Category: Manila Times Columns

Biazon doesn’t understand arithmetic

I am reprinting my column (with some deletions) that appeared here in February in order to emphasize my utter puzzlement why even as President Aquino has shamed the Bureau of Customs in front of the nation as a den of thieves, he has kept as its head Rozzano Biazon, who was tasked nearly two years ago to clean it up. Here it is:

* * *

I wrote a piece “Smuggling at its worst under Aquino” on November 15, 2012 in the Philippine Daily Inquirer when I was still a columnist there.

The analysis used data from the International Monetary Fund’s Direction of Trade Statistics and compared the value of imports as reported by the Philippines and the value of exports to it as reported by the exporting countries. Discounted for the exports’ cost of freight and insurance, the difference between the two figures roughly indicates the magnitude of smuggling in a particular country. Many economists have used the technique, even as early as 1965 in an analysis of smuggling in our country at that time.
The conclusions form the computations are shocking: Smuggling in the Philippines is at its worst under President Aquino’s first two years in office to June 2012, with the smuggled value averaging $19.6 billion annually, an explosion from the comparable figures of $3.1 billion and $3.8 billion yearly during Presidents Estrada’s and Gloria-Arroyo’s terms, respectively. For the first two years of Aquino’s administration, the estimated smuggling totaled $39.2 billion.

Subsequent disclosures have bolstered the analysis, the most recent one being Petron chairman Ramon Ang’s claims that massive smuggling of gasoline and diesel has been costing the country P30 to P40 billion in lost government revenues.

While largely shrugging off my analysis, Customs chief Ruffy Biazon however issued a reply November 19, which is accessible at

I was flabbergasted by his response, and you will too if you read it. His reply reveals not only how ignorant he is of how our imports are monitored but also his shocking illiteracy in arithmetic.

Biazon wrote there: “What may be reported by China as an export to the Philippines may not be reported by the Philippines as an import if it is meant for the Freeport Zones and Economic Zones which utilize imported products in the production of goods which do not enter the domestic market for local consumption.”
Such a statement from the Customs chief is alarming. He is saying that imports of the country’s export processing zones (e.g., Clark and Subic Bay free ports) are not included in the country’s import figures, as collated by the National Statistics Office, from which the IMF gets its data for the country’s trade figures.

This is completely false. If this were true, our import figures for instance of $61 billion in 2012 would be reduced to only $47 billion, to exclude our biggest import — inputs for electronic products mainly assembled in and exported by firms in the export processing zones.

We really don’t have to go into such counter-factual arguments. While imports to export processing zones are duty-free, the Customs bureau monitors these and reports their values to the National Census Office in its Bureau of Customs Form NO. 2342-CEWE (formerly EPZA Import Tally Form No. 8102).

Perhaps Mr. Biazon isn’t even aware that there are Customs offices and directors for each export-processing zone. While these Customs officers’ main work is to compile the import figures for submission to NSO since no duties are collected, and to be sure that such duty-free imports are actually used by the firms there, strangely there has always been fierce lobbying by Customs officials to head the units in these zones, especially Subic Bay and Port Irene.

It gets worse. In his reply, our Customs chief doesn’t even seem to know basic arithmetic. He wrote: ”(Mr. Tiglao’s chart 1) shows that $19.6 B was the value of alleged smuggled goods. It means that in his table, the $19.6B covers a period of two years, or $9.8 B annually.”

Biazon then claimed “Immediately, it is noticeable that the opening statement of the article, which claimed that the value of smuggling in Mr. Aquino’s first two years totaled $39.2 Billion, is not supported by chart 1 presented in the same article, which shows $19.6 Billion for the same period.”

But table was very clearly titled “annual average”, that the $19.6 billion is the annual average value of smuggling. To get the total for Aquino’s first two years in office, you multiply that, and not divide it as Biazon did, by 2 and you will come up with the $39.2 billion figure. I’m afraid the concept of an arithmetical average seems to be beyond Biazon’s comprehension.

Biazon continued: “Mr. Tiglao is claiming that the annual value of smuggled goods is $39.2 Billion. But in (the table) in his opinion piece, it is indicated that the total estimated value of smuggled goods for the first two years of the Aquino administration is $33.2 Billion. Once again, this does not match the statement at the beginning of his piece that under “President Aquino’s first two years, the value of smuggling totaled $39.2B.”

Our Customs commissioner just can’t seem to read well. The table was very clearly titled estimates of smuggling from “selected countries”, not from all exporting countries. Only eight countries—where our country gets most of our smuggled goods—are included in that table. I calculated these figures to show that as many have suspected the bulk of smuggled items have been coming from China.

(Note: Biazon has not responded to this column, in contrast to his lengthy reply to my first column posted at his website, in which he boasts that he is a techie. Be careful not to go to though, as this very weirdly is a blogsite titled “Mature Dating for the Shy.”

Filed under: Manila Times Columns

Gates to the hell of cancer

The horrendous traffic in Metropolitan Manila doesn’t only result in huge economic costs, estimated by one study to amount to a horrifying P2.5 billion per day. It doesn’t only make the quality of life of ordinary Filipinos a purgatory on earth, as they wait for hours every working day to get into a jeepney or a bus and then for these vehicles to traverse the traffic.

The pollution from the traffic generated by a hundred thousand vehicles is hell on earth for any human being: cancer, particularly breast cancer, the incidence of which may actually be on a nearly pandemic level in the metropolis.

This could only be logical conclusion from the incidence of breast cancer rates in several areas in the metropolis as reported in a 2010 article “Cancer Incidence and Survival in Metro Manila and Rizal Province, Philippines,” by a group of researchers headed by Dr. Adriano V. Laudico. The researchers compared data of breast cancer incidence per city or municipality in the national capital region for 1998 (inset) and for 2002.

The picture is one in which the blight of cancer spreads out from the center of Manila to its adjacent areas from 1998 to 2002, as urbanization—and traffic—expand.



Areas which had the worst breast cancer incidence in 2002 (per 100,000 population) were Manila City (63 per 100,000 population), San Juan (70), Mandaluyong (57), Paranaque (70). Pasig (63) and Makati (52). This represented a worsening of the cancer incidence from 1998, when most of these areas had less than 32 cases per 100,000 population.

Municipalities at the fringes of the metropolis—such as Tanay, Pelilla, Montalban, Jala-Jala, and even Navotas at that time had significantly low rates of cancer.

These areas with high cancer incidence are those which already had heavy traffic in 2002, which has worsened probably tenfold now.

For 2011, the environment and natural resources department’s environmental management bureau reported that the following areas had the highest pollutants, with the reported microns of polluting particles per cubic meter (m/NCM) there higher than the 99 microns safe level: San Juan and Mandaluyong, 136; Makati, 131, Marikina, 123; and the Manila-Pasay boundary, 221.

The 2010 study however was not conclusive that traffic-caused pollution was the main factor or the incidence of breast cancer. It could have been due to “life-style changes” in these areas, as these were swamped with upper and middle-class migration to housing developments, for instance the posh subdivisions that expanded in Las Pinas and Muntinlupa (such as Ayala Alabang).

However, Evangeline Santiago, head of the Chemical Research and Analytical Services Laboratory of the University of the Philippines National Sciences Research Institute, explained in a recent article that particles produced by the combustion engines of motor vehicles spread into the air, contain polycyclic aromatic hydrocarbons (PAH) which have been identified in many scientific researches as carcinogens, particularly linked to breast cancer.

She wrote that World Health Organization’s studies “show that there is a probability of one in 10,000 that a person will have cancer if he is exposed to ambient air with 1 nanogram (ng)/m3 Benzo(a)pyrene during his lifetime.” Benzo(a)pyrene is one form of PAH. The UN’s International Agency for Research on Cancer listed Benzo(a)pyrene as a “Group 1 carcinogen” or highly carcinogenic to humans.

Santiago reported that her field research in 2001 in six sites in Metro Manila found that concentrations of the carcinogenic Benzo(a)pyrene were much higher (1.2-10.6 nanograms per cubic meter) than the cancer-causing threshold of 1 ng per cubic meter.

Pollution in Metro Manila is so visible: One can see it as a grey thick mist enveloping the metropolis when you’re driving at the highest point of the Skyway coming from the south, or even if you’re at the top floors of a condominium in Makati. One can see and feel it as black particles when you wipe your nose with a white handkerchief after a day in the metropolis.

As death is, cancer-causing pollution is even a “great equalizer” as not even the rich in their air-conditioned homes in posh villages, condominium units, and SUVs are shielded since the carcinogens of microscopic size aren’t blocked by air-conditioners’ filters.

Studies abroad have found that the microscopic pollutants even affect the chemistry of brains, that children growing up sniffing these have low IQs — a claim credible given the utter stupidity of our electorate in the metropolis that they even voted a convicted plunderer for mayor of Manila.

No wonder that most of us who’ve lived in the metropolis have a loved one, a relative, a friend, or work colleague who died of or is dying of cancer.

Indeed, breast cancer, going by the statistics of the Philippine Society of Medical Oncology has overtaken lung cancer as the most prevalent form of cancer in the country in the country.

Dr. Felycette Gay Lapus, the society’s president, also said that the Philippines had the lowest survival rate of people with breast cancer among 15 Asian countries. “So, we are number one for breast cancer in Asia. Three out of 100 (Filipino) women will get breast cancer before age 75 and one out of 100 will die before reaching 75,” Lapus said.

It is so ironic. The heavenly prosperity that Metropolitan Manila has been enjoying has made it the gates to the hell of cancer.

Filed under: Manila Times Columns

Aquino’s SONA: Lies, deceptions and silly boasts

How can you respect a President who, in a speech that should discuss where we are as a nation, instead brags about his purported accomplishments by barraging us with claims which turn out to be downright false, deceptive, arguable as to its veracity, or puerile boasts?

Given this newspaper’s deadline for column submissions, what follows is a preliminary list of such atrocious claims made by President Aquino in his 1.7-hour State of the Nation Address the other day.

RICE IMPORTS. Aquino (translated from Pilipino) said in his SONA: “According to the NFA, in 2010, the country imported more than 2 million metric tons of rice. In 2011, this fell to 855,000 metric tons. In 2012: 500,000 metric tons. And now in 2013: the maximum we will import, including the private sector, will be the minimum access volume of 350,000 metric tons. “

Did Aquino think we forgot about the reports of massive rice smuggling that the National Food Authority obviously can’t report? What follows is the report from, the recognized global grains industry news site, quoting separate reports of the US Department of Agriculture, which is known to rely for its data even on CIA intelligence:

“The USDA estimates that rice imports by the Philippines in MY2012?13 (May to April) are likely to reach around 1.5 million tons, while rice imports in 2013?14 are forecast at around 1.2 million tons. These figures are significantly higher than government figures of 500,000 tons of rice imports in 2012 and the targeted . . . rice imports in 2013.

The USDA says that the continued entry of undocumented rice (estimated at around 400,000 to 600,000 tons in MY 2012?13) into the country is a serious challenge to the Philippine rice industry. It says that smuggled rice into the country increased in 2012 and hurt the profits of local rice producers and traders.” (Emphasis mine.)

THE CONDITIONAL CASH TRANSFER PROGRAM. The rationale of the program—to prevent it from becoming merely a give-away—is that poor families receiving the funds are required to keep their children in school. Thus, the argument goes, the cycle of poverty will be broken as educated or merely literate workers have higher wages.

Aquino in effect claimed that the conditional cash transfer program is such a success in its major aim of getting children of poor people finish elementary that he would extend the program to include “families with children up to 18 years old …so that their children will be able to finish high school.”

However, a comprehensive assessment by the World Bank (“Philippines Conditional Cash Transfer Program Impact Evaluation 2012) released this year had the following main conclusion:

“The findings suggest that the program has not had a significant impact on increasing enrollment among older children aged 12-17 years old. . . . However, the program was unable to even improve enrollment of children 12- 14 years of age, who are currently covered under Pantawid Pamilya.”

Why would Aquino extend coverage to families with children up to 18 years old, when the program is failing in getting poor families’ children finish even elementary school, which is the minimum requirement for them to crawl out of the poverty quagmire?

COCONUT INDUSTRY. Aquino thought he had hit on a brilliant idea by claiming that if coconut farmers just intercrop their farms with coffee (or bananas and cacao), they will be rich, earning more than P150,000 a year. Wow!

But somebody should tell Aquino that’s been tried even before the last world war in almost all coconut-producing countries in the world.

The Philippine Coconut Authority during Marcos time (using the controversial coco levy) even made heroic efforts to introduce intercropping. Such programs were mostly failures, and proven to be unworkable, unless billions of pesos in funds support them. Small, poor coconut farmers (which dominate the industry) can’t afford the seedlings and fertilizers for the new crops, markets for the new crops (like cacao) are too far, and risks for incurring loans for these new ventures are too high. If they fail they’ll be losing their lands.

Aquino bragged: “We were able to use 5,500 hectares of land for intercropping in 90 different locations throughout the country.” Didn’t someone tell him that there are 3.9 million hectares of land planted to coconuts? Isn’t it so silly that Aquino thinks it is such a big accomplishment to report to the nation in his SONA that after three years he succeeded in introducing intercropping in 0.1 percent of the Philippine coconut hectarage?

A LIE SO HE COULD BOAST. Aquino said in his speech: “Let us take the Philippine Reclamation Authority (PRA) as an example. In the thirteen years prior to our term, from 1996 to 2009, the dividends of the PRA amounted to a sum total of P676.8 million. Along the straight path: in 2012 alone, their dividends: P1 billion pesos. Is this not a complete transformation?”

Audited statements of the PRA show that its dividends from 2007 to 2009 amounted to P2.1 billion. If you include those for 2010, the total would be P2.6 billion. Aquino clearly lied on reporting the P678 million figures.

There’s more. PRA’s income for 2012 has grown allowing it to remit P1 billion to the National Treasury thanks to you commuters, at least those regularly commuting from Cavite and Manila, who pay about P64 to use the R-1 Extension of the Manila-Cavite Expressway (Cavitex), which opened in 2011. That stretch of Cavitex is owned and operated by the PEA Tollways Corp., a wholly owned subsidiary of the PRA. And who shepherded this project, which involved massive funding from Malaysian companies? Presidents Ramos and Arroyo.

Aquino claims its P1 billion is due to the PRA’s “complete transformation” under his administration. Of course Aquino didn’t mention that PRA’s president and chief executive officer is Peter Anthony Abaya, who had been one of Arroyo’s technocrat from 2001 to 2008, first as energy undersecretary, with his last post being CEO of PNOC Alternative Fuels Corp. from which he resigned because of health reasons.


“(We) are seeing the effects of the honest, transparent, and clear way we have been going about our PPP Projects . . . Apart from the Laguindingan airport, which is already being utilized, we are upgrading and modernizing the Tacloban Airport, the Bicol International Airport, the New Bohol Airport, and the Mactan Airport, all at the same time. The Daang Hari-NLEX link road is the fastest PPP project that has been awarded in any administration, with no shortcuts in the processes.”

The International Monetary Fund assessment of the PPP project, quoted from is Staff Report on its 2012 Article IV consultations:

“The current government initiated a series of PPP projects, but these have been implemented slowly, with contracts for only two projects (road network and classroom construction) awarded so far to the private sector. While the PPP pipeline includes 22 projects across various sectors, the total cost of all projects is still small (less than 2 percent of GDP). “


“In the space of only three years, we have proven that agencies that were once cesspools of corruption can be transformed into examples of honest and efficient service. (Secretary Singson’s) kind of honest leadership has allowed the DPWH to save P18.4 billion, which has been allotted to other meaningful projects.”

Both Aquino and Singson have been repeating again and again that the DPWH has been saving billions of pesos by reducing graft in its projects. They have, however, not given any details how this has been accomplished, so that they might as well claim P100 billion and we have no way of verifying it.

One case where the project cost significantly went up is the Ternate-Nasugbu road. Ricardo Ramos, head of the NGO InfraWatch that is monitoring the government, reported that the signage for the early 2010 for that project showed that it costs P600 million.

Now the DPWH lists its cost in its reports at P820 million, Ramos said. Ramos, who has been in the construction industry, explained that a significant part of the corruption at the DPWH now involves contracts to repair roads that do not need to be repaired, but only to provide easy projects for DPWH officials’ favored contractors.

The modus operandi Singson would have told contractors: “Incur savings on this project so we’d appear good in media, and I’ll give you easy projects to capture these savings.”

Strangely, there have been no changes at all in the DPWH’s bureaucracy. Nor has there a single charge of graft filed in the Ombudsman under this administration for cases of corruption in the DPWH committed in the past or incumbent administrations. Are we to believe that personnel of the DPWH—in surveys always ranked in the top three most graft-ridden agencies in the past several administrations—have suddenly become saints?

What is also shameless for this president is to claim that infrastructure projects that were“ started 20 years ago” such as the Ternate-Nasugbu road and the Aluling bridge in Ilocos are being constructed only under his term.

As a former congressman and senator, Aquino knows full well the DPWH has master plans looking into decades in the future, renewed almost every year that includes just about any infrastructure project the country needs. These projects, however, actually get started only when Congress approves budgets for these, based on the assessment of their urgent needs.

Why the heck is Aquino so obsessed with TESDA, a minor agency whose main activity—running training programs for blue-collar work—doesn’t require much brains and leadership, just enough funds to pay for trainors?

If we can’t trust Aquino on information he claims in the most important speech he makes every year, why should we trust him at all?

Filed under: Manila Times Columns

‘Kung walang corrupt, walang mahirap’

So was, and still seems President Aquino’s slogan. . . .

The slogan was invented in the 2010 campaign by an advertising executive, who of course brainstormed the catchy sentence in the way she dreamed up ad copies for commercials for detergents and deodorants. Never mind whether it’s realistic or rational, just as long as it sticks in people’s minds. Never mind if no country on earth actually developed just through an anti-corruption drive.

After three years in power, Aquino’s campaign slogan haunts him. One is even tempted to argue logically from it: “There is more poverty now; therefore, there is more corruption? “

The poverty incidence—percent of population poor—has hardly improved, from 28.6 percent of the population in 2009 to 27.9 in 2012, the last available data. Subjective surveys of the Social Weather Stations do not indicate any improvement in poverty incidence after that.

Source: Computed from NSCB data.

Source: Computed from NSCB data.

But the rate masks the worsening lot of Filipinos under Aquino. There were 26.3 million poor Filipinos in 2009, now there are 800,000 more: 27.1 million. Among these are the extremely poor, barely managing to keep body and soul together: 9.7 million.

That means one in four Filipinos are poor, one in 10 barely managing to survive.

For all of Aquino’s boasts—and he will make many today, many even false ones— his administration hasn’t dented at all the country’s poverty problem. And that is the bottom line of any government’s performance: whether or not, it improves the lot of its citizens.

Aquino’s track record is dismal if one notes that during President Arroyo’s term, the 28.8 percent poverty rate in 2006 was reduced to 28.6 in 2009.

That was despite the slowdown in the gross domestic product’s (GDP’s) growth rate from 5.2 percent in 2006 to 1.1 percent in 2009 because of the Global Financial Crisis that was at its worst in 2009, a recession worse than the Great Depression of the 1930s, which severely cut down our exports. But Arroyo launched, just when the crisis appeared on the horizon, a P330 billion Keynesian type of response called “Economic Resiliency Plan” that shielded the poor from the global slowdown.

In sharp contrast, GDP in 2012 grew by 6.6 percent. But that hardly dented our poverty profile, which was at 27.9 percent of the population.

Aquino can’t make the excuse that growth doesn’t spread to the poor automatically.

Indonesia’s GDP growth rate last year was 6.2 percent, lower than the Philippines’ 6.6 percent. But Indonesia’s poverty incidence went down from 13.3 percent in 2010 to 12 percent last year. Thailand’s GDP growth was 6.4 percent in 2012; its poverty incidence went down from 17 percent in 2010 to 12.8 percent.

Quite obviously, Aquino’s growth has been mostly for the elite, aptly symbolized today in metropolitan Manila by images of towering condominium buildings with shanties in the foreground, and street beggars tapping on the windows of Audis, asking for loose change.

The world of Aquino’s elite has started to impinge on and directly worsen the poor’s world, a recipe for social and political unrest. Resort developments in such areas as Tagaytay and Batangas are ending the poor’s decades-old lease arrangements with absentee landlords, creating a new angry mass of squatters.

A type of local vicious cycle is being strengthened, its impact affecting the nation. The Communist and Islamic insurgencies in such provinces as Samar, Negros Oriental, Leyte, Apayao, Ifugao, and southern and central Mindanao provinces have been feeding on poverty in those areas. The intensified insurgencies worsen poverty in those areas as businesses flee the fighting, and the entire country becoming for the global community a politically unstable one.

Source: NSCB

Source: NSCB

The national poverty figures actually mask the reversal of gains in reducing poverty in many provinces achieved by Aquino’s predecessor, President Arroyo. In nearly half of the country’s provinces, the reduction of poverty achieved from 2006 to 2009 was reversed under Aquino, the incidence of poverty rising. (See table)

Even in such a minuscule province as Batanes, the fiefdom of Aquino’s ideologue and Budget secretary Florencio Abad, the poverty incidence more than doubled, from 14 percent in 2009 to 37 percent. No wonder, Abad’s wife nearly lost—winning by only 200 votes—in the recent congressional contest. The poverty rate in Capiz, home province of Aquino’s would-be successor Mar Roxas, went down to 29 percent from 2006 to 2009; it increased to 30 percent in 2012.

The impoverishment in several provinces under Aquino’s watch is actually alarming, with the poverty incidence at rates seen only in war devastated countries:

• In six provinces, half of the population have become poor, down from the 2009 levels: Occidental Mindoro, Negros Oriental, Bukidnon, Lanao del Norte, North Cotabato, and Northern Samar;

• In four provinces, two out of three Filipinos are poor: Ifugao, Eastern Samar, Lanao del Sur, and Maguindanao.

On Wednesday: Why poverty won’t be solved under Aquino.

Filed under: Manila Times Columns

Malampaya claim shows pork-barrel tale a scam

It is the pork-barrel-scam accusers’ allegation that P900 million in Malampaya Funds were stolen by one Janet Lim-Napoles that reveals that the claims are an utter fabrication, even a sloppy one at that. How the Malampaya funds got into the picture also points to the brains of this propaganda plot.

The Philippine Daily Inquirer in its July 16 banner headline titled “Malampaya Fund lost P900 M in JLN racket” reported the accusations:

• “At least P900 million from royalties in the operation of the Malampaya gas project off Palawan province intended for agrarian reform beneficiaries has gone into a dummy nongovernment organization (NGO), according to an affidavit on a P10-billion racket submitted to the National Bureau of Investigation (NBI).

• The Department of Agrarian Reform, then headed by Secretary Nasser Pangandaman, was the implementing agency of the oil funds.

The DAR has never been “the implementing agency of the oil funds” and has never had any involvement as conduit for those moneys. The DAR is not one of the three departments—the budget, finance and energy—which under a Joint Circular of January 2008 managed the release and utilization of a portion of the Malampaya Funds, that allocated for Palawan.

The DAR never got P900 million from the Malampaya funds earmarked for agrarian reform beneficiaries or for disbursement to NGOs under the pork-barrel system.

Audits by the Commission on Audit of the DAR from 2008 to 2012 do not contain any single reference to a Malampaya Fund in the department’s budget and expenditures.

In July 2011, obviously exasperated over the wild, ignorant charges hurled in a Senate investigation, Budget Secretary Florencio Abad clarified that the bulk of the P79.5 billion share of the government, or 60 percent of the Malampaya gas field’s income, formed part of the state’s revenues, as much as customs duties and income taxes are.

However, for accounting purposes, to comply with certain provisions of Presidential Decree No. 910 that legally governs the Fund, and to support the government’s priorities, part of the funds received by various departments for certain projects were booked by the Budget Management and the Treasury as coming from the Malampaya Fund, code named “Fund 151”.

The departments didn’t even know that the funds they were getting from the Treasury were booked as such. Even the Commission on Audit obviously didn’t, as there was no reference at all to a Malampaya Fund in its audit reports for the years 2009 to 2012 for the DAR and for three other departments I checked.

For instance, the P423 million used for the purchase of a US Coast Guard cutter that became the BRP Gregorio del Pilar in 2011 was booked as coming from the Malampaya Fund, and so were the Aquino administration’s emergency P2 billion funding for the fuel requirements of National Power Corp. and its P450 million Pantawid Pasada fuel subsidy last year to jeepney and tricycle operators last year to prevent them form striking.

During President Arroyo’s term, certain budgets of government agencies—such as the P1 billion for the Armed Forces Modernization Fund, P7.7 billion for infrastructure projects, and P4 billion for agriculture—were booked as coming from “Fund 151.” Some P900 million of the DAR’s budget was similarly booked, which the ignorant pork-barrel-scam scam artists thought were given to the DAR to be disbursed at their officials’ discretion.

The confusion of the accusers—or their puppet masters— arose from the fact that out of the Malampaya Funds from 2004 to 2008, P3.9 billion were remitted to the Palawan local governments on the provincial, city, and municipal levels, which had features of a pork-barrel fund in that local politicians could direct where and how it would be used.

This was the result of an interim, compromise agreement with the national government since the province had filed a case that reached the Supreme Court claiming most of the state’s shares, on grounds that the gas field was within its boundaries, and therefore it owns 40 percent of the national government’s share revenues, according to the Internal Revenue code.

It was the Department of Energy which acted as conduit of the funds and which evaluated the projects these would finance. These projects were required to be mainly for infrastructure and electrification in Palawan. Agrarian reform projects or those related to this program were not included as eligible to be financed by the Malampaya project.

The COA’s 2012 report on the P1.36 billion Malampaya funds disbursed through the DOE to Palawan from 2004 to 2007 concluded that P131 million (9.6 percent of the total) were still unliquidated, mainly by the Public Works department for road projects.

Strangely, there have been reports in media that the COA’s Fraud and Investigation Office and the Ombudsman have been investigating the second disbursement to Palawan made in 2008 amounting to P2.6 billion. However, the COA’s 2011 annual report said that it had already audited these funds, and its main conclusion:

“The (Palawan) Bids and Awards Committee awarded the 217 infrastructure projects with total cost of P1.714 billion to the contractors without posting the Invitation to Apply for Eligibility and to Bid in the Government Electronic Procurement System and in the agency website as required in Sections 8.2.1 and 21.2 of R.A. No. 9184.

Without such posting, widest dissemination of IAEB and best prices for the projects were not secured.”

So were in the world did the “scam” scam artists get the idea of claiming that P900 million from Malampaya funds were stolen by Napoles?

In November 2012, there was attempt to link President Gloria Macapagal-Arroyo to allegations that she was involved in a “Malampaya scam”. The propaganda operation—the venue for which were solely reports in ABS-CBN television network—claimed that “ghost NGOs” in Arroyo’s home province Pampanga were the recipients of these funds. The operation fizzled out because of its sheer nonsense.

And what was the figure claimed in that smear job? An ABS-CBN News article on November 29, 2012 titled “More NGOs that got Malampaya money go missing” reported:

“In 2009, the entire P900 million given to DAR from the Malampaya fund was distributed to various NGOs . . . with the agreement that the groups would be the ones to distribute the funds in DAR’s behalf.”

The article did not explain where it got the P900 million figure, or what agency reported it. Those allegations fizzled out, since they were clearly fabricated and preposterous.

The tale of Napoles stealing P900 million from Malampaya funds is obviously regurgitation—a sloppy one at that—of a propaganda script in 2012, at that time targeting Arroyo. I strongly suspect the present fabrication was concocted while the accuser Benhur Luy was kept at the NBI headquarters since April.

The same brains obviously dusted off his old playbook— even if it had failed—so that the targets this time are the three senators who could make a bid for the presidency, or the vice presidency in 2016: Ramon “Bong” Revilla, Ferdinand Marcos, Jr. , and Jinggoy Estrada.

Conveniently for the plotter, he found a desperate low-life to scream the fabrication in media.

It was only yesterday that it was disclosed that charges had been filed at the Pasig City Regional Trial Court Branch 265 against the principal accuser, the 31-year old Benhur Luy, for pocketing P300,000 of the money Ms. Napoles—which he has accused of being the “scam’s” mastermind—asked him to deposit in the bank. The complaint was made in April and the judge found probable cause for him to be put in jail.
Guess when did the Court issue the arrest warrant?

July 5, a few days before his accusations were first printed. in the Philippine Daily Inquirer July 12.

The other day, Justice Secretary Leila de Lima—the Justice secretary for Chrissakes, who is the principal officer of the Republic charged with implementing the law of the land—refused to turn him over to the Court, claiming that Luy is under her Witness Protection Program. Since when can a protection program countermand a Court order?

A suspected thief using media to hurl charges of a scam involving billions of pesos, accusing five senators including the Senate President and seven congressmen of complicity – so he won’t be arrested.

Definitely a cliché, but I just can’t resist saying it: “Only in the Philippines.”

Filed under: Manila Times Columns

Questions on ‘the pork barrel scam’ scoop

(First of Two Parts)

For the seventh straight day yesterday, the Philippine Daily Inquirer’s banner headlines have been its scoops on the alleged scam involving Congress pork barrel funds, that these were hijacked by one Janet Lim-Napoles.

The articles were mainly written by reporter Nancy Carvajal, and backed up by the paper’s investigative team chief Fernando del Mundo. Del Mundo even implied that a burglary at his home was done by criminals hired by the scam’s brains. That of course indirectly confirmed—dramatically—that the articles were on to something very serious, and that we in the press should be alarmed over such brazen attack on media.

The articles are certainly spectacular, and could be another feather in the cap of the PDI, where I am proud to have been a columnist. And as I‘ve always believed, excellent papers are excellent papers because of the exclusive, investigative stories it regularly publishes—a feat only four publications do. I do hope that the series leads to the reform of the pork barrel system, officially called Congress’ Priority Development Assistance Fund.

It is an unwritten rule—or professional courtesy—that a journalist from one paper does not criticize the reportage of another. He does so only by way of reporting a third party’s denials.

However, I’d have to stick my neck out in the case of this pork-barrel reportage, in the spirit of camaraderie in the brotherhood of journalists. After all we are all committed to the truth, and the last thing we would want is that our profession be used for a dark agenda.

What also prodded me to write this critique is that I witnessed first-hand in 2001 how an alleged whistle-blower could be so skillful as to fool even veteran intelligence officers and hard-nosed journalists. I’m referring to Ador Mawanay, who had very detailed figures on Panfilo Lacson’s alleged dollar accounts in US banks, which also became banner headlines for the PDI. Mawanay turned out to be a very clever con man, his allegations completely fabricated.

I must say when I saw a very short TV footage of the main accuser Benhur Luy impishly smiling as he took off his dark glasses and cap, he reminded me so much of Mawanay.

To be frank, I have become sick about self-styled whistle-blowers. We should drop that term whistle-blower, as it presumes what they are claiming is true, and call them the neutral term “accusers.”

Remember Dante Madriaga who accused a “Greedy Group (again a made-for-media term) headed purportedly by First Gentleman Mike Arroyo of extorting $40 million in the ZTE controversy? But do you remember that even rabid anti-Arroyo Senator Panifilo Lacson demanded that the Senate throw him in jail for being a liar? Did your read that he recently claimed that there was nothing wrong with the ZTE contract?

Or Jun Lozada, who thought that making up allegations against the former President could save him from the solidly-based corruption charges against him when he headed the Philippine Forest Corp. President Aquino himself doubted his truthfulness, and now Lozada is “whistle-blowing” against him and his relatives.

Many aspects of the pork-barrel reportage are odd, which professional journalists would easily detect.

First, the “P10-billion” figure is obviously designed for shock and media impact, since the accusers do not have a tally of the alleged pork-barrel funds stolen. Notice how the term “P10-billion pork barrel scam” has stuck so swiftly and has been repeated again and again in media now?

Whoever thought of “the P10-billion figure” is a skilled PR man, with an extensive background in advertising, and fully knowledgeable how certain terms could stick in the public mind. Would PDI run a “P150 million scam” story as its banner?

“Billions” attract readers: a stringer at the New York Times, Carlos Conde, got a much-desired space in the paper by claiming a $2 billion pyramid scam in 2003, which turned out to involve less than P20 million. The Aman pyramid scam became headline news because of the P12 billion the con men allegedly amassed, even if that figure logically appears to be so huge as to be unbelievable. (Another headline in that propaganda genre: “We control government”, attributed to Napoles, which of course enrages everyone.)

Second, why did the accusers leak the story only to the PDI, when crusaders would call for a press conference so all media would hear their revelations? Was it because this would ensure it headline play by one of the biggest newspapers in the country?

A PDI correspondent, Tetch Torres-Tupas actually reported three months ago: “JLN Group of Companies (the Napoles firm) allegedly oversaw the implementation of several government-funded projects like the alleged Fertilizer Scam, Malampaya Fund Scam, and the Priority Development Assistance Fund (PDAF).” That article didn’t go anywhere though, until details were added starting last week, particularly the P10-billion figure.

Third, why are the accusers willing to be interviewed to this day, only by the PDI (and its broadcast-media working partner GMA News)? Are they afraid of being grilled on their allegations?

Fourth, Luy claims he was defending himself against Napoles and her brother Reynaldo Lim, who kidnapped him in March. But in April, Lim and Napoles’ counsel presented the CCTV footage by the security of the posh Pacific Plaza Towers showing that he was resisting the NBI agents’ demand for him to join them. Six witnesses—including the condominium’s guards—testified that he was not detained at the couple’s condominium.

The Department of Justice dismissed the NBI’s allegations of Luy’s kidnapping on June 10, 2013. Nearly a month later, the accusation was resurrected through PDI’s “scoop”, with its July 17 article even headlined: “Kidnapping led to discovery of P10-B pork scam.”

Despite Luy’s resistance, the armed NBI agents managed to get him and keep him in its offices. That was three months ago. Could that period been used by NBI elements to work out with Luy—willingly, or under the threat of being salvaged— an elaborate “P10-billion pork-barrel” story?

Fourth, how did the 31-year old Luy—whose highest position was probably as office clerk get to hire a lawyer, and to be so media-savvy to link up with the PDI? His lawyer Levito Baligod is based in Cagayan province, but is reportedly to be close to ranking NBI officials.

Why have the alleged affidavits, which make up the sole basis of the PDI’s stories, not been published by the newspaper, for others to confirm if these were actually signed by the accusers and notarized? This is important if you remember that ZTE accuser Madriaga circulated in media his alleged affidavit that contained his accusations, but which he later refused to sign. Would the accusers later turn out not to have signed the affidavits, therefore disowning them?

Fifth, who is the retired general Napoles claimed in his April letter to President Aquino was with Luy and others who were attempting to extort P300 million from her, or else she would be completely destroyed in media?

Sixth, why do we have the same talking heads in this pork-barrel brouhaha as in the past character-assassination operations undertaken by Mr. Aquino or his cohorts against former President Arroyo and former Chief Justice Renato Corona.

First is Justice Secretary Leila de Lima with her usual quote, “yes, the NBI is investigating” and the next day offering the accusers to be put under the Witness Protection Progam, which implies that they could be killed by the accuser’ guns-for-hire since their accusations are correct. Then BIR head Kim Henares steps in to practically label the target as a tax-evader, which obviously assumes that there is stolen money on which taxes should be levied. Then it is the Ombudsman ordering her own investigation. And of course Presidential Spokesman Edwin Lacierda with his drone that “this is part of the President’s anti-corruption campaign.”

Seven, and most importantly, the brouhaha’s targets. There are about 60 senators and over 800 congressmen in the ten–year period the alleged pork-barrel scam operated. There are many legislators most people and I know are so unscrupulous who I do not have the shadow of a doubt enriched themselves through the pork-barrel system. I would have listed them if not for my pity that this newspaper would be embroiled in an expensive libel suit.

But Luy alleged that only five senators were involved in this scam: Former Juan Ponce Enrile who can still, even by a long shot, foil Aquino’s plan to completely put the Senate under his thumb; his protégé, the quiet but fiercely independent Gregorio Honasan; and three senators who would likely make a bid for the presidency (or the vice presidency) in 2016—Ferdinand Marcos, Jr., Ramon “Bong” Revilla, and Jinggoy Estrada.

Too early for 2016? People have very long memories with regards to corruption allegations. Many still remember President Quirino’s “golden aurinola”—which actually turned out to be brass. Many still believe the canards hurled against President Arroyo in 2007 in a propaganda drive to trigger a fake People Power revolt, even if none has been proven so far, even after the Aquino government has left no stone unturned looking for evidence.

The PDI headline yesterday—why am I not surprised?—has President Aquino entering the picture, just in time for his SONA on Monday, and in effect confirming the five-part series: “P-Noy orders full fair, probe of pork scam.” (The subhead was “BIR also to scrutinize tax records of JLN,” a clever implication that yes, Napoles stole P10 billion.)

The truth could be somewhere in between. My gut feeling is that Napoles might have been involved in pork-barrel or municipal-fund scams but certainly not in the scale of a P10 billion operation.

Did somebody come up with a brilliant scheme to use this to end the ambitions of presidential hopefuls?

As is often the case, elaborate fabrications are exposed when one of its allegations that are shown to be totally erroneous. This involves the fifth banner headline of the PDI: “Malampaya lost P900 million in JLN racket.” On Sunday, I’ll discuss why auditors of Commission on Audit, and even Aquino’s budget secretary Florencio Abad would have fallen off their seats laughing after reading that.

Filed under: Manila Times Columns

IMF warns on real estate bubble

The International Monetary Fund has warned the Philippine government that one of the risks the economy faces is a “domestic asset price bubble”, which could burst, weaken its financial sector, and slow down economic growth. The IMF made this assessment in its “Country Report No. 12/102”, or its staff report for the 2013 Article IV Consultation with the Philippine government.

By “assets”, the IMF staff was referring mainly to shares traded in the stock market and real estate. “The ensuing risk of asset price bubbles and/or too rapid appreciation could compromise growth’s sustainability and dent employment generation,” it warned.


Source: IMF Staff Report 2013

“Reflecting ample liquidity and the low interest-rate environment, asset prices have risen rapidly,” the report explained.

It reported: “The Philippines’ stock exchange index rose 33 percent in 2012 and a further 8 percent during January 2013, with bank share prices jumping 59 percent in 2012. Nominal prices of high﷓end residential properties have also been buoyant, rising 8 percent year﷓on﷓year, with rents increasing more than 15 percent.”

The IMF data showed that the year-on-year increases in Philippine property prices (proxied by Makati prices) starting 2011 have been higher than those for Indonesia and Singapore, but a bit lower than those for Malaysia. (See chart)

The IMF pointed out that banks’ exposure to real estate has rapidly expanded, and their loans to this industry may not be reflected in their reports to the BSP.

It therefore recommended to the Bangko Sentral ng Pilipinas to monitor not only banks’ credits loans for property acquisition and to property developers but also its credits to thrift banks, which in turn use these funds for the industry.

The IMF report disclosed that the inter-agency committee called the Financial Sector Forum—consisting of the BSP, the Securities and Exchange Commission, the Insurance Commission, and the Philippine Deposit Insurance Corp.—have started “to gather information on all sources of real estate finance”, which should be accelerated and widened.

The IMF warned “real estate developers may (have been applying) less-stringent lending standards and more-generous loan terms than required of banks, including (a higher cap than the standard 60 percent loan-to-value) and by offering initial teaser terms.” The IMF staff claimed “some banks may not also be in full compliance with the loan-to-value limits.”

The IMF explained one possible weakness of the real-estate market by pointing out that “about 80 percent of new residential construction (by number of units) is in the low middle price bracket. Of these, about half are reported to be purchased pre construction by overseas foreign workers.” The risk here, the IMF implied, is the “possible non-renewal of OFWs’ short-term employment contracts”, which could make the real-estate projects unviable.

What is worrying, the IMF noted, is that “no institution has oversight responsibility for the housing sector from a macro-financial perspective.” It explained that such responsibility is not that of the Housing and Land Use Regulatory Board, which merely regulates construction standards and licensing real estate projects.

The IMF here was drawing from the experience of the real-estate meltdown in 2008 in the US, caused by real estate mortgages gone wild, which expanded into an untenable bubble, but were hidden because of complex financial instruments until it was too late.

In its Risk Assessment Matrix, the IMF staff outlined how the real-estate bubble could burst and torpedo the country’s long-term economic situation.

First, here are what it called the “Transmission Channels”:

• “Continued inflows into financial assets and real estate.

• Activity in construction and related industries accelerates, while others weaken.

• Financial sector exposure to real estate grows.”

These will lead to the following events:

• “Near-term growth rises strongly.

• Vulnerability of the financial system gradually builds (up).

• Asset price correction through financial accelerator channel weakens growth.”

The IMF explained how a short rapid growth could lead to a long-term stagnation: “Overly rapid credit expansion, coupled with intensified real estate activity and stretched asset prices—possibly driven by a capital inflow surge—could accelerate GDP growth in the near term. However, a subsequent unwinding would likely have large negative macroeconomic effects over the longer run.”

To prevent the property bubble from emerging, the IMF staff recommended the tightening of regulations on banks’ exposure to property especially with regards to the interpretation of the 20 percent limit on their loans to the real estate industry.

The IMF emphasized: “Prudent loan origination standards and existing regulations should be strongly enforced, supported by a comprehensive positive credit registry, conservative debt to income guidelines for retail borrowers, and granting an explicit legal mandate to an appropriate institution for stability aspects related to the real-estate sector.”

An emerging property bubble was one of five risks to the Philippine economy the IMF staff report outlined. The other four are as follows:

• “Default by a highly-leveraged conglomerate” (discussed in this column last Monday);

• “Capital inflow reversal affecting emerging markets, accompanied by a strong unwinding of asset price overvaluation”;

• Weakening economies of the US and Europe, resulting in smaller Philippine exports and remittances from OFWs; and

• Protracted period of slow European (or global growth).

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IMF warns of conglomerate’s default

The International Monetary Fund has warned the Philippine government that the economy faces a risk that a “highly-leveraged conglomerate”, or one part of it, would default on its “foreign obligations and/or domestic loans”.

“With a handful of large conglomerates following broadly similar business models, and bank exposure to them equivalent to a sizeable share of total capital, systemic risks are heightened, “ the IMF explained in its Country Report No. 12/102, or its staff report for the 2013 Article IV Consultation with the Philippine government dated April 2013. (Each member country of the IMF is required to provide data to and consult with the Fund’s staff regarding its economic situation and policies as provided for in Article IV of its Articles of Agreement.)Continue reading

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Zygotes and zombies: The Unborn, the Undead

When is a creature a person?

That really is the question the Supreme Court justices felt was most crucial in order to decide whether the reproductive health law is constitutional or not. It is not the newspaper headline “When does life begin?”, since obviously even a spermatozoa or an egg on its own is already a living thing.Continue reading

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Corruption persists: Why wouldn’t it?

Transparency International’s Global Corruption Barometer for 2013 confirms what most informed Filipinos have concluded after three years under President Aquino’s administration: Corruption in this country persists and has increased.

Based on 1,000 respondents in the Philippines, the organization’s survey showed that nearly two-thirds (62 percent) believed that corruption has remained the same or increased.Continue reading

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