It’s safer here

Source: Journal Online

www.journal.com.ph

We don’t know whether to laugh or cry.

It’s not only more fun in the Philippines.

It’s also safer to keep your funds secret here than in Switzerland. Got that?

Yes, especially if it’s tainted cash.

So step right in, folks. We welcome mob money, narco-cash, jueteng proceeds, and other dividends of criminal activities.

Our financial system must be awash in dirty money.

But is it an honor for our banking institutions, our monetary enforcers, and our financial legislation?

Would the Transparency International give the country accolades or citation? Is an award forthcoming from the Bank for International Settlements?

“The world will now know that Philippine foreign currency deposit accounts provide a much better safe haven for ill-gotten wealth than Swiss bank accounts,” Supreme Court Senior Associate Justice Antonio Carpio said.

But Carpio said the law guaranteeing the secrecy of foreign currency deposits should not turn the country into a haven for ill-gotten wealth.

He argued thus in his dissenting opinion on the SC’s issuance of a temporary restraining order on the opening of the dollar accounts of Chief Justice Renato Corona.

Carpio said the majority decision to issue the TRO is a mockery of all existing laws.

He said Republic Act 6426, the Foreign Currency Deposit Act, is intended to protect non-residents to encourage the inflow of foreign currency deposits in Philippine banks.

“What the majority has ruled is that government officials and employees have no obligation to disclose their foreign currency accounts, and that the public has no right to know such foreign currency accounts,” he said.

Carpio said government officials and employees can simply open foreign currency accounts and deposit money to avoid scrutiny.

Since Corona had already admitted that he owns the foreign currency accounts in Philippine Savings Bank, he now has the obligation to disclose these foreign currency deposits to the people, he added.

In a separate dissenting opinion, Associate Justice Ma. Lourdes Sereno said PSBank should have not been entitled to the injunctive relief since its petition was based on “mere news report, exaggerated theories of a possible bank run, or stubborn fears of culpability”.

“Granting the prayer of petitioners for injunctive relief is tantamount to endorsing their position on absolute confidentiality, so much so that higher values, such as public accountability, cannot even be considered as a valid exception to the said privilege,” she said.

The court granted the prayer of PSBank and its president Pascual Garcia III, invoking the provision on absolute confidentiality of foreign currency deposits under the RA 6426, which bars any inquiry or examination as to the details of such foreign currency accounts.

The TRO would result in “an iniquitous situation, where the supreme interest of the public to maintain accountability among public officers is relegated to the sidelines in favor of a statutory privilege that arose purely out of economic considerations,” Sereno said.

Associate Justices Diosdado Peralta, Mariano del Castillo, and Estela Perlas-Bernabe concurred in this position.

Those who voted for the TRO were Associate Justices Teresita Leonardo-de Castro, Arturo Brion, Lucas Bersamin, Roberto Abad, Martin Villarama Jr., Jose Mendoza, Jose Perez and Bienvenido Reyes.

Corona inhibited from the deliberations, being the subject of the case.

The Trials of Al Capone and CJ Corona

Telltale Signs 

By Rodel Rodis

If Senator Miriam Santiago had been the defense lawyer of Al Capone in his tax evasion trial in 1931, she may have argued for the exclusion of all evidence of unexplained wealth as she warned her Philippine Senate colleagues this week that exposing the dollar bank accounts of Chief Justice Renato Corona in the Senate Impeachment Trial would have a “devastating effect” on the Philippine economy and “would drive away the capital market for our country.”

Al Capone’s lawyers employed similar apocalyptic hyperbole when they exhorted a Chicago jury to “stand as a bulwark against an oppressive government that was using the tax law as a means to stow Al Capone away.” One Capone defense lawyer implored the all-male jury: “You, gentlemen, are the last barrier between the defendant and the encroachment and perversion of the government and the law in this case.”

Unfortunately for Capone, he faced a judge who was not at all like the Philippine Supreme Court justices who issued a Temporary Restraining Order (TRO) preventing the disclosure of the dollar accounts of their Chief Justice to comply, they said, with the strict disclosure rules of the Foreign Currency Deposit Act of the Philippines (Republic Act No. 6426) on dollar accounts.

The problem with their argument, as Justice Antonio Carpio explained in his dissent, is that RA 6426 was specifically intended to protect foreign depositors and not Filipinos. If Ferdinand Marcos had deposited his hundreds of millions of US dollars in foreign currency accounts with local banks – instead of in Swiss banks – under RA 6426, “he would have gotten away with his loot under this ruling of the majority,” Justice Carpio wrote.

US government prosecutors faced a more difficult task in accumulating evidence of tax evasion against Capone because he had no bank deposits in his name unlike CJ Corona who kept his funds in his own name in the Bank of the Philippine Islands (BPI) and in the Philippine Savings Bank (PSBank). In two of his peso accounts in the PSB, Corona had P12 million pesos while a BPI Branch Manager stated under oath that Corona had a 2010 end of the year balance of 12 million pesos in his BPI account.

In the PSBank, Corona owned 10 accounts – 5 in peso accounts and 5 in dollar accounts, one of which had an initial deposit of $700,000. Before the PSBank could disclose the amounts of the four other dollar accounts of CJ Corona, it sought and obtained a TRO.

In investigating Capone, the Internal Revenue Service (IRS) noted that Capone failed to pay taxes on any of his earnings from bootlegging, prostitution, embezzlement, gambling, and other illegal activities. Capone scoffed at the IRS investigation and said: “The government can’t collect legal taxes from illegal money.”

But Capone was wrong. The US Supreme Court, in the 1927 case of United States v. Sullivan had ruled that the Fifth Amendment’s privilege against self-incrimination did not protect Manley Sullivan, a bootlegger convicted of failing to file a tax return showing the profits from his illegal businesses.

The forensic accounting method used by the IRS to nail Capone was called the “net-worth method” where IRS investigators examine a combination of the subject’s assets and liabilities in relation to all sources of income. If a taxpayer’s net worth, taking into account assets offset by liabilities, increased during a taxation year, the receipt of money or property to cause that increase would be considered taxable sources, the failure to pay taxes would constitute the crime of tax evasion.

The IRS also employed an “expenditures method” where expenses are matched against reported income. If there is a gap that cannot be explained, that may indicate unreported income.

House prosecutors had presented evidence that CJ Corona owned 26 pieces of real property including a Bellagio penthouse condominium that he purchased for P14 million pesos, about P12 million below its market value.

CJ Corona declared under oath in his 2010 Statement of Assets, Liabilities and Net Worth (SALN) that his cash assets amounted to just P3.5 million pesos. According to the tax records of Corona, as disclosed at the senate trial, in 2010, he paid only P176,577.32 pesos in taxes based on a gross income of P657, 755.57. In 2009, he only paid P155,556.20 in taxes on a gross income of P621, 528.62.

How did Corona purchase 26 pieces of real property and deposit P31 million pesos in peso accounts and $700,000 in dollar accounts on an annual salary of P657,755?

In building the tax evasion case against Capone, the IRS had to examine department store, jewelry store, car dealership, and hotel records for evidence of Capone’s expenditures, uncovering purchases of high-end furniture, custom-made shirts, diamond-studded belt buckles, gold-plated dinner service, hotel suites, and a Lincoln limousine.

The federal trial of Al Capone began on October 5, 1931 at the federal courthouse in downtown Chicago with the prosecution presenting evidence that Capone owned gambling halls and derived substantial profits from those businesses. Other prosecution witnesses presented evidence of Capone’s lavish lifestyle. A clerk at Chicago’s Metropole Hotel testified that Capone rented the hotel’s most expensive suites and hosted expensive parties paying cash “in hundred dollar bills, sometimes five hundred dollar bills.”

Capone’s lawyers presented their case in one day claiming that Capone was a “horse-racing addict” who had lost as much money as he earned, neglecting to point out that gambling losses are only deductible against gambling winnings so Capone would still have been required to pay taxes on his income, even if the sources were undeclared.

In his summation, US Attorney George Johnson said, “This is a case that future generations will remember….They will remember it because it will establish whether a man can so conduct his affairs such that he is above the government and above the law.”

On October 18, 1931, a Chicago jury deliberated for eight hours before returning a verdict of “guilty” on the charge of tax evasion. Capone was sentenced to 11 years in the federal penitentiary, most of which he spent in Alcatraz.

The Philippine Supreme Court majority, in supporting their CJ to prevent the disclosure of his dollar accounts, has basically declared that Corona “can conduct his affairs such that he is above the government and above the law.”

(Rodel50@gmail.com)

‘Catch me if you can’

PerryScope

By Perry Diaz

At a press conference at Club Filipino on February 12, 2012, Corona’s defense lawyers accused Malacañang of trying to influence senator-judges to vote for the opening of Chief Justice Corona's dollar account at the impeachment trial. Photo credit: Ralph Joel

Has it occurred to you that when a person tries to convince others, more doubts are raised about that person’s sincerity or honesty?  Such is the situation that Supreme Court Chief Justice Renato Corona has gotten himself into.  It’s likened to a person who falls into a quicksand; the more he tries to get out of it, the faster he sinks.  But if that person remained immobile he’d still sink nevertheless.  The lesson here is: Don’t go near a quicksand.

And that’s precisely what Corona did when he accepted an illegal appointment from then President Gloria Macapagal Arroyo during a period when a ban on “midnight appointments” was in effect.  He jumped into a quicksand knowing full well that he might not get out of it!   It’s a case of “come what may” or “bahala na.”

It did not then come as a surprise when a year and a half after he reached the pinnacle of his career – a dream come true – Corona found himself in a quicksand of legal and moral questions about his ascendancy to the highest position of the judicial branch of government.   And now, he is struggling to save his career and what is left of his reputation.  He might have a chance of saving his career; however, it seems that his reputation is now stained indelibly as a result of a slew of damaging evidence that came out at the Senate impeachment trial in which he is accused of culpable violation of the Constitution, graft and corruption, and betrayal of public trust.

When the Senate impeachment trial began, Corona’s battery of topnotch lawyers led by retired Supreme Court Justice Serafin Cuevas took the offensive like a German blitzkrieg, which caused heavy damage to the House prosecutors’ initial presentation.  Even the experienced private prosecutors who were helping the House prosecutors seemed ill equipped in battling the legendary Cuevas.  In his cross-examination of the prosecutors’ witnesses, Cuevas assaulted them with a “take no prisoner” stance and at one point declared one witness as “bankrupt.”  He was brutally effective in pulverizing the testimony of the witnesses and neutralizing the prosecutors with his courtroom maneuvers… until he met his Waterloo.

Discrepancies

An unexpected turn of events happened last February 6 (Day 12 of the trial) when Cuevas cross-examined Bureau of Internal Revenue (BIR) Commissioner Kim Henares.  Henares testified that she found discrepancies in Corona’s Statements of Assets, Liabilities, and Net Worth (SALNs) in the years from 2003 to 2010.  She gave a detailed breakdown of the discrepancies.  For instance, in 2010 – when he was already Chief Justice – Corona declared only P14.5 million in his SALN when in fact he owned P50 million in assets.

Cuevas abruptly moved to have Henares’ testimony stricken from the impeachment trial records, saying that Henares was not an “expert witness.”  But the private prosecutor, Arthur Lim, retorted and pointed out that Cuevas had just qualified her to be an “expert witness.”  The president officer, Senate President Juan Ponce Enrile, agreed with Lim and let Henares’ testimony stay.  It was only then that the foxy Cuevas realized that Lim had outfoxed him.

Unreported wealth

The stinger came on February 8 (Day 14) when Philippine Savings Bank (PSBank) president Pascual Garcia III testified on five domestic accounts of Corona, which revealed that as of December 31, 2010, Corona’s total peso deposits at PSBank was P19,728,555.39.  This did not include Corona’s five dollar accounts, which he claimed couldn’t be disclosed under R.A. 6426, the Foreign Currency Deposit Act.

The following day (Day 15), Leonora Dizon, branch manager of the Bank of Philippine Islands (BPI) presented bank documents that showed that Corona’s checking account had an ending balance of P12,024,067.70 as of December 31, 2010.

Let’s do our math: Between the two banks, Corona’s cash deposits – excluding his secret dollar accounts – total P31,752,623.09.  That’s P28,252,623.09 more than the P3.5 million he declared in his 2010 SALN.  However, if you add the secret dollar deposit account of $700,000 that Corona allegedly deposited in 2008 at PSBank, then the total unreported amount could be as high as P66 million in 2010.  Incidentally, Corona through Cuevas admitted the existence of his dollar accounts; however, he refused to authorize disclosure at this time saying that he’d disclose them in due time.  Hmm… do I smell a stinking fish here?

Attack the “enemy”

With this incontrovertible evidence, Corona is faced with a difficult situation.  How could he convince the impeachment court — and the court of public opinion – of his innocence?  He must have realized then that the impeachment court is an unfriendly territory.  He had to find another venue where he could extricate himself out of the quicksand he trapped himself into.

On February 12, on the eve of the Day 15 trial, several members of Corona’s defense team held a press conference where they alleged that an unnamed source gave them “reliable” information that President Benigno Aquino III through Executive Secretary Paquito Ochoa Jr. attempted to bribe the senator-judges P100 million each to disregard the Temporary Restraining Order (TRO) issued by the Supreme Court on the disclosure of Corona’s dollar accounts.

As he attacked the “enemy” using the media, Corona also petitioned the Supreme Court to issue a TRO and void the impeachment proceedings.  In an en banc session last February 9, the high court decided to defer issuing a TRO; however, it required the respondents to comment within 10 days.

Last February 13, Corona upped the ante and filed a supplemental petition to reinforce his bid to stop the impeachment trial.  He accused five senator-judges of being partial against him. One senator-judge opined that Corona’s strategy in filing the supplemental petition is to open the way for a mistrial.

“Acquittal by TRO”

Evidently, Corona is now taking an unorthodox approach to secure his acquittal, he is playing “catch me if you can” by bringing the Supreme Court into play; that is, each time the prosecution gets closer to pinning him down, he would run to the Supreme Court and ask for a TRO.  With at least eight justices – all Arroyo appointees — closely allied with him, he has a good chance of getting a TRO to stop the impeachment proceedings for good.

The question is: Does the Senate impeachment court have the temerity to defy the Supreme Court and proceed with the impeachment trial?

It is interesting to note that before the impeachment trial started last January, Enrile commented during a radio interview.  He cautioned both Malacañang and the Supreme Court against meddling in the trial.  He said that only God and the people could dictate terms on him and that the only one who could stop the trial is “the might of the military.”

In my opinion, Corona would eventually get his “acquittal by TRO,” thanks to his allies in the Supreme Court.  And as expected, Enrile would stand by his word.  But he has only one vote.  Would the majority of the senator-judges back him up and defy the Supreme Court?  Or would they side with Senators Miriam Defensor-Santiago and Joker Arroyo who have repeatedly manifested their beliefs that the Supreme Court is higher than the impeachment court and therefore should prevail?

Last February 14 (Day 17), his 88th birthday, Enrile was asked what he wished for himself on his birthday.  He said, “My wish is for God to give me the stamina and divine light to do what is right in the remaining years of my life.”

For someone who had been in both the wrong side and right side of history, how would he want to be remembered as the presiding officer of the impeachment trial of Chief Justice Renato Corona?

(PerryDiaz@gmail.com)

# # #

 “The world suffers a lot. Not because of the violence of bad people, but because of the silence of good people!” – Napoleon

Science, not just English skills

ON DISTANT SHORE

By Val G. Abelgas

Amid the distraction created by the ongoing impeachment trial of Chief Justice Renato Corona are a couple of good news coming from the Department of Education that assures us that it has begun to realize the need to push science education in the Philippines.

On Monday, Education Secretary Armin Luistro allayed fears that the teaching of science has been dropped from the Grade 1 curriculum as he clarified that the new K-12 program, which adds two years to the current 10-year Basic Education curriculum, will not de-emphasize science education. He said science would continue to be embedded in Grades 1 and 2 subjects such as math, language and health education. Science as a separate subject will continue to be taught starting in Grade 3. Luistro said Science has not been taught as a separate subject in Grades 1 and 2 for more than 30 years now.

Some sectors were concerned that the Education department was dropping the teaching of science in the early grades, and would instead focus on developing the students’ English language skills to prepare them for an expected boom in business process outsourcing (BPO) or what we know as the call center industry.

There is reason to be concerned if indeed the K-12 program, which will be implemented starting the school year 2012-2013, would focus on developing the Filipino students’ English language skills, instead of their scientific and analytical skills.

But this doesn’t seem to be the case because late last year, the Department of Education announced that it has added 100 more schools to the 100 schools that offer specialized curriculum focused on Science in its effort to train more scientists.

Luistro said the 100 new special science elementary schools (SSES) consist of Special Education Centers (SPED) with programs for the gifted and talented child and selected regular schools that passed the SSES screening procedures.

“We feel that it is time to add more science-oriented schools in addition to the first SSES in 2007 which was composed of 57 schools and another 43 in 2009,” said Luistro. He said the stronger focus on science education is included in the 10-point education agenda of President Aquino to upgrade the quality of the basic education system.

SSES is designed to develop Filipino children with scientific and technological knowledge and skills plus creative and positive values that will make them catalysts in spurring research and development thrusts. It provides enriched curriculum for Mathematics and Science where gifted and talented learners are provided a venue and exposure to develop their aptitude and skills.

The need to focus on math and the sciences has become even more urgent in the wake of a report in 2009 by the United Nations Educational, Scientific and Cultural Organization (UNESCO) that the Philippines is lagging behind in the scientist-population ratio when compared to other countries.

The report said there are only 125 scientists and engineers per million people engaged in research and development in the Philippines. The UNSECO average for developing nation is 380 scientists and engineers per million population.

In 2008, there was a study that showed that the Philippines was in the bottom of 38 countries tested in the efficiency of their math and science education. The test was conducted among eighth grade students of the 38 countries (second year high school equivalent in the Philippines) to see how effective the current math and science education programs in these countries were.

The Philippines placed well below the bottom in both the math and science categories, beaten even by Thailand and Malaysia.

That same year, Sen. Edgardo J. Angara lamented that the Philippines was in the bottom third of the global competitiveness list of 117 countries, and he attributed this laggard status to the Filipinos’ general failure to keep up with the advancement in science and technology throughout the world.

It would be a big mistake for the Philippines to shift its focus from math and science to developing the students’ English language skills just to make the country more competitive in the BPO business. In fact, it would be a tragic mistake for the government to rely on the BPO industry for economic development just as it would be a mistake for the country to depend on the remittances of overseas Filipinos for long-term economic growth.

Both the BPO and remittance sectors depend on outside factors that are not under the control of the country. For example, President Obama is pushing a bill that would discourage the outsourcing of jobs by US companies. With the current economic problems being experienced by European countries, they can follow the example of the United States and try to bring back jobs in their own countries, thereby crippling the BPO industry in the Philippines.

While remittances from overseas Filipinos continue to grow, there is always the danger that the hiring countries would no longer depend on foreign workers once their own citizens being to develop their own skills, or would have to do away with foreign labor when their own economies are at a downturn. In the US, for example, which has tightened the door to new immigrants, a new generation of Filipino-Americans who would have no attachments to their homeland will arise, thus greatly reducing remittances to the Philippines.

Look at India and China. While they are the leading BPO providers in the world and two of the biggest remittance recipients, they continue to give serious attention to the teaching of math and science, which has led to their leadership in the computer industry and in the manufacturing sector. These two countries, which also are among the top countries in the math and science tests mentioned in the article, are producing the most number of highly paid computer experts and executives in Silicon Valley and in other computer capitals.

These two countries have also produced the finest doctors, medical researchers and engineers in the United States. It is no wonder that both China and India are among the richest countries in the world, and their economies are growing at a pace faster than any of the traditional industrialized countries, such as the United States and Germany.

The Philippines enjoys one of the highest literacy rates in the world. But the students’ literacy are not directed towards careers that will eventually bring growth and wealth to the country, such as in computers, engineering, agriculture, and scientific research. Instead, Philippine colleges and universities continue to produce mostly graduates in business and the arts.

Angara lamented that the Philippine educational system is not designed to meet the demand for technological skills. He cited a study of the Department of Labor and Employment showing that firms engaged in science and technology would generate 4 millions jobs in the next five years, but educational institutions can produce only 2.7 million graduates in these fields during that period.

Angara said the educational system could give the Philippines a competitive edge if it focuses on math, science, technology and engineering.

For example, education officials should lure back Filipino students to the prestigious International Rice Research Institute, which has produced great agriculture scientists for Thailand, Taiwan and Vietnam but not for the Philippines. Thus, Thailand, Taiwan and Vietnam are raking in billions of dollars in agriculture while the Philippines, which has perhaps the best and most number of agricultural colleges, continues to lag behind.

Ultimately, it is agriculture and the manufacturing sector that will bring long-term positive effects on the country’s economy, and not the short-term BPO and remittance sectors.

The Philippines should redirect the Filipino students’ energy and enthusiasm in education to math, science, engineering and computer sciences, and feel the impact of growth in the years to come.

(valabelgas@aol.com)

Subic Coal Plant Getting Permits by Stealth?

By Fr. Shay Cullen

(His columns are published in The Manila Times,
in publications in Ireland, the UK, Hong Kong, and on-line)

Wherever there is a coal-fired power plant, people get sick and die and the environment is damaged beyond repair. Coal is the dirtiest and most toxic form of power generation.

The people of Zambales, Bataan and Olongapo City vehemently oppose the proposed coal plant to be built on scenic Subic Bay and are asking what dirty coal deals have been made between the Subic Bay Metropolitan Authority (SBMA) and “The Power Company”, made up of Aboitiz Power Corporation, RP Energy, and the Taiwan Cogeneration Corporation (TCC) and the higher Philippine government officials who have allowed this to go forward?

The toxic fumes of the electricity-generating coal plant will cause many diseases especially among the children and the elderly. Despite the campaign of President Aquino for a transparent, clean nation, environment and good government, a dirty deal from the past administration is still going ahead in the SBMA and will bring shame and hurt to the President.

The three main provisions of the original Memorandum of Understanding set up under the corrupt Arroyo Administration have not been honored or implemented by the proponents of the coal plant. The agreement started out as a joint-partnership agreement between the SBMA, the Aboitiz Power Corporation, RP Energy, and the Taiwan Cogeneration Corporation (TCC), call them “The Power Company”. The government was to have a role as partner to monitor compliance with safety and health standards, but that has been eliminated.

The government is just a lessor of the public land for a measly give-away pittance, no more than US$3.50 a sq meter to be paid over 50 years. This is grossly detrimental to the public interest, it is worth vastly more than that and it smells of a corrupt sweetheart deal. The present SBMA board must rescind it.

The people will get nothing from the profits or the lease but will, in effect, pay for the plant which will damage them and their environment. The rich families will get richer and the poor will get very sick.

Another provision of the Memorandum of Understanding agreement was that “The Company” would assist local communities off-set any damage to the environment and reduce the health risk with “state of the art” technology. But no written commitment as to what would have been signed. Such health problems has been clearly forecast and acknowledged. A third provision agreed upon was that low-cost electricity would be supplied to the local communities and the SBMA. None of these will happen. The plant will sell all its power to the national grid.

As soon as the “The Company” got the Environmental Compliance Certificate (ECC) issued by higher authorities under strange and questionable circumstances, “The Company” failed to sign any binding contract with the SBMA. They failed to show any evidence of meeting the strict ECC standards. Inexplicably, they mysteriously got the final permit first. The SBMA officials issued a Permit to Operate (PTO) before the other necessary permits were issued. The requirements for a PTO apparently were waivered. Besides, all safety and design requirements needed to qualify for a Permit to Operate were allegedly not complied with.

Also the original project application stated that it would be a 300 Megawatt coal plant and now they are trying to get an extension of the ECC to double the project to 600 Megawatt plant. The ECC is only good for a 300 MW, it can’t cover a 600 MW. “The Company” must start again and follow the requirements to qualify for an ECC for a 600 MW. The ECC for a 300MW plant is null and void since they will build a 600 MW plant, a project with double the hazards to health and the environment.

The proponents of the coal plants are trying to push for “Clean coal”, “Green coal, Safe coal”, There is no such thing as clean coal and don’t believe the profit-hungry companies that tell you there is. All over the world, they are into coal plants for the money, big profits and all to be paid for by the tax payers.

Perhaps the government officials behind this coal plant are the saintly exceptions and will never take a single dollar in exchange for a signature. If they are indeed true and honest people of integrity with the best interests of the Filipino people at heart, they will join the protesting people and oppose the project and allow the alternative renewable energy projects to go ahead instead. END

http://www.preda.org/en/news/fr-shays-articles/subic-coal-plant-getting-permits-by-stealth/