Part 1: Has Carpio been their lawyer?
CONCEALED by the flag-waving histrionics of Antonio Carpio and Albert del Rosario is a classic case of oligarchic rule.
What triggered the Aquino 3rd regime’s conflict with the Chinese that led to the unprecedented Philippine arbitration suit against China and which sustains the Sinophobic campaign in the country was the ambitious, rushed project of three tycoons and their companies to become energy giants in a few years.
The project was the extraction of natural gas from the Sampaguita Gas Field in the Reed (Recto) Bank in the Spratly (Kalayaan Islands). That Sampaguita field was estimated in 2005 to have as much as the gas deposits of the Malampaya well off Palawan, which has provided a fifth of the country’s energy requirements since 2002.
However, the Malampaya well — 90 percent owned by Shell Petroleum and Chevron with the Philippines having a 10 percent stake — is estimated to run out of gas starting 2024. The three magnates figured through Reed Bank, they would be among the region’s largest energy firms. Since it started in 2002, revenues of Shell and Chevron from Malampaya have been estimated to total $90 billion.
This Recto Bank triad* consists of the primus inter pares, the Indonesian magnate Anthoni Salim, who through his First Pacific conglomerate run by his top CEO Manuel Pangilinan, owned 70 percent of Philex Mining, whose subsidiary Forum Energy held the government contract to extract oil and gas in that area of the Reed Bank. (Isn’t it ironic First Pacific is based in Hong Kong, a Chinese territory?)
The second biggest owner, with 30 percent, is port and casino magnate Enrique Razon, who in 2010 got the Arroyo government to issue the so-called Service Contract No.72 covering the Sampaguita Oil Field to Forum Energy to extract oil and gas in the disputed part of the Reed Bank. Before Razon got into the picture, Forum Energy only had what is called a geophysical survey and exploration contract (GSEC), or the authority to explore for gas and oil, not to extract it. Razon acquired a 30 percent stake in the service contract in 2009. (Isn’t it ironic it is Razon who is the main contractor for the building of the P20 billion Wawa Dam, funded mainly by China?)
The third tycoon is Marcos technocrat Roberto Ongpin who has 20 percent ownership of Forum Energy, through his Atok Big Wedge listed firm. It was Ongpin who led an investors’ group in 2008 to sell the last tranche of Philex Mining to First Pacific that gave it full control of the firm. First Pacific had to buy it, spending a total of P25 billion, as it owned Forum Energy. Ongpin holds the distinction of being the only tycoon specifically labeled by Duterte — back in 2016 — as an oligarch.
How much has the triad plunked in for its Reed Bank project? I estimate at least P50 billion, including the cost of First Pacific’s acquisition of remaining Forum Energy shares from its British owners. A drop in the bucket though compared to the hundreds of billions of pesos in potential revenues from the Malampaya-like gas well. However, it is a mammoth investment for the triad, which therefore called for an all-out, no-holds-barred campaign to push it through by any means.
The triad’s project took off the ground when its survey ship MV Veritas Voyager on March 2, 2011 sailed to the Sampaguita Oil Field to undertake seismic surveys to determine locations of gas deposits where exploratory wells would be drilled.
That was just six weeks after Albert del Rosario became Aquino 3rd’s foreign affairs secretary, who would turn out as that administration’s point man in dealing with China. Del Rosario for much of his working life has been with the First Pacific conglomerate as director in the biggest of its Philippine firms and for several years of the Hong Kong-based mother firm itself. While he went on leave as director of these companies, as required by law for a government official, he got his old directorships back as soon as he stepped down as foreign secretary.
The Voyager’s surveys were still to be completed when two Chinese Maritime Surveillance (CMS) vessels on March 2, 2011 drove it away from the area, radioing that it was on waters under Chinese sovereignty and it had no permission to undertake surveys for oil and gas.
It wasn’t just accidental the Chinese vessels spotted the Voyager in the vast expanse of that sea: They were waiting for it. The Chinese had sent both the Arroyo and Aquino administration angry notes verbales in 2010 and 2011, protesting the Philippines’ authorization of Forum Energy to explore and extract hydrocarbons in the area, on grounds the area was within its sovereign territory. These diplomatic notes were totally ignored by the two administrations.
While the incident wasn’t much reported in media, a US-based think tank, believed to be connected with US intelligence agencies reported two months later, in a clearly congratulatory tone:
“The Philippines’ response was immediate and fairly robust: Western Command deployed an OV-10 light attack aircraft and an Islander observation aircraft to Reed Bank; two coast guard vessels were subsequently dispatched to escort the Veritas Voyager until its survey activities had been completed. In describing the incident, Armed Forces Western Command Gen. Juancho Sabban warned: ‘It’s clearly our territory. If they bully us, ‘even children will fight back.’ Defense Secretary Voltaire Gazmin and Armed Forces Chief Gen. Eduardo Oban later visited the Western Command headquarters in a show of support.”
Contrary to that report that portrayed the Philippines successfully resisting China, the reality was the triad’s ambition to become energy giants was stopped dead in the water. No survey ship has been sent to that area to this day.
It would be President Aquino 3rd a few months later who would make the incident nearly a casus belli, involving the country’s integrity, to the puzzlement of most Filipinos at that time who hadn’t heard of a “Recto Bank”.
‘What is ours’
In his July 2011 State of the Nation Address, a speech usually reserved to discuss the country’s most important problems, Aquino fired the opening salvo in his administration’s all-out campaign to force China to abandon the Reed Bank and demonize it as a bully in the region.
In melodramatic fashion, he declared in his speech: “What is ours is ours. We will defend Recto Bank as if it were Recto Avenue.” He even revealed in that speech his government’s move two years later: “We are already studying the possibility of elevating the case on the West Philippine Sea to the International Tribunal for the Law of the Sea.”
Such vehemence against a superpower, I have to suspect, could only be explained if Aquino had acquired a stake in that billion-dollar project.
In June 2012, First Pacific CEO Pangilinan, to salvage their project, went to Beijing to offer the China National Offshore Oil Corp. a stake in it. The Chinese outrightly rejected the offer. Aquino’s ranting against China and his boasts the US had our backs and will be giving us warships to patrol our seas against Chinese intrusions escalated.
On June 4, del Rosario ordered our vessels to vacate Scarborough Shoal, ending the eight-week stand-off there with Chinese ships but surrendering it to the Chinese — the only territory (after Sabah) we have lost as a nation.
Using the need to recover Scarborough as an excuse, the Aquino regime in January 2013, filed its arbitration suit against China. While it asked the arbitral panel 15 issues, the suit was the Carpio-advised scheme to get it to order China to allow the Voyager and Philippine-authorized entities to extract natural gas in the Reed Bank. It alleged the Chinese basis for banning such enterprises was its claim its “nine-dash line” encompasses that area. This, however, is wrong, as China claims the Reed Bank on the ground it is within its Nansha archipelago (Spratly) is its sovereign territory.
A book which lawyer Carpio appears to have bankrolled as it portrays him to be the patriotic brains of the arbitration, implied a few months after the Reed Bank incident, he “drafted a seven-page confidential memo, titled ‘Proposed Philippine Strategy in the Spratly Dispute’ which he gave to del Rosario.” It proposed a suit be filed against China to force it to allow the triad to extract gas in the Reed Bank.
Never before had Carpio expressed any interest in geopolitics nor our territorial disputes with China before he gave this memo to del Rosario. After this, the issue has consumed this corporate lawyer, turning him into the most vehement critic of China. I don’t think this is due to the fact his wife is Vietnamese, whose country lost more than hundred of its soldiers to China in battles in the Paracel and in the Spratly.
Del Rosario himself has disclosed several times the arbitration was Carpio’s brainchild: “As early as 2011, Justice Carpio correctly foresaw the unilateralist path on which Beijing would embark in its attempts to control the South China Sea. He pointed to and proactively advised [us] on the use of international law as the best and most peaceful means of securing our position on the basis of universally recognized global norms and principles.”
Indeed, after the 2011 Reed Bank incident, Carpio has campaigned feverishly against China, apparently making this more important than his post as Supreme Court justice: He gave 200 lectures on the South China Sea issue here and abroad since 2011 and even wrote an e-book on it published 2017.
I don’t think Carpio could or would defy his corporate-lawyer DNA not to charge — at the highest rates possible. Of course, given the huge stakes — the triad or First Pacific for his legal advice and propaganda services on its huge problem with China. I emailed him if officially or unofficially he was contracted by First Pacific to be its lead lawyer for it to continue its Reed Bank project. He hasn’t replied. First Pacific’s managing director for public affairs denied he is. Carpio works for free?
If he is indeed lawyering for the triad, that explains everything: He is not after the truth but like all lawyers, simply arguing for his client.
To be fair to the triad, it is unlikely to have ordered the anti-China campaign: It is the practice of magnates (and mafia godfathers) not to bother with the details for accomplishing what they want, in this case for China to allow their oil and gas project to proceed.
However, they obviously haven’t stopped their operatives from undertaking a vicious Sinophobic campaign, on the very wrong assumption China will buckle under both local and international public opinion to “comply” with the arbitration award.
The media venues owned by First Pacific, mainly the Philippine Star and TV 5, have become Carpio and del Rosario’s megaphones, having the most strident anti-Chinese columns and editors publishing whatever they say. The Philippine Daily Inquirer in which First Pacific has a 20 percent stake not only took in Carpio as a columnist who has devoted nearly 90 percent of his pieces against China. That paper, as I have written several times before, has been spreading outright fake news regarding China in the South China Sea.
Pangilinan either through his personal or corporate funds is likely funding del Rosario’s “ADR Stratbase Institute” — an anti-China propaganda venue thinly disguised as a think-tank — since he is its vice-chairman.
Indeed, Carpio and del Rosario’s ability to continue their anti-China rhetoric is a testament to the power of the oligarchy in molding people’s minds.
Because of First Pacific’s media power, del Rosario’s post as foreign affairs secretary and as a close associate of the conglomerate that owned Forum Energy wasn’t raised at all as a clear case of conflict of interest.
However, in a TV interview in July 2016 in which he was asked about his conflict-of-interest situation, del Rosario answered in infamous what’s-good-for-General-Motors-is-good-for-the-USA manner: “I was working for the country. If Manny [Pangilinan] benefited from that, the whole nation will benefit.”
The Chinese move stopped dead in the water the triad’s P50 billion project to become an Asian energy conglomerate. It could pursue that plan only if China allowed it to explore and develop gas and oil in the Reed Bank, which the superpower claims as its territory.
However, rather than the Philippines pursuing bilateral negotiations to convince China to do so, the Aquino regime took a belligerent stance against China and filed a suit to force the superpower to give up the Reed Bank. But the arbitration panel did not even order China to vacate the Reed Bank.
The Philippine squabble with China is a textbook case of oligarchic rule, a demonstration of oligarchs’ power to direct foreign policy to one that would have been disastrous for the country had it not been reversed by President Duterte. It certainly has been a national tragedy — which even makes us the world’s laughingstock — that we had been quarrelling with a superpower in the region because of the ambitions of an Indonesian oligarch and two of the country’s richest billionaires.
*I use this term not in its meaning as “a secret society originating in China, typically involved in organized crime” but in its dictionary sense of “a group of three connected people.”