‘Resource course’

When Finance Secretary Carlos Dominguez, at the 2017 Philippine Extractive Industries Transparency Initiative (PH-EITI) National Conference said, “Never again should suspensions be meted out on the basis of unseen audits.  Never again should honest industries be subjected to levies without legal basis,” no one could possibly doubt that he was referring to former environment secretary Gina Lopez and her actions.

And what were these actions?  In essence, I would describe them as actions designed to balance the mining industry’s desire to be left alone with their profits with the interests of the farmers and fisherfolk affected directly and those of the rest of the Filipinos affected indirectly, by the mining operations. Her being rejected by the Commission on Appointments (CA) really indicates that the mining industry won, and the farmers, fisherfolk and the rest of the Filipinos, lost. Period.

To say that the basis of these actions were “unseen” audits, and that “honest” industries were subjected to levies without legal basis (sob), is so far from the truth as to be almost Trump-like.  As I recall, Gina Lopez painstakingly described her actions—sending out a total of  16 audit teams to the various sites and in the company of the miners’ representatives.  They then sent the results of these audits to the companies, who then replied, etc. etc.  This took place over a period of seven months and is duly documented.  That is certainly due process, and how could they have been “unseen” as all the mining companies replied in very great detail?

What about the “honest” industries being subjected to levies without legal basis? The “levies” are not taxes but the estimated cost of damages to agricultural lands and to the livelihood of farmers due to mining operations.

What has no legal basis is the current audit being undertaken by the Mining Industry Coordinating Council (MICC), proposed by Secretary Dominguez. Lopez points out that it is not the MICC that is authorized to review the performance of mining companies but a “multi-stakeholder team headed by the DENR [Department of Environment and Natural Resources]” (Section 3 of Executive Order No.  79). Moreover: “[A]ppropriate action shall be immediately taken against proven violators based on the findings and recommendations of the review.” Both done, legally.

Dominguez, from all indications, is a terrific finance secretary.  But it looks like, despite his denying it, his ties to the mining industry, though they may not be legal, continue to be binding.

And speaking of “legal,” what is really needed is a new mining law, the current one being really onerous to the government. What is wrong with the 1995 mining law? Simple. The government gets nothing for its ownership of the minerals. Because the mining law was reportedly based on the draft of the mining industry, with Congress giving short shrift to the DENR draft for a million reasons. Pardon the cliché.

This is not an uncommon phenomenon.  It is the result of what economists call the “resource curse,” or natural resource curse. It was found—especially true among low- and middle-income developing countries—that those with abundant natural resources tended to grow slower than countries with fewer or no natural resources. This is tied to poor governance, but which causes which is not determined. What is certain is that both are tied to resource revenues, which can pollute governance and be inimical to development (that CA decision may be an example).

This thesis is not uncontested.  But there is general agreement that the resource curse can be broken by improving institutions through greater transparency and oversight. Which is what the  PH-EITI mentioned above is all about.

One of Lopez’s last acts was an administrative order making compliance with the EITI mandatory: Government makes transparent its receipts; oil and mineral (extractive) companies make transparent their payments.

Let us hope that the order is allowed to stand. And that Dominguez would support EITI and a new mining law with the same enthusiasm that he supports the “honest” mines.