Press Release

15 August 2006

MIRIAM URGES SENATE TO FOCUS OWWA FUND SCAM PROBE ON RAMOS

Senator Miriam Defensor Santiago today urged the Senate to focus its ongoing OWWA fund scam inquiry on the culpability of former President Fidel V. Ramos and so-called “Ramos Boys,” former OWWA Administrator Wilhelm Soriano and R-II Builders owner Reghis Romero II.

In a Resolution filed today, Santiago said the Senate committee on labor and employment should focus on the criminal and civil culpability of Ramos, Soriano, and Romero who, in 1995, “with malicious intent and in evident bad faith, facilitated the disastrous OWWA investment in the Smokey Mountain Project.”

The Smokey Mountain Project was a joint venture of the National Housing Authority and R-II Builders to develop the Tondo garbage dump into a residential and commercial complex. To finance the project, Asset Participation Certificates (APCs) with 8.5% annual interest were issued, fully guaranteed by the Home Guaranty Corporation (HGC).

In December 1995, OWWA reportedly invested P459.47 million, with a face value of P500 million, in the project. In 2000, R-II Builders reportedly defaulted when the APCs had matured and amounted to P835 million.

After R-II Builders defaulted in its obligations, OWWA sought payment from HGC, which agreed to pay P500 million and to issue debenture bonds worth P335 million, plus interest of 8.5% annually.

In January 2003, HGC paid OWWA P500 million in cash and only P72 million in bonds. In June 2005, HGC promised to release P300 million worth of bonds. However, the 2005 Report of the Commission on Audit states that HGC issued only P100 million worth of bonds in October 2005.

According to Santiago, although on paper, OWWA should have earned P40.5 million when HGC paid the P500 million, the payment was made only after seven years, and was reportedly much lower than what OWWA could have earned if only R-II Builders had paid its obligations.

Santiago said the Smokey Mountain investment was contrary to the legal policy of the OWWA to ensure “the efficiency of collection and the viability and sustainability of the fund through sound judicious investment and fund management policies.”

She also called on the Senate to inquire into the alleged lack of approval of the investment by the then OWWA Board of Trustees.

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Press Release

15 August 2006

SENATE EXPRESSES SUPPORT FOR UN RESOLUTION CALLING FOR END OF LEBANON WAR

The Senate yesterday unanimously approved Senate Resolution No. 540 expressing support for the United Nations Resolution which called for an end to the war in Lebanon.

The Resolution was authored by Senate Minority Floor Leader Aquilino Pimentel Jr. and Senator Miriam Defensor Santiago.

On 11 August 2006, the UN Security Council unanimously passed Resolution 1701, which calls for full cessation by Hezbollah of all attacks against Israel, for immediate cessation by Israel of all offensive military operations against Lebanon, and for withdrawal of all Israeli forces from southern Lebanon.

The UN Resolution took effect yesterday, at 1:00 p.m. Manila time.
According to Santiago, the Senate Resolution is in line with the Constitutional provision declaring that “the Philippines renounces war as an instrument of national policy, adopts the generally accepted principles of international law as part of the law of the land, and adheres to the policy of peace, equality, justice, freedom, cooperation, and amity with all nations.”

In the Senate Resolution, senators also called on all parties involved to disarm all armed groups in Lebanon; for states to take necessary measures to prevent the sale or supply of arms to any entity or individual in Lebanon; and for states to consider making appropriate contributions to the UN Forces in Lebanon (UNIFIL).

President Gloria Macapagal Arroyo has reportedly also expressed her support for the UN Resolution. However, she has issued directives to continue implementing her August 2 order for the mandatory evacuation of all OFWs in Lebanon, for lack of assurance that the ceasefire will be strictly observed by the warring camps.

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Press Release

14 August 2006

MIRIAM URGES SENATE PROBE ON PORO POINT CONTROVERSY

Senator Miriam Defensor Santiago today called on the Senate to investigate the reported takeover by government agencies of the operations of the San Fernando seaport from the Poro Point Industrial Corporation.

The takeover was reportedly orchestrated by the DENR Environmental Bureau, the Bases Conversion Development Authority (BCDA), the Philippine Ports Authority (PPA), and the Poro Point Management Corporation (PPMC). According to media reports, the takeover was effected with the use of arms and violence by government operatives, and in defiance of a temporary restraining order issued by the Regional Trial Court (RTC) of San Fernando.

Santiago said the incidence of violence and apparent brutal flouting of the rule of law occurring in the San Fernando seaport is indicative of a police state or a military state.

Until the present time, representatives from the BCDA, PPMC, and PPA reportedly continue to defy the TRO by relying on the presence of armed Coast Guards and PNP personnel at the San Fernando port.

In a Resolution filed today, Santiago urged the Senate committee on environment and natural resources to inquire into the continued open defiance of the concerned government agencies of a valid and existing TRO issued by a court of justice, in order to emphasize the principle of judicial supremacy and the rule of law.
According to the senator, the court order does not appear to be prohibited by Presidential Decree No. 605, which bans the issuance by courts of preliminary injunctions in cases of permits issued by public administrative officials, because PD No. 605 refers only to “the exploitation of natural resources.”

The senator said neither does the TRO appear to fall under the prohibition of Presidential Decree No. 1818, which involves only the operation of a public utility operated by the government.

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Press Release

9 August 2006

MIRIAM URGES CONGRESS TO PASS 2006 BUDGET TO COVER COMELEC PREPARATIONS FOR 2007 ELECTIONS

Senator Miriam Defensor Santiago today urged Congress to pass a simple version of the 2006 budget to cover the Commission on Elections’ (Comelec) preparatory activities for the 2007 elections, instead of the “2006 supplemental budget” proposed by the Department of Budget and Management (DBM).

The Senate committee on finance today held a hearing on the DBM’s proposal to allocate P46.42 billion as a supplemental budget to “cover funding deficiencies of the government in the event that the 2006 National Budget is unacted upon by Congress.”

Until now, Congress has yet to pass what Malacañang calls the “long overdue” 2006 national budget.

According to Santiago, Congress should enact a 2006 budget that includes the appropriations made in the 2005 budget plus meritorious items in the DBM’s proposal, such as the P250 million allocation for the Comelec’s preparatory activities for the 2007 elections and the P1.31 billion allocation for the modernization of the electoral system.

Santiago said that the DBM’s proposed supplemental budget is a mix of proposals that appears to have been hastily assembled. She said the supplemental budget included valid requests for urgent activities, such as the conduct of the 2007 elections and the modernization of the electoral system. However, it also included some entirely new proposals, such as a P3.2 billion subsidy for the MRT 3, payment of government counterpart contributions to the HDMF, GSIS, and Philhealth going back to 1981, and adjustments in salaries and benefits of uniformed personnel.

Santiago said the proposed supplemental budget is in the nature of a special appropriations bill for which the Constitution requires a certification of funds from the National Treasurer or an accompanying revenue proposal. She said passing a simple version of the 2006 budget will do away with these Constitutional requirements, and will show that Congress is doing its primary job of enacting a national budget.

The senator said that in the event Congress is still unable to pass a simple version of the 2006 budget that includes appropriations for the Comelec’s preparatory activities for the 2007 elections and for the electoral modernization program, the problem can still be remedied through the process of augmentation. According to Santiago, since the 2005 budget is deemed reenacted due to the failure of Congress to pass a 2006 budget, the government can generate some of its savings to augment the Comelec’s budget. The government can do the same thing for other programs and activities outlined in the DBM’s proposal, provided that there are items in the 2005 budget that could be augmented, and the total authorized appropriations does not exceed the total non-debt service component of the 2005 budget.

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Press Release

7 August 2006

MIRIAM: MALACAÑANG CAN’T COMPEL SENATE TO SUBMIT ADVANCE QUESTIONS

Senator Miriam Defensor Santiago today said that executive officials cannot refuse to attend a Senate legislative hearing on the ground that the Senate did not furnish them with information on the “possible needed statute” that prompted the inquiry and the questions that will be asked during the hearing.

Last 31 July 2006, Executive Secretary Eduardo Ermita and other executive officials snubbed a Senate inquiry on the repatriation efforts of the government for Filipino workers trapped in war-torn Lebanon. In a letter dated 29 July 2006, Secretary Ermita told Senator Jinggoy Estrada, chair of the Senate committee on labor, employment and human resource development, that he and other government officials will be “unable to attend” the hearing until information on the “possible needed statute” that prompted the inquiry and the questions “relative to and in furtherance of the subject of the inquiry” are provided them. In his letter, Secretary Ermita also said that he must be provided with sufficient time to prepare for the hearing.

Malacañang officials likewise did not attend today’s Senate hearing on the Lebanon repatriation. In his letter, dated today, to Senator Jinggoy Estrada, Secretary Ermita said that even though Senator Estrada had furnished them with a list of bills related to Senator Richard Gordon’s Resolution No. 515, the invited executive officials will still be unable to attend today’s hearing in the absence of information on the questions that will be asked them.

Secretary Ermita said that the advance questions will enable the officials to prepare the answers needed by the Senate. The advance questions will also aid the Executive in determining whether certain information sought to be obtained in the inquiry may fall within the scope of executive privilege.

Santiago, a noted Constitutional Law expert, said that under the Senate Rules of Procedure, inquiries in aid of legislation may refer to (1) implementation or re-examination of any law or appropriation; (2) any proposed legislation; (3) the formulation of, or in connection with future legislation; or (4) the review or formulation of a new legislative policy or enactment. Such inquiries may also extend to any and all matters vested by the Constitution in Congress and/or in the Senate alone.

According to Santiago, since the power of Congress to hold inquiries in aid of legislation covers the formulation of or in connection with future legislation or a new legislative policy, the Senate is not mandated to provide invited Malacañang officials with detailed information on the proposed legislative measure. As long as the subject of the inquiry is within the power of the Senate to legislate, it is enough that the invited officials are given information on the subject of the hearing.

The senator also said that Malacañang may not compel the Senate to submit beforehand the questions that will be asked government officials during the hearing. In his letter to Senator Estrada today, Secretary Ermita cited the decision of the Supreme Court on the constitutionality of Executive Order 464, which in turn cited the 1991 case of Bengzon v. Senate Blue Ribbon Committee, to support his position that the Senate must furnish government officials with an advance copy of the questions to be asked during the hearing.

According to Santiago, the Bengzon case is different, since the aim of the investigation in that case was to find out whether the relatives of the President had violated the Anti-Graft and Corrupt Practices Act, a matter that must be determined by the courts and not the legislature. In contrast, the aim of the investigation by the Senate committee on labor was to inquire into the repatriation efforts of the government for the OFWs in Lebanon, which is within the power of the Senate to legislate on.

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The Senator in the News

From Inq7.net:
WHEN EX-RIVALS MEET
Ramos, Santiago clash over Masinloc deal

By Juliet Labog-Javellana
INQ7.net
Posted date: August 04, 2006

SENATOR Miriam Defensor-Santiago and former President Fidel Ramos yesterday clashed at a hearing of a joint congressional inquiry into reports linking the latter to an allegedly anomalous $561.7-million deal won by a Malaysian firm associated with Malaysia’s ruling party.

Ramos, who Santiago accused of cheating her of victory in the 1992 presidential election, denied he was behind the sale to YNN Pacific Consortium Inc. of the 600-megawatt Masinloc coal-fired power plant in Zambales province, which Santiago described as one of the “crown jewels” of the Philippine power industry.

YNN failed to make the $227-million down payment for the sale despite several extensions and a government’s announcement it would terminate the contract on Aug. 6.

YNN is believed to be a dummy of Ranhill Berhad, a publicly listed company, which is said to be partly owned by leaders of the United Malay Nationalist Organization, which in turn has ties to the ruling Lakas-NUCD, the political party founded by Ramos.

Ramos turned the tables on Santiago and asked her if she was accusing UMNO leaders, Malaysian Prime Minister Abdullah Badawi and former Prime Minister Mahathir Mohamad of involvement in a graft-ridden contract in the Philippines.

Ramos, who said he readily agreed to appear at the hearing despite his status as a former President, said the charges linking him to the deal were unfounded.

He said he did not know any of the officials of Ranhill Bhd. or if they were also officials of UMNO, but he acknowledged that he had close ties to both Mahathir and his successor Badawi.

Guilt by association

“The charges upon me are without basis because it is ... guilt by association. I don’t know if that is now an accepted principle in our jurisprudence,” Ramos said.

Santiago cut him off. “The chair disagrees with you. Guilt by association is guilt when a person...,” but Ramos this time cut her off: “May I continue Madam...”

“No,” Santiago said firmly. “The chair is speaking. I have the floor whenever I decide to have it. You are using guilt by association very loosely.”

Santiago, who co-chairs the Joint Congressional Power Commission (JCPC) with Lanao del Norte Representative Alipio Badelles, asked Ramos about a statement made by Senate Minority Leader Aquilino Pimentel Jr. that Ramos’ hand in the fraudulent sale of the Masinloc plant by the government to YNN must be investigated.

“Are you calling Senator Pimentel a liar?” Santiago asked.

Slightly raising his voice, Ramos stared at Santiago with his trademark lens-free eye glasses and said: “My answer to that is: ‘Are you [saying] the UMNO -- the ruling party of Malaysia -- is involved in corruption in the Philippines, specifically the Masinloc power plant?”

“Sir, it is not your function to raise questions with the chair,” Santiago replied. “Your function is to answer. You are now discharged by this chair. Thank you.”

But thanks to Senator Sergio Osmeña III and other senators who wanted to ask Ramos questions, he was not banished from the hearing until it ended.

Osmeña said a letter sent by Badawi to Malacañang asking that the Masinloc plant be sold to YNN helped fuel speculations about Ramos’ involvement.

Strings pulled?

Pimentel said strings were apparently pulled in Malacañang to make Ranhill Bhd. a player in the country’s power sector in lieu of YNN, which had no financial capability to buy the power plant.

“Therefore, the implication is that some powerful figures in or out of government were pulling strings to bring in YNN (and Ranhill Bhd.) and media (reports) identified Mr. Ramos (as one of the figures),” Pimentel said.

Santiago later told reporters that Ramos was entitled to a presumption of innocence in the absence of hard evidence linking him to the deal.

“I am not saying that it was Fidel Ramos who pulled strings for YNN [but] YNN is getting very powerful political support here. We don’t now who it is,” she said.

Meralco supply deal

She also said YNN chief Sonny Sun, who did not attend the hearing, apparently had the capability to pressure Manila Electric Co. (Meralco) to sign a supply agreement with YNN to buy its power.

But talks between YNN and Meralco on a power supply agreement were stopped after the consortium failed to meet the June 30 deadline to remit the down payment.

Ranhill Berhad made a power supply contract with Meralco a condition for its infusion of fresh equity into YNN.

Santiago noted that the Masinloc plant was sold as a merchant plant, without a transitional supply contract ensuring that someone would buy the power it would generate.

“A businessman will not buy a power plant unless he is assured he has a market or buyer for his power,” she said.

The senator said there was public suspicion that Ranhill, after its buyout of YNN, expected Meralco to sign the supply contract as a Philippine government concession to the Lopez-owned Meralco, which owes the government billions of pesos and has a pending application for a power rate hike.

Alarm bells

Santiago also said alarm bells should have rung during the bidding when YNN “overbid,” with $561.7 million, compared to First Generation Holdings Corp.’s $275 million.

YNN’s bid was much higher than the $388-million tag price of the Power Sector Assets and Liabilities Management Corp. (PSALM).

She said the answer lay in how profitable the Masinloc plant would be.

Crown jewels

“In effect what we are seeing is the sale of one of the most lucrative power plants of our government -- in fact it is often called one of the crown jewels of our power industry -- for a bargain basement price because, if you look at the statement, every year they will have a profit of $75 million. They can recover the investment in seven years and all the rest will be gravy,” Santiago said.

“And that is why today the JCPC explicitly directed the PSALM to allow the contract to terminate by Aug. 6. In other words we were able to nip in the bud what would have been a case of graft,” she said.

Terminate sale

Sen. Joker Arroyo and Pimentel supported her recommendation to terminate the sale. Badelles said that was also the “unanimous position” of the House panel.

Ramos later told reporters Congress had no right to take an executive action and that it should leave the decision to PSALM and President Gloria Macapagal-Arroyo.

Press Release

3 August 2006

MIRIAM: STOP US$560 M MASINLOC SALE

Sen. Miriam Defensor Santiago, chair of the Joint Congressional Power Commission (JCPC), directed the Power Sector Assets and Liabilities Management Corp. (PSALM) to terminate by August 6 the controversial sale of the 600-watt Masinloc power plant in Zambales, to YNN Pacific Consortium, Inc.

Termination on August 6 of the Asset Purchase Agreement will call for an immediate rebidding.

At a public hearing Thursday, Santiago pointed out that under the contract, YNN promised to pay 40 percent of its bid price of US$561.740 million, equivalent to US$227 million, by 31 March 2006.

However, YNN failed to meet the payment deadline, and was granted a three- month extension until 30 June 2006.

YNN had requested the extension to allow entry of Ranhill Berhad, a Malaysian publicly-listed company.

When YNN failed to make the upfront payment last June 30, PSALM forfeited the US$14 million performance bond.

“It is a matter for speculation why Ranhill wants to buy YNN shares, although the Masinloc power plant is being sold as a merchant plant, without any transitional supply contract,” Santiago said.

Santiago said that there is public suspicion that Ranhill expects PSALM to pressure Meralco into signing a supply agreement with YNN, in exchange for concessions to Meralco concerning its $20 billion liability to the government, and the pending Meralco application for a rate hike.

“We do not even have a statement on the impact of Ranhill’s entry on YNN’s ability to comply with its contractual commitments to PSALM,” she said.

The proposed sale became controversial because, while 22 companies initially expressed interest to participate for the bidding of the power plant, on the bid date, only two – YNN and First Generation Holdings Corp. – submitted their bids.
While YNN bid some $560 million, First Gen bid only some $275 million, raising questions on whether YNN deliberately overbid with its bid price.

Subsequently, YNN requested for an extension of the date for the upfront payment, on the ground that Ranhill had acquired the entire equity in YNN for US$8 million.

Santiago said YNN apparently violated its representation and warranty that it has “as of award date, immediate available funds to pay the upfront payment, rentals, and option price.”

“Between the bid submission date on 1 December 2004 and the date of the award to YNN as the winning bidder on 22 December 2004, 20 days had lapsed. The 20-day period should have been sufficient for PSALM to confirm whether YNN, through the bid documents submitted, has ‘immediate available funds,’” the senator said.

Santiago noted that YNN is a special purpose company formed primarily to bid for the Masinloc power plant, and that YNN is not heavily capitalized, because it has only an authorized capital stock of P10 million, and a subscribed capital of some P2 million.

“But in fairness to PSALM, although YNN is not heavily capitalized, the situation is not peculiar because people do not want to form companies with large amounts of subscription when they are not sure of winning in the bid process,” Santiago said.

The senator also pointed out that under the Electric Power Industry Reform Act of 2001 (EPIRA), there is no provision for the minimum capital requirement for companies that engage in the business of power generation.

“I wonder why PSALM was unable to determine from the documents of the two principal stockholders, YNN and Great Pacific, whether their financial backgrounds and profiles supported their claim that they had immediate available funds,” Santiago said.

Santiago said PSALM did not violate any contractual stipulation when it set the original date for the payment, and later when it extended the date of the upfront payment.

“YNN continues to be the entity that is bound by the provisions of the asset purchase agreement. The agreement does not prohibit YNN stockholders to sell their shares to other parties,” she said.

However, last month the Ombudsman found enough basis to investigate graft charges filed by Bagong Alyansang Makabayan against the members of the PSALM board, among them Finance Sec. Margarito Teves, Energy Sec. Raphael Lotilla, Budget Sec. Rolando Andaya, Economic Planning Sec. Romulo Neri, Justice Sec. Raul Gonzalez, Trade and Industry Sec. Peter Favila; PSALM Pres. Nieves Osorio, and PSALM Vice-Pres. Froilan Tampinco.

The JCPC hearing was held on the urgings of Sen. Aquilino Pimentel, Reps. Edgar Valdez, Teodoro Casiño, Crispin Beltran, and Etta Rosales, who claimed that there are indications of corruption in the YNN-Ranhill deal.

Pimentel has urged the JCPC to look into the role of former Pres. Fidel Ramos in the entry of Ranhill, while Rep. Casiño called the Masinloc deal the “biggest privatization swindle in Philippine history.”

Pimentel charged that PSALM was under tremendous pressure to honor the purchase contract to YNN and to extend the payment deadline until September, because Ranhill is partly owned allegedly by leaders of the United Malay Nationalist Organization (UMNO), which has ties with the ruling Lakas NUCD, headed by former Pres. Ramos.

For his part, Ramos recently issued a press release stating: “I do not have any direct or indirect involvement or interest, past or present, in the Masinloc-YNN-Ranhill transaction.”

Santiago said that JCPC invited Ramos to the public hearing to give him an opportunity to swear under oath as to his alleged innocence.

“We wanted to give Mr. Ramos a chance to swear that he is innocent. If later evidence is unearthed to the contrary, then he would be liable for perjury, as well as for other crimes such as fraud,” Santiago said.

In addition, Casiño charged that PSALM officials divided a P10 million bonus among themselves for the Masinloc sale, although the sale has not yet been finalized.

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