(Second of a 3-part series)
LAWYERS ARE taught early on to make the distinction between companies and their officers and shareholders. But Rona Ann Caritos, acting executive director of the lawyers' election watchdog group Legal Network for Truthful Elections (LENTE), indicates that this may not be true when it comes to the law on banned donors to election campaigns.
“It is the position of LENTE that the officers, the board of directors, the board of trustees of these corporations are also covered by the prohibition,” Caritos says. “It is not just the corporation that is banned from donating, but the officers as well. Why? Because what you cannot do directly, you also cannot do indirectly.”
Caritos says it does not make sense to ban a corporation from donating when the officers who have control of the corporation are allowed to make the donation on a private capacity. In the first place, she says, it is the officers or the owners of the corporation who call the shots in the company. Thus, the interests of the owner or major stockholder are married or at least heavily intertwined with the interest of the company.
“A corporation is just a cloth of legal personality, but in reality it is the officers and the directors who are calling the shots,” adds Caritos. “If you look at the spirit and the intention of the law, it is to prohibit undue influence, and you cannot prohibit and prevent undue influence if the officers and directors of the corporation are allowed to give contributions to these candidates. If they are allowed, e di ang prohibition on corporations will be useless because there is a loophole that they can use.”
Caritos said that if candidates and political parties balk at this interpretation of the Omnibus Election Code, it is only for one reason: that the campaign finance rules had been left unimplemented for so long that they have been taken for granted, or at least interpreted in the most liberal manner.
She says if the rules are implemented strictly, many political parties and candidates would have already committed an election offense punishable with six years imprisonment.
Firms banned, not execs?
In the last midterm elections alone, campaign donors apparently included those who have considerable interests in sectors that are prohibited from making campaign contributions to candidates and parties by the Omnibus Election Code.
Several of these election campaign donors, in fact, are owners and incorporators of companies with pending major contracts with various government agencies; businessmen with controlling shares in mining, power, and other industries that are extractive in nature or use natural resources of the country.
Take plastics king William T. Gatchalian, a businessman who learned to invest in politics as well during the time of President Joseph Estrada, who donated P20.9 million to the opposition coalition, the United Nationalist Alliance (UNA). He also donated P10 million to Estrada’s party, Pwersa ng Masang Pilipino (PMP).
But then Gatchalian and his plastics empire are also major players in the mining sector, which is banned from making campaign donations by the Omnibus Election Code.
SEC records show that Gatchalian is incorporator and director of Wellex Mining Corporation, which registered with the SEC in 2008 “to search for, prospect, explore for ores and minerals and to locate mining claims.”
SEC records also reveal that the Wellex Group, which Gatchalian owns and controls, owns 124 million of the 125 million shares of stock of Wellex Mining Corporation, or 99.2 percent of the company. Gatchalian owns roughly 60 percent of the shares of Wellex Group, the plastics empire he started building in 1994.
Gatchalian and yet another major UNA donor, Eric R. Tagle, are also incorporators and board members of another mining firm: Aureus 74 Mining Corporation. Tagle had donated P10 million to UNA’s campaign kitty.
Aureus 74 Mining, registered with the SEC in March 2013, is engaged in gold ore and coal mining. The company lists as incorporators Gatchalian, Tagle, and former Armed Forces chiefs of staff Hermogenes Esperon Jr. and Efren Abu. As far as ownership of the mining firm is concerned, Gatchalian and Tagle control 79 percent of Aureus, through Tagle’s ERT Holdings and Gatchalian’s Wellex Group.
PCIJ has yet to receive a response to letters it sent to Gatchalian's office at Wellex Group.
Another contributor to the UNA's campaign coffers was Danilo V. Roleda, who gave P8 million to UNA, and another P2 million to the senatorial candidacy of Ma. Lourdes Nancy Binay. PCIJ found at least two notices of award sent to Roleda by the Department of Public Works and Highways (DPWH) in March this year, informing him that his construction company, B. Vicencio Construction, had won in bids for government projects.
The DPWH Samar First District Engineering Office awarded the firm an P11.5- million contract to build three school buildings in Gandara, Samar. The Notice of Award for Contract ID 131J-0040 was signed by District Engineer Virgilio Eduardo, and the conforme signed by Roleda himself as the owner-proprietor of B. Vicencio Construction.
In addition, the Iloilo 2nd District Engineering Office of the DPWH sent Roleda a notice of award for a P10.2-million project to upgrade a gravel road to a paved road in Lambunao, Iloilo. The notice, sent in March 2013, was signed by district engineer Nilo Gavia.
Roleda is also listed in SEC records as an incorporator and director of International Gold Mountain Mining Inc. in August 2005. The company is engaged in mining, concentrating, smelting and trading gold, silver, copper, iron, oils and gas. Roleda owns 59 percent of the company.
Another Binay campaign donor was Emmanuel A. Atienza (P5 million), president of the Philippine LPG Bus and Taxi Company (PLBT), a public utility also banned from making contributions by the election code. The transportation company was registered with the SEC in September 2006.
Binay’s spokesman, Rex Hirang, has told PCIJ that the neophyte senator – the eldest daughter of Vice President Jejomar Binay – is still too busy to respond to its queries.
In the meantime, another high roller who also belongs in the list of questionable donors is Jose G. Ranola, who gave P20 million to the campaign of Senator Joseph Victor ‘JV’ G. Ejercito. Ranola is president of Legazpi Premium Development Corporation, an Albay-based company engaged in public construction.
Curiously, SEC records have no listing for Legazpi Premium Development Corporation, although PCIJ found notices of awards from several local government agencies to Ranola as the head of the company. These include a notice of award from the Negros Oriental provincial government of a P200-million contract to rehabilitate and deepen the Tanjay River in Tanjay City Negros Oriental; a P48.5- million project to rehabilitate the protection dike along the Ajong River in the same province; and a notice of award from the provincial government of Sorsogon for a P98.4-million project to expand and improve the Dr. Fernando B Duran Sr. Memorial Hospital.
Senator Ejercito had two more contributors who appear to qualify for the Omnibus Election Code’s list of banned donors. One is Inigo Urquijo Zobel, son of the late tycoon Enrique Zobel of the Zobel de Ayala clan.
In 2012, Iñigo Zobel was introduced to the public by Air Philippines Express as its new President and Chief Executive Officer. Air Philippines Express, a low-cost airline, was later rebranded as PAL Express, with Zobel staying on as President and CEO. In the past, Zobel had also been involved in All Asia Airlines, whose registration was revoked by the SEC in 1993.
The Omnibus Election Code prohibits public utilities from making donations to election campaigns. But airlines are not just simple public utilities; they also need congressional franchises to be able to operate in the country.
Mining concerns, too
Zobel is involved as well in the extraction of natural resources, another prohibited activity for campaign donors. He is listed in SEC records as a director and incorporator of A Blackstone Energy Corporation, registered with the Commission in February 2007. Blackstone’s incorporation papers state that the company is engaged in extracting, exploiting, buying and selling of coal, oil, gas, and hydro. The controlling shares, however, are held by Filipinas Prefab Building Systems of the F.F. Cruz construction family.
Yet another donor to Ejercito’s campaign may be in the list of banned donors. Michael L. Romero, who gave P7 million to Ejercito’s kitty, is also the Chairman and Chief Executive Officer of 168 Ferrum Pacific Corporation, a firm engaged in metallic core mining, according to SEC registration papers filed in January 2007. Romero is the owner of Ferrum Pacific, owning 99 percent of the company, according to the SEC.
Romero is also heavily invested in two more mining companies, as major shareholder, incorporator, and director of both Radtech Mining Corporation and Rednickel Mining Corporation.
SEC incorporation papers for Rednickel Mining Corporation, filed in March 2008, showed that Romero owned 96 percent of the firm and other documents show Romero owned 28 percent of Radtech Mining Corporation.
In an interview with the PCIJ, Ejercito defended Zobel’s contribution, saying Zobel stood as his best man in his 2007 marriage to Hyacinth Lotuaco at the Pinaglabanan Church in San Juan. “He is my best man, he is my best friend, and whatever his business is, I don’t care,” Ejercito said.
Ejercito added that he does not see any problem with Zobel’s donation, since it was made in his personal capacity. “Before he became chair or was involved in Air Philippines, he was already my best man,” Ejercito said.
‘No strings attached’
As for Michael Romero’s P7-million donation, Ejercito said: “Oh I never thought he gave me that much. But I don’t think (it is wrong)… as long as there are no strings attached.”
“I made it clear to my finance people during the campaign, no strings attached,” he also said.
According to Ejercito, there should be no issue so long as the candidate does not make any commitments to the donor. Moreover, Ejercito said, the campaign finance rules are impractical and skewed against those running under the opposition.
“If you put all these restrictions, no one will donate to us except for the small and medium-scale businessmen,” he said. “And what can they give us? One or two thousand pesos each?”
In this sense, Ejercito said, administration candidates have an advantage because they can tap government resources while opposition candidates need to scrounge funds.
“My position is basta there are no commitments of taking positions on issues, and not to expect any protection,” he said. “Then there is no problem with that.”
To be sure, though, even the administration’s coalition Team PNoy, with its candidates and guest candidates mouthing the Tunay na Tuwid na Daan slogan, appears to have violated the laws against banned campaign donors.
For example, Senator Paolo Benigno "Bam" Aquino IV, first cousin of President Benigno Simeon C. Aquino III, accepted donations from Vicente Tan Lao and Michael Allan Sicat who each gave P5 million to his campaign. Lao is the proprietor of Vicente T. Lao Construction, listed in the DPWH database of registered contractors for public works projects.
A month before the 2013 elections, President Aquino himself led the groundbreaking ceremony for the rehabilitation of the 14-kilometer Punta-Dansullan-Sergio Osmeña Road in Zamboanga del Norte. Phase 1 of the road project is being undertaken by Vicente T. Lao Construction at a cost of P69 million.
In late July this year, Vicente T. Lao Construction also submitted technical and financial proposals to the Department of Education for an P8-billion project to build school buildings under the government’s public-private partnership (PPP) program.
Michael Allan Sicat owns M.E. Sicat Construction, which is currently engaged in the design and construction of the Balara Sludge Treatment Plant for the Metropolitan Waterworks and Sewerage System, and the structural design and retrofitting of the Balara Waste Treatment Plant in the MWSS compound in Quezon City.
On its website, M.E. Sicat Construction also boasts of being “a contracting and service-based company serving both government and private institutions. The group’s principal activities are engineering, resource management, supply chain solutions, building, pipeline services, civil construction, and utilities.”
Aquino received as well a campaign contribution of P 10.2 million from his father Paul Aquino, who had been heavily engaged in the extractive industries, particularly in geothermal energy extraction, until his retirement in 2010.
Prior to his retirement, Paul Aquino had been president and Chief Executive Officer of Energy Development Corporation, in 2004, when it was still a government-owned and -controlled company under the Philippine National Oil Company, and carrying over the position well past the EDC’s privatization and sale to the Lopez group in 2007.
After 2007, Paul Aquino also became president of Green Core Geothermal Incorporated, a generation, distribution, and transmission company owned by the Lopez group.
Replying to inquiries sent by PCIJ, Paul Aquino stressed that he is no longer connected with the EDC or any of its subsidiaries.
“I have retired as an officer and director of Energy Development Corporation and its operating subsidiaries as of July 2010,” the older Aquino said in an email.
Senator Bam Aquino also responded via email to questions sent by the PCIJ. Bam Aquino said that “our basic policy was not to accept from individuals alleged or connected to illegal gambling, drug trafficking and other illegal activities, aside from, of course, following the law.” He added that “to my knowledge, we are compliant with all regulations specified in the Election Code.”
But when PCIJ sent another email raising concerns over the business links of Sicat, Lao, and his father, Senator Aquino said his staff would have to study the matter further.
“Thank you for pointing this out,” he said. “Again, all contributions were accepted in good faith. In any case, let me check this with our campaign accountants and finance team.”
Asked if the Liberal Party under whose wing he ran in 2013 had any specific policy on the acceptance of campaign donations, Aquino said the party may have worked within the same lines as his staff.
“I am sure the LP (Liberal Party) has similar policies,” he said, “but you will have to ask the party officers for these.”
Millions for LP
It appears, however, that President Aquino’s Liberal Party accepted donations from personalities who may belong to the prohibited list.
Documents submitted by the LP to the Comelec for instance showed that the Liberal Party had accepted donations of P5 million each from Willy Ng Ocier and Alfredo Macam Yao. Ocier is principal executive officer of property, leisure, and gaming firm Belle Corporation, and had a stint in the limelight in 2001 when he testified against former President Joseph Estrada in the graft and plunder charges against him.
The charges stemmed, in part, from allegations that Estrada obtained P189.7 million in commissions from the purchase of Belle shares by the Social Security System and the Government Service Insurance System.
Ocier is also chairman of Aragorn Power and Energy Corporation, a firm set up in 2005 “to prospect, explore, exploit, extract, produce, purchase or otherwise acquire, store, transport, use, market, distribute, exchange, sell… any and all kinds of petroleum and petroleum products, oil, gas and other volatile substances.”
SEC records appear to show that Ocier only has a nominal share of one in the company, with almost total ownership belonging to the APC Group. But further research in the SEC showed that Ocier is also chairman of the APC Group, and in fact owns 36 percent of the APC Group. As well, he owns 79 percent of the Kalinga Apayao Geothermal Resources Inc., an electricity distributor registered with the SEC in July 2010.
Yao, for his part, is president and chief executive officer of Asiawide Airways Incorporated, registered with the SEC in 2008. Asiawide is an aircraft transport and charter company, of which Alfredo owns 20 percent. Sixty percent of Asiawide is owned by AMY Holdings, which, incidentally, is 54.8 percent owned by Alfredo Yao as well.
PCIJ has been trying to schedule an interview with LP Secretary General Mel Senen Sarmiento. But Sarmiento’s staff said the matter has already been referred to LP general counsel Raul Daza.
Team PNoy kitty
There were other problematic donations made to senators who ran and won under the administration’s Team PNoy.
• Team PNoy guest candidate Senator Francis Escudero received P10 million from Reynaldo Manalansan, owner, president, and chairman of Tokwing Construction. Tokwing is heavily engaged with the DPWH, with at least 15 pending projects ranging from P4 million to P429 million mainly for flood control.
• Escudero also received P10 million from Jose D. Acuzar of New San Jose Builders. Years earlier, Acuzar had been involved in the building of the P2.8-billion mass housing project in Rodriguez, Rizal called ‘Erap City.’ Acuzar’s firm was also responsible for renovating the famed Boracay mansion along 11th St. New Manila, Quezon City reportedly as a gift to then President Estrada in exchange for the contract.
• Senator Juan Edgardo ‘Sonny’ Angara of the Laban ng Demokratikong Pilipino received P5 million from his cousin, Riza Angara Moises, owner of the bus firm Genesis Transport Services. Moises is also the treasurer of the Sierra Madre Pacific Renewable Energy Corporation.
• Angara also received P7.5 million from Jaime E. Chua, owner of JAC Transportation Systems, operator of the bus firm JAC Liner. A search of SEC records also showed that Chua is involved in Auto Bus Transport Industries Incorporated, and Metro Manila Bus Company Incorporated. Chua also donated P2.5 million to the LDP campaign.
• Nacionalista Party Senator Alan Peter Cayetano received P7 million from Jose B. Baylon, vice president for corporate affairs of Nickel Asia, one of the biggest nickel mining firms in the country.
• Senator Grace Poe Llamanzares received P10 million from Thomas Tan, who is connected with MG8 Terminal Incorporated; Mactan Shipyard Corporation; Baseco Shipyard Corporation; Maple Tanker Corporation; Molave Tanker Corporation; and Narra Tanker Corporation.
• Too, Poe received P10 million from Michael de Leon Escaler, treasurer of the Mazzaraty Energy Corporation, which is involved in the generation, collection, and distribution of electricity. Escaler also owns 60 percent of Andrew and Gray Transport Incorporated, and Whitelands Express Inc.
PCIJ sent letters of inquiry and letters requesting an interview with these senators and donors. Most of them did not reply to the PCIJ’s requests for interview or comment.
Jaime Chua, who acknowledged making a donation to the campaign of Senator Angara, sent a written reply to the PCIJ where he stressed that he “made the donation in my personal capacity, out of my own income/savings.”
Chua wrote, “The public utility company of which I am one of the stockholders, and of which (sic) a grantee of a franchise from the LTFRB, is NOT the donor for the campaign of now Senator Angara.”
“The main consideration of my donation is my close friendship with a relative of Senator Angara,” he added. “It has nothing to do with the corporation to which I am a stockholder.”
Personal not corporate?
Another Angara campaign donor, Riza Moises, had a similar response. “I made a personal donation,” she said in a letter to the PCIJ. “It was distinct and separate from the company’s expenditures.”
Moises also said that she and other relatives donated to Angara’s campaign because he is kin.
She wrote, “We are low profile supporters who were in the campaign because of one inextinguishable link – blood. No other reason. The donation was an obligation to family. And I believe it was legal.”
“Were it not for the legal bar,” she noted, “our company would have donated to Sonny’s campaign in a major way.”
“Unfortunately,” comments LENTE’s Caritos, “if you look at our electoral history, no one is ever sent to jail, no one is even charged among the corporations or the officers of the corporations. We have not yet really enforced our campaign finance laws and regulations.”
But she seems to be hoping that may yet change. With Comelec’s newly created Campaign Finance Unit, Caritos says LENTE and other lawyers groups are hoping that donors, candidates, and political parties will finally take campaign finance more seriously, as a first step toward taking elections, and the principles of democracy, more seriously as well. – PCIJ, October 2013