer is actually (according to them) paying even more than the other larger importers?

There was a time when those dealing in imported cars never paid any taxes on their importations. They would get people with permits to import cars for being in the diplomatic service to own the importations; these would then be sold to buyers who would not have to pay any import taxes since the cars would be registered under the names of the diplomats. (Of course, the diplomats would have to be paid for their acquiescence.) Eventually, under one of the previous BoC Commissioners, a modus Vivendi was worked out whereby the people in this business were allowed to bring in these luxury cars under affordable tax rates even as the more expensive official tax rates were still in place.

I am not suggesting anything, Our new BoC personnel should be allowed to do what they think is best; but, shouldn’t they also look at what the previous BoC Commissioners did before immediately upsetting the applecart that has been in use for sometime?

After all, while pursuing the case against Viking Haulers may give the BoC some headlines, does it actually have a case that it can win?

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I am saddened by the bad press that the P’Noy administration has been getting primarily from the botched handling of the hostage situation of last week. The fact is that this administration will (from al indications) be an honest one where not a single centavo will find itself in corrupt official’s pockets. One keeps hoping that it will remain this way.

At the same time, one realizes that a government that does not deliver what the masa needs has no chance of finishing its term, Another realization that just one clean P’Noy administration is not enough to change the way that the Philippines operates.

We need a series of Presidents (who are clean) to change the way that the rest of us (and the government) do our things.

To be able to do what needs doing P’Noy must remain a popular force to the end of his term so that he will be a factor in who we will choose for our next president. Then, that President must also keep his mandate to the end of his term in 2018. We need about five Presidents who will be honest and clean before we can effect a change in how we operate and do things. That is the reality.

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Perhaps, it is time for P’Noy to speak to all of us about corruption and how this has affected the way we do things. Clearly, the Manila Police treated the hostage taker with kid gloves because he was one of them. This is corruption, too, when a criminal is treated with deference because he is or was one of them even when clearly the hostage-taker was doing a continuing criminal act. He ought to have been shot when he showed himself alone and an easy target.

P’Noy should say that corruption must be ended and that he is committing himself to this. Some have suggested that P’Noy (if he does this) may not live to see the end of our widespread corruption, that someone will pay to have him assassinated. I, on the other hand, am more optimistic, believing that the rest of us want to see an end to the way that things were done in previous administrations.

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Readers who missed a column can access www.duckyparedes.com/blogs. This is updated daily. Your reactions are welcome at duckyparedes@yahoo.com

“We did not win. The PIATCO claim was dismissed but all of the 23 counterclaims our government filed were also dismissed.”

by Ducky Paredes

 

Imagine yourself an employee in an agency or an owned or controlled corporation of government. It’s tough getting any additional pay or benefits. There never is any money for the rank-and-file.

Yet, the political appointees of Government-Owned and Controlled Corporations (GOCCs) take home millions.

Even worse is the situation for the rank-and-file employees of the Manila International Airport Authority (MIAA) whose appeal for pay increases or the mere integration of the cost-of-living allowances (COLA) and amelioration allowances of MIAA workers into their salaries has been pending for ten years. The case is now in court, even as most other workers in other government agencies have had these same benefits for years.

Yet, this is a pittance compared to what the MIAA has been shelling out due to a miscalculation of Gloria Arroyo.

 The work on Terminal 3 of the MIAA began during the Ramos presidency and continued under Erap. In 2002, amid rumors that the contractor PIATCO (composed of Germany’s Fraport AG and its local partner Paircargo of the Cheng family) had not come up with the proper funds, Gloria revoked the contract with PIATCO.  

 Our Supreme Court then ruled that the contract was, anyway, void ab initio. Like an annulled marriage, the contract never happened; but the SC allowed PIATCO to sue for just compensation and ordered the government to pay P3.2 billion for the semi-finished building constructed by PIATCO.

PIATCO, in suing for just compensation, decided not to go to a Philippine court but to the arbitration court in Singapore’s International Chamber of Commerce.

Since 2002, the MIAA, so stingy with its rank-and-file has already spent (as of February) $46,573,787.60, equivalent to P2,095,820,442.00! This is what the arbitration case had so far cost this poor country – in lawyer’s fees.

Last Feb. 4 alone, the MIAA released $3.5 million to the Office of the Solicitor General (OSG) to pay for legal fees in the arbitration proceedings. In February of last year, $2.36 million was withdrawn from MIAA’s account in favor of the OSG. A letter to the Landbank dated Feb. 23, 2009 and signed by GM Al Cusi and MIAA Senior Assistant General Manager Roberto Uy confirms the release of this amount to the OSG.

Through several resolutions adopted by the MIAA Board starting in 2003, the agency has been releasing funds to the OSG for the expenses incurred for the arbitration proceedings.

And, it’s not over yet. Another $400,000 (P20 million) is about to be spent.

The good news is that, according to government, we have won the arbitration case filed by PIATCO. Malacañang claims that the government saved $1.1 billion or roughly P49 billion by winning the arbitration case.

The government is telling a half-truth. To get to $1.1 billion, it added the cases filed by PIATCO ($565 million) and Fraport ($465 million before the World Bank’s International Centre for Settlement of Investment Disputes, which was dismissed earlier).

We did not win. The PIATCO claim was dismissed but all of the 23 counterclaims our government filed were also dismissed.

In fact, the ICC noted how badly our case was represented by stating in it decision that when the Philippine government “turns to discuss each particular counterclaim, with some exceptions, it does not point to a particular legal basis for putting forward the claim.

 “Where it does point to a legal basis, it is not at all clear to the Tribunal that such basis supports the counterclaim made. In those circumstances, it is not the role of this Tribunal to select an appropriate legal basis for each of the counterclaim out of the potpourri proffered by the Respondent (Philippine government) in its introduction to the counterclaims.”

So, what were our lawyers doing?

These local and foreign lawyers included retired Supreme Court justice Florentino Feliciano and UP Professor Maria Lourdes Aranal Sereno, who was recently appointed to the high tribunal by President Aquino. Initially, the OSG represented the Philippines in the ICC proceedings in Singapore and hired services of international law firm White and Case, which later also hired the services of Florentino and Sereno.

It was reported that during the ICC hearings in Singapore, a minimum of 10 government lawyers from the OSG were present. Wow! We had the lawyers from White and Case, Feliciano and Sereno plus ten OSG tourists?

Among these counterclaims was a plea before the arbitration body to declare PIATCO a “builder in bad faith,” which would have denied PIATCO the right to recover its expenses incurred in building Terminal 3 and would have allowed our government to claim damages for its graft-ridden contract.

The Singapore arbitration tribunal ruled instead that PIATCO was a “builder in good faith,” and could seek compensation to recover its costs in building NAIA-3.

I really think that we lost – at least two billion pesos and counting — for the unsuccessful and pointless and useless legal campaign that we incurred. In fact, our expenses for Terminal 3 went up by two billion pesos in legal fees and PIATCO is not done with us, yet!

And the poor rank-and-file of the MIAA have not yet been given their just compensation!

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The first P’Noy appointment to the Supreme Court, UP Professor Maria Lourdes Aranal Sereno was a major participant in “winning” against PIATCO, right?

Malacañang spokesman Edwin Lacierda, in announcing her appointment said that the President does not personally know Sereno, but that she was chosen based primarily on her “admirable” credentials, particularly her role on the PIATCO case.

 Lacierda stated that Sereno’s competence couldn’t be questioned, as, according to him, she was among those instrumental in the Philippine government’s victory against PIATCO and Fraport in the arbitration proceedings involving NAIA-3.

 But, how can that be when an official document shows that Sereno was no longer involved in the arbitration proceedings as of August 28, 2008.

 A letter sent by fax and e-mail by White and Case to the ICC tribunal members in Singapore on that date stated that Sereno was no longer connected with the PIATCO case.

Signed by White and Case’s Carolyn B. Lamm, the letter said: “Please be advised that Ms. Maria Lourdes Sereno is no longer one of the Respondent’s Representatives as listed in Section 1.3 (b) of the Terms of Reference and should not be copied on future correspondence.”

 The Office of the Solicitor General also received copies of the letter from White and Case.

The arbitration proceedings just recently ended; so how could now Justice Sereno have been involved in winning the case if she had already dropped out as legal counsel two years before?

At least, it proves that neither the president nor his spokesman personally knew her or even of her.

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hvp (08.26.10)

Readers who missed a column can access www.duckyparedes.com/blogs. This is updated daily. Your reactions are welcome at duckyparedes@yahoo.com