Pamusa’s Case vs. Lucio Tan

by Frank Wenceslao

This column’s readers know the Philippine Anticorruption Movement USA, Inc. (Pamusa) is authorized by the USDOJ to participate in fighting corruption and kleptocracy in support of the enforcement of UNCAC by U.S. laws which has been reinforced by the recent G20 London Summit ending bank secrecy for tax evasion investigation.

Pamusa’s lawyers have gathered sufficient evidence to charge Filipino big fishes starting with Lucio Tan in the United States for corruption, mail or wire fraud, money laundering and racketeering (violation of RICO). Moreover, Tan’s and family members’ U.S. businesses have put themselves under U.S. jurisdiction for violation of the U.S. Foreign Corrupt Practices Act (FCPA) and Anti-Trust Laws. For instance, a Tan-owned company and Boeing have conspired in the procurement and leasing of planes including spare parts and support services for Philippine Airlines at questionable transfer pricing that make Tan and family members probably guilty for violating the FCPA and detrimental to American stockholders of PAL’s holding company, Baguio Gold Holdings Corporation.

Pamusa has submitted its evidence to the FBI to investigate Tan. Gloria Macapagal Arroyo could add the government evidence in various cases against Tan which he has danced around for too long. GMA may also prove the seriousness of her anti-graft and corruption program, thus save her presidency from infamy and enshrine a legacy of reforms for our people to perhaps pardon her alleged malfeasances.

We’re also hoping the Moral Force Movement (MFM) would use this case as a launching pad for its mission to combat widespread corruption which is the primary cause of poverty and its debilitating effects. MFM may reinforce Pamusa’s evidence against Tan and build on the credibility of targeting one of the country’s biggest fishes. Tan’s case would reverberate across the nation to warn all involved in graft and corruption to cease and desist in their nefarious activities or be subjected to international condemnation.

Tan and other big fishes have gotten used to being untouchable under Philippine laws. They overlook that the USDOJ has laid the basis for criminal action and forfeiture of assets acquired from “a process or series of actions through which income of illegal origin is concealed, disguised, or made to appear legitimate (main objective); and to evade detection, prosecution, seizure, and taxation.”

By inventorying from dates of organization Tan’s group of companies starting with Fortune Tobacco’s annual reports, income tax declarations, and their personal statements of assets, liabilities and net worth would show the growth of each company’s assets vis-à-vis Tan’s personal net worth of $1.4 billion as of 2008 according to Forbes has been statistically improbable unless the companies resorted to massive tax evasion, bureaucratic corruption and be almost free from competition because of government favors from Marcos and succeeding administrations.

Tan’s and his group of companies’ alleged massive tax evasion was brought to light under President Ramos. Sufficient evidence of corruption and other crimes punishable under U.S. laws can be adduced by the FBI and conclude that much of the companies’ income came from illegal origin. Tan, the companies’ boards of directors and executive officers have evidently engaged in corruption by paying, or promising to pay, bribes, or by giving other undue advantages to public officials and their accomplices which they cannot deny when questioned by the FBI or be guilty of perjury.

In fairness to Tan, however, he took advantage of the country’s corrupt environment as others have similarly done. He can’t be punished to the exclusion of those equally guilty such as Danding Cojuangco, Henry Sy, Roberto Ongpin and others. They should emulate the Union Bank of Switzerland and Siemens AG and negotiate with the FBI Los Angeles office and USDOJ before they’re charged in court.

They may return to RP government Marcos’ ill-gotten wealth and accruals kept by them including ill-gotten gains from corruption during succeeding administrations. These can be reasonably accounted for and perhaps converted into preferred shares of their companies so they continue management control while freeing themselves, their heirs and successors from criminal and civil liabilities.

It’s a fact that when amicable settlement is approved by a U.S. court, the records are shielded from the public and can’t be used for any other legal action. It’s impossible to convict someone for graft and corruption or plunder in the Philippines after the evidence is sealed by a U.S. court.

Tan’s incredible story started with the family-owned Fortune Tobacco. To his credit, Tan was chosen by Marcos to be one of his cronies granted government favors that led to his building a business empire including Asia Brewery (which would not have been possible had Marcos known San Miguel Corp. would one day be under Danding Cojuangco), Allied Banking Corporation, Foremost Farms, Eton Properties, Himmel Industries, Tanduay Distillers and other subsidiaries.
Tan can’t deny he and other cronies were required by Marcos to cede 60% of the equity of each company granted favors such as unlimited dollars for imported needs, PNB and DBP loans, no bureaucratic meddling that allowed Fortune Tobacco to allegedly print multiple same-numbered revenue stamps to minimize tax on cigarettes, etc.

Tan added PAL and Philippine National Bank obviously from the income of the earlier companies. By monopolizing inter-company businesses with Tan-owned firms such as exclusive caterer for PAL passengers, conduit in purchasing and leasing planes including parts and services for PAL, banking transactions confined to PNB, its foreign subsidiaries and Oceanic Bank in which Allied Bank has significant stake, Tan with the board of directors and executive officers of the companies involved have crossed the line of U.S. legal business practices.

Tan’s net worth of $1.4 billion makes him the second richest Filipino with likely investments in China which may have exposed him to the latter’s anticorruption laws which can be pursued by USDOJ that could lead to far worse retribution.
(fcwenceslao1034@hotmail.com)

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Survival of the Cheatest

PerryScope
By Perry Diaz

With President Gloria Macapagal Arroyo’s approval ratings plummeting like balls of fire into the Pacific Ocean, presidential wannabes are sprinting to the starting line of the 2010 presidential derby. Assuming that Gloria is not going to declare martial law -- which a lot of people say she might -- it’s going to be rough and tumble politics in a crowded field.

Election cheating has been around since the Philippines adapted the democratic system of government after gaining independence from Uncle Sam in 1946. In my column, “It’s ‘Open Season’ Again” (January 26, 2007), I said: “I remember in the 1950’s, the term ‘flying voter’ became the buzzword during elections. A ‘flying voter’ is a person who has the ability to ‘fly’ -- like a bird -- from one precinct to another to vote for the same candidate; thus, giving the candidate a numerical edge over his opponent. Mathematically, whoever has the most ‘flying voters’ would have a better chance of winning.”

In some instances, candidates provide some sort of “home service,” that is, they would send someone to your house and have you fill out the ballot in favor of their candidates. In some cases, ballot boxes were hijacked and replaced with ballot boxes containing ballots favoring certain candidates. And in other cases, particularly in remote barrios, armed goons were used to intimidate the voters to vote for their candidates. It was not uncommon for a precinct to show 100% vote for a certain candidate. Another method used was vote-buying. The poor were always fair game. The three G’s -- guns, goons and gold -- were the most effective way to win an election. As someone once said, “There were no losers in an election, only the winners and those who were cheated.”

After the People Power Revolution of 1986, a new system of election cheating evolved. Known as “dagdag-bawas” -- add and subtract -- it involves a cunning method of tallying the votes by adding a number of votes to a candidate and subtracting the exact number of votes from his or her opponent. However, this kind of cheating involves the collusion of Commission on Elections (COMELEC) officials.

During the presidential elections in 2004, the celebrated “Hello Garci” election cheating was exposed. It was alleged that the taped wiretapped conversations between President Gloria Macapagal Arroyo and COMELEC official Virgilio “Garci” Garcillano were proof that fraud was committed to rig the election results in favor of Gloria’s reelection.

Impeachment was filed in Congress against Gloria. However, Gloria survived the impeachment. But the “Hello Garci” scandal cracked COMELEC’s façade as an independent government body.

It was also during the 2004 elections that another scandal surfaced -- the P1.7 billion bidding scam of the Automated Election System (AES) awarded to Mega Pacific Consortium. It was alleged that three COMELEC officials -- then Chairman Benjamin Abalos and members Florentino Tuazon and Resurreccion Borra -- were involved in the anomaly. Corruption charges were filed against them in the Ombudsman’s Office but the Ombudsman, to date, has not made any progress in its investigation. However, the Supreme Court ruled the contract null and void due to irregularities in the bidding process.

This year, COMELEC is once again pursuing the automation project. However, with the 2010 elections just a year away, COMELEC has yet to award the whopping P11.3 billion AES contract. Recently, the bidding process hit a snag when the seven consortiums vying for the contract failed the eligibility requirements. I wonder what the “eligibility requirements” included? A “padrino” perhaps?

According to Rick Bahague, the National Coordinator of the Computer Professionals’ Union (CPU), “The initial result of CPU’s investigation in the bidding process of COMELEC revealed that the COMELEC is dealing with questionable and unreliable vendors.” He said, “The COMELEC is even more subjected to a triple degree of difficulty to win the trust of Filipino people especially on its effort to automate the national election in 2010.”

But COMELEC officials said that the situation is not hopeless and that a contract could be negotiated with a provider as a “last recourse” to install 80,000 automation machines in time for the 2010 elections.

And this is where the problems would begin. First, a “negotiated contract” implies a “sole bid process” in which only one bidder is selected. This reminds me of the controversial ZTE-NBN contract exposed by Jun Lozada. A “negotiated contract” circumvents the competitive “multiple bid process” in which two or more bidders would compete for the contract primarily based on a low-bid rule. And since there is no competition, a “negotiated contract” is vulnerable to overbidding. Oftentimes overbidding is done in order to accommodate under-the-table commissions -- or “tongpats” -- to influence peddlers and corrupt government officials. In the end, the “negotiated contract” could increase the contract amount to as much as twice its cost.

The second -- and more serious -- problem would be the integrity and accuracy of AES. In a press release issued by CPU, it says: “Cheating and fraud in the 2010 election will be swift and simple for the likes of ‘Garci’ through the automated election system (AES) the Commission on Elections (COMELEC) is striving to implement. In 2010, ‘Garci’ will return and will be more sophisticated in his cheating schemes with his expertise in computer technology. ‘Garci’ will operate far better than the fraud he performed last 2004 national election.”

Indeed, if AES is going to be hastily implemented in 2010, an electronic “dagdag-bawas” cheating scheme which might have been surreptitiously programmed in the system will virtually be impossible to detect. There would not be enough time to fully test the system and incorporate all the necessary verification and security routines in the system to ensure that data integrity is maintained. As computer professionals would say, “Garbage In, Garbage Out,” the system is only as good as the input. It is said that most computer systems work, it’s people who don’t make them work. And that is the danger of a computer system that doesn’t have all the bells and whistles installed to prevent it from being tampered.

If COMELEC pushes through with AES in 2010, the next President may not necessarily be the fittest, but the cheatest. Indeed, the 2010 elections could very well be the survival of the cheatest.

(PerryDiaz@gmail.com)

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When: June 12-13 (Cebu), June 26-27,2009 (Manila), 10:30am - 5:30pm, Friday/Saturday
Contact: cebuworkshop@gmail.com / manilaworkshop@gmail.com
Venue: SM City Cebu / Cubao, Metro Manila