Transcript of Sen. Miriam Defensor Santiago’s Interview
14 December 2007

On the JPEPA

By January, on the first working week, I intend to sponsor the JPEPA, provided that I am able to convince the Japanese ambassador that we shall have a side agreement or an exchange of notes that will preclude any finding of unconstitutionality by the Supreme Court. As I have said, that is the threshold question. I think we have also because more or less we have reached a consensus on the language to be employed. The main concern here is that if we substantially alter the provisions of JPEPA, then, under Japanese law, the JPEPA will have to go through the Japanese parliament or Diet all over again. Naturally, the Japanese government does not wish to do that. It is going to delay the matter maybe by a year.

So what we are trying to do is very sensitive. What we are trying to do is craft a vocabulary or a formula that would be acceptable to the Japanese government and will preclude the necessity of submitting the JPEPA all over again to the parliament, and at the same time will satisfy the constitutional requirements of our own Philippine Constitution, so that we can be safely assured that if any petition is brought to the Supreme Court, at least the question of constitutionality, we shall be upheld both on the part of the Senate and the executive branch.

I think we are nearly there because the Japanese ambassador has been very accommodating and cooperative. The formula is with me. I am trying to word it very carefully and calling on all resources of academic training so that we can meet the requirements of Japanese law and Philippine law at the same time.

With regards to the trade and industry provision, there will be no major changes, maybe just a slight amendment on the language employed. I don’t think it would cause any controversy. I think we will have a JPEPA by the first three months of the new year.

On the JCPC’s contempt charge against Transco President and CEO Arthur Aguilar

He submitted a motion for reconsideration, and under the Epira Law that grants powers and jurisdiction of the JCPC of which I am chair, then I find his explanation acceptable and will reconsider the citation for contempt. Apparently he is also very sick.

On the proposed revival of the Anti-Subversion Law

That is a step backward. Under the Anti-Subversion Law, mere membership is punishable, and that would be unconstitutional because it would impinge on the constitutionally protected right of freedom of assembly and association. Although the previous Anti-Subversion Law provided that any member could be prosecuted provided that the member is in possession of arms or in the act of calling on an uprising against the government. Nonetheless, the language is so vague that it could be justifiably accused of unconstitutional infringement of the freedom of assembly and association. Just because you are a member of a party it does not mean that you are guilty of whatever some members have committed, that would be guilt by association which has already been rejected by our Supreme Court.

I believe that the present provisions of our Penal Code on insurrection, sedition, inciting sedition, and the Anti-Terror Law or the Human Security Act already provide amply for the protection of the state against rebels and subversives. But you cannot just hail a person to detention just because you suspect him to be a subversive. That was the authority granted to law enforcers in the Anti-Subversion Law, and that is why it was repealed in 1992.

Do you think it would gain support in the Senate?

No. Considering that the Senate is opposition dominated, plus because of the constitutional issues that it raises, I don’t think it would gain any ground in the Senate or even in the House. These two chambers of the legislature are very sensitive to public opinion, and I think it is indefensible to be able to arrest and prosecute a person just because he or she is a member of a political group. That is antidemocratic.

On the Senate Committee on Energy hearing

The Renewable Energy Bill has been filed in various forms by thirteen senators, so I can already foresee a brief and happy debate in the Senate because we already have thirteen votes, meaning even before we have debated it is already sure of being passed in the Senate. We want to develop renewable energy so that we will no longer be dependent on the fluctuating price of oil. This is actually an oil independence law. We want to give incentives to people who want to develop renewable energy facilities by, for example, exempting them from tariff duties, value-added tax, giving them substantial discounts in realty taxes and income taxes. There are a lot of fiscal and non-fiscal incentives.

On the part of the consumer, the law provides for green energy option, meaning if you choose not to avail of your electricity from the standard electricity supplier which is always sourced from oil, but from a supplier that sources its energy from a renewable energy source. It provides for a discount or a tax holiday when you avail of this option. Binibigyan natin ang consumer ng karapatan para mamili kung alin ang panggagalingan ng kanilang kuryente. Kung oil, kung tumaas ang presyo ng langis, tataas rin ang presyo ng iyong kuryente. O kaya kung renewable energy sources, bibigyan ka ng diskuwento ng gobyerno o babawasan ang iyong income tax. Basically this is an incentives bill so that our country will be weaned away from total oil dependence to renewable energy. We have already agreed with the executive branch that his will be prioritized.

Can the proceeds from the sale of the government’s energy assets be used to lower electricity rates?

You can use it in that sense only if the money is turned over to the National Treasury. Remember when we sell our electricity assets, part of it will go to the government, part of it will go to the National Treasury. That part that goes to the National Treasury can be used by Congress by the President when she submits her proposed budget to subsidize oil prices.

As you have heard the PISTON president this morning, apparently this (public transportation) is an industry crying for help, and the only way you can help an oil industry-based service sector is by subsidy, either by exempting oil from the usual taxes or by government stockpiling it. He made a very radical proposal; he wants government to buy Petron, which we already sold. As I’ve pointed out yesterday, it is very important that we must reconsider and study carefully the sale of our asset kasi kapag nabenta mo na iyon, mahirap na bilhin ito muli.

I say that [subsidy] is a real possibility. Imagine, the peso-dollar parity is now almost Php40, baka bumaba pa. We cannot go back to oil regulation. That would be a step backward.

You’ll notice that there is a periodic sense in the public to change presidents whenever there is an oil price increase. Any president who is historically-conscious will make sure that the almost cyclical increases in oil prices will not affect his or her incumbency.

On Sen. Madrigal’s insistence that there is an anomaly in the Transco sale

That is for her to prove. As far as we could gather from yesterday’s JCPC hearing, there is no documented evidence of her charges. She makes these accusations, but in court you need evidence, and it could either be testimonial or documentary. You have to have a witness who has first hand knowledge that there is a subversion of the Anti-Dummy Law because in effect the charge is that there is no Razon name in any of the papers involved and he is acting through somebody else. To make that charge stick you have to present either a witness who can testify through first hand knowledge, or documentary evidence. I doubt very much if that is possible.

There is an accusation, but even from a fact-finding point of view there is no probable cause. There has to be more than mere verbal accusation. There has to be evidence to support it.

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Transcript of Sen. Miriam Defensor Santiago’s Interview
13 December 2007

On the JCPC hearing on the sale of PNOC-EDC

We are on the verge of losing our patience because the issue simply is how much the EDC has contributed to the national treasury. We already know how much it was sold for: some P58 billion. If it (EDC) contributed more than that to the national treasury, then why sell it? Because then it would be able to make more money than it is being sold for in the very near future. They (the government panel) cannot give us a ballpark figure. These are huge amounts of money and we are entitled to an explanation why we are selling a profitable government enterprise.

During the time of President Aquino, the sales of government assets were confined only to those that were non-performing assets or government corporations that were losing money. We never sold any profit-making assets because if we sold it to a private owner he would pay today and we would have today the amount that he paid, but the entire revenue stream or the entire potential earnings of the enterprise would have absolutely stopped. It would be like looking only at the short-term but not at the long-term. It would be trading instant gratification for future security.

(But) the most basic problem is why they didn’t inform us that they were selling it. All the while we thought that just trying to prepare for the sale of certain assets of the EDC like its geothermal fields and steam sales agreements. We didn’t have any inkling that they were selling sixty percent of EDC which would make government lose control of a geothermal firm that is considered one of the first in the whole world. We are number one in steam sales technology and number two in steam sales production. Now PNOC-EDC, through the chair of the Privatization Council (the Finance Secretary) and the president of PNOC-EDC himself, wants to sell this valuable asset for what?

Plus, I have a personal concern on why did the winning bidder, Red Vulcan, bid P 58.5 billion, which is P13.5 billion higher than the floor price. In other words, the Privatization Council and PNOC-EDC undervalued the valuable assets of our government. Even the buyer himself admitted that the floor price was an undervalue of the asset. Why make it easy to sell something that is making money? Their argument there is very weak, and that is that now it (EDC) is in its peak price and we will never be able to sell it in the same amount again. How did they know that? Do they have any fact-based data to support their argument?

In the case of the JCPC, we have one particular instance in the past when, owing to the intervention of a public official, a sale that has already taken place, was cancelled or aborted… it turned out that the cancellation of the government asset sale, I’m talking about Malampaya EC, was correct because eventually the price of oil rose from $30/barrel to $100/barrel, so the income from Malampaya rose as well. If we have not stopped that sale at that time, we would have lost a valuable asset forever, and it is now making a lot of money for the government. That is more or less the same situation as EDC.

Can the JCPC still block the sale?

[The sale] has not yet been implemented. In a sense it has been consummated because the winning bidder has been announced, and was able to make full payment in cash. The next thing that should happen is that it should now take over control of EDC. But not if the JCPC can help it. If we need to go to court, then we will go court. But first we will give the Secretary of Finance and the PNOC President, the two officers responsible for the sale, an opportunity to explain themselves. What I am doing here is I’m making a compilation of all the questions that were raised today and I will give them until next week to give me a specific answer for each question. They were saying this morning that they don’t have the exact figures. We find that hard to believe. You would have at least some rounded or ballpark figures in your head if you are dealing with an amount as big as P 168 billion.

The power of the JCPC is to monitor the privatization of the power industry and to ensure compliance of the Epira. Epira provides that we must optimize the value of our assets that are being sold. If we find that the value has not optimized and we therefore reach the conclusion that the law has not been followed, we would have good legal grounds for ordering them to withdraw their approval, just as they did in Malampaya.

You insinuated earlier that somebody must have received commissions and kickbacks

It cannot be helped because these people could at least have given the senators and the congressmen the basic courtesy of notice. Sa tingin ko may kumita dito. Bakit mo ililihim kung wala kang itinatago? Napag-usapan na ito sa JCPC noon pa. Sinabi namin na huwag na nating ibenta ang shares of stock o control ng EDC, ibenta na lang natin ang mga assets niya. Nagulat na lang kaming lahat na ibebenta na pala. That is mainly the burden of the JCPC. We are trying to understand why they didn’t give us due notice and wait for us. What is the rush, since the sale price of P58.5 billion is meant to go only to make up for the budget deficit. That is not the function of the Privatization Council or the Department of Finance.

They could not even answer the question [how much the government lost in the sale of EDC]. I want to know how much has EDC given to the national treasury. At first they said P71 billion. Kita mo na: binenta natin ng P58 billion ang kumikita ng P71 billion. Tapos ang sabi nila “ Mali pala kami, meron pa pala kaming ide-deduct diyan.” Ang mga kumisyon daw ng mga broker at underwriter sa kanilang benta. Hindi raw kumpleto ang listahan nila. Iyon na nga ang problema, may mga kumikita nang hindi alam ng publiko.

On citing Transco President Arthur Aguilar for contempt

I cited him for contempt because pinag-uusapan dito kung maayos ang pagbenta ng Transco. Biro mo, presidente siya ng Transco hindi siya dumating, nagpadala lang ng vice president niya dahil nagpreside daw siya ng nationwide bidding ng mga subordinate at regional managers niya. Pinag-uusapan ang P160 billion ng gobyerno dito, at mas gusto niya na makihalubilo sa mga subordinates niya. He is not giving the JCPC the proper courtesy of at least his physical appearance.

I gave him 3 days to file a motion for reconsideration, but I have already said that we will not find it acceptable that he explains himself by merely saying that “I am sorry but I am presiding over a nationwide conference.” E di magpa-preside siya ng ibang tao at bumalik siya ng hapon. Anong deperensya? Anong problema? But we will ask him to explain in writing what the details of (the sale of) Transco are.

My reading of the JCPC law is that we can detain or imprison him for less than one year, and we can impose a fine of less than P50,000.

On Ibazeta’s defense on charges of conflict of interest over the sale of Transco

Myself as chair and Rep. Arroyo as co-chair the explanation to be reasonable and therefore valid. He (Ibazeta) is saying that “There is no conflict of interest. I am chair of a terminal services corporation and we are here dealing with the power sector, so I don’t see any conflict between terminal services and the power sector.” Besides, he inhibited himself from the bidding process because of the ethical question that has been raised. Unless there is further evidence, we find that he has acquitted himself successfully on the charge of conflict of interest. Whether there is any irregularity in the bidding process itself or in the projected dire consequences of the sale to this winning bidder, that will be taken up by another committee.

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TRANSCRIPT OF SENATE MEDIA INTERVIEW WITH SEN. MIRIAM DEFENSOR SANTIAGO

26 November 2007

On the conflict of interest in the Transco sale

The crux here is that the president of the government agency which is in charge of selling the National Transmission Corporation (Transco), a billion-peso company, is suffering from a prohibited conflict of interest, in the sense that he is an officer of several corporations owned by one of the part owners of a bidder for the government agency. But we must put this charge in context. That is the reason why I, as chair of the Senate panel, and Rep. Juan Miguel Arroyo, as chair of the House panel, of the Joint Congressional Power Commission, which has the power of
control and supervision over the sale of these electric power assets of the government, are first
asking these government officials to explain if they have violated the law. There is a violation of law when the person who is supposed to sign or approve the contract is himself, or through a board, group, or a panel of the government, might have a financial, material, or pecuniary interest [in the contract]. In this case, the allegation is that the president of PSALM, a government agency, was a former member of the board of directors of several companies owned by Mr. Enrique Razon, who is part owner of a company which is one of the qualified bidders. So there is a defense on the part of Mr. Ibazeta if he can show that pursuant to law he divested himself of any interest in the Razon corporations, then there is no violation of law. The fact that he used to be an officer of any of those corporations does not make it illegal if after his appointment he resigned from the position or he sold his shares of stock within the period provided by law, 30 days for resignation and 60 days for divestment of interest.

Furthermore, we have to put it into context that the complaint is being filed by disgruntled bidders who did not make it in the cut. When there’s a public bidding, there is a prequalification process. You weed out those who are qualified and those who are not. And these two objectors, who belong to the failed bidders, are not exactly strangers to the power game in Manila. One is the brother of a congressman, Mr. Zamora. The other one, Mr. Ocampo, used to be a public official. Although there is no presumption of innocence in this case because the law expressly provides that there is a presumption of prohibited interest, the person is given a chance to prove that there is no such conflict because he either resigned or he divested himself. We have to wait for his reply in the name of fairness and justice before we make any serious charges. Senators Pimentel and Madrigal are expressing concern over the alleged conflict of interest. This is what has prompted the JCPC, of which I am co-chair, to require the written explanation from Mr. Ibazeta.

On the schedule of the JCPC hearing on the Transco sale

Now we are entering budget week. Under Senate rules, we cannot hold committee or any other hearing when Session is in order. Since we have sessions morning and afternoon, we are prohibited from holding public hearings this week. The budget hearings may even be extended next week. I have to go from December 1 to 7 to Europe as part of the delegation for the President’s state visit there. The earliest we can set the hearing [on the Transco sale] is on December 13. We shall then be anticipating the presence of two public officials who are now in the hot seat. The first one is Finance Secretary Teves, as chair of the privatization council which approved the sale of the Energy Development Corporation without notice to the JCPC. The Epira law provides that to privatize our government corporation in this particular case, we should sell the generating plants packaged to the steam sales agreement. That this methodology prescribed by the law. Now we hear that the privatization council has approved of the sale by a means other than that provided by law. We had asked Secretary Teves to make an urgent appearance and give an explanation. The second one is Mr. Ibazeta because of the charge of conflict of interest. There are two hot officials who will have to come to the Senate on December 13.

The bidding is on December 12. It will not necessarily be the declared a failure just because there might be conflict of interest on the part of the president of PSALM. Assuming for the sake of argument that that is the case, the bidding will not necessarily result to a failed bid. Remember that we in the JCPC are very anxious that this bidding procedure should now be concluded because in the past we spent a lot of time going over three bidding processes, all of which were declared failures, mostly for the reason that there was only one successful pre-qualified bidder. Pursuant to the philosophy of Epira, which is to sell all assets concerning the power industry to private owners, we want to sell at a good market price the Transco. But we want to make sure that the sale is pursuant to the Epira.

On Sen. Mar Roxas’ election as president of the Liberal Party

It is no secret that Sen. Roxas was elected president of the Liberal Party today in anticipation of his presidential candidacy as official standard-bearer of LP for 2010. By Wednesday, his major rival in the presidency as of the moment, Senate President Manny Villar, is also holding his own show of power, to mark the 100th anniversary of the Nacionalista Party, which is the oldest political party in our country, also in anticipation of his own presidential candidacy. For a while there it looks like a Villar-Roxas race. But now, former President Estrada tour within Metro Manila, where he is reportedly getting crowds of the masses, has prompted media titillation with his public entertainment of the possibility that he might run for president. Then it might become a three-cornered fight. In that case, all bets will be off. It will be three multibillionaires fighting each other and all the rest will have the capacity of ants in the presence of three elephants.

On Sen. Loren Legarda and Vice President Noli de Castro running for President in 2010

They are ants. (Laughter.) When the elephants sneeze, the ants will catch pneumonia. Because it is now a given that you cannot run for president unless you have at least P1 billion, and your chances increase in multiples of tens of billions. The surveys will not count for very much apart from the usual cynicism among the public about the accuracy of those surveys.

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