Gov’t needs billions of pesos for rehab
War in Zamboanga, one typhoon after another, floods and landslides everywhere, millions of Filipinos jobless and hungry, politicians looting the treasury, and now a powerful earthquake in Central Visayas that destroyed heritage churches, buildings, roads, bridges and homes and claimed more than 100 lives. What other disasters await us? It is as if the Four Horsemen of the Apocalypse are galloping toward us. Is God punishing us because of corruption?
It will take billions of pesos to restore those churches, which are part of our cultural pride, as well as the roads and bridges and homes destroyed in Zamboanga, Bohol, Cebu and elsewhere. Where are we going to get those billions?
Now we can see the folly of the Department of Budget and Management in realigning savings to form the Disbursement Acceleration Program, only to give these as “bribes” to senators and congressmen. Now we need those billions of pesos in savings to rehabilitate devastated areas.
The excuse given by the DBM is to hasten government spending to pump more money into the economy. How can all that money improve the economy when most of it goes to private pockets?
If the government needs to spend more money faster, why not use the savings to build more schools, more homes for the homeless, or more feeder roads in the rural areas (not in the cities such as Metro Manila where perfectly good concrete streets are torn up so more concrete can be poured into the holes just to give more projects to private contractors)? Why not use the savings to put up more power plants to provide more and cheaper power to industries to make them more competitive in the world market? Or why not use the savings to put up factories to provide jobs to millions of jobless Filipinos? That will really improve the economy because it will put money in the hands of consumers, who can then use it to buy the goods that factories will turn out.
So many rural communities are begging for more schools and feeder roads, but the government always pleads “no funds.” Why will the funds not disappear when they are being stolen by our public officials?
We put billions of pesos in the Conditional Cash Transfer program under which the government gives money to poor families in exchange for their sending their children to school, but we do not provide the latter with enough classrooms and teachers. Excuse: no funds.
Yet the DBM finds billions of pesos in savings with which to “bribe” lawmakers.
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Here is the latest chapter in the case against Standard Chartered Bank (SCB), which I discussed in a column last August.
The Department of Justice recommended on Sept. 16 the filing of criminal perjury charges against SCB, deciding favorably on a petition filed by Philippine Investment Two Inc. (PI II).
If you recall, this column had wondered why the DOJ intervened in PI II’s case against SCB, which was filed in December in the Makati Prosecutor’s Office. As it turned out, after taking over the preliminary investigation, the DOJ agreed that the SCB was guilty of perjury in its submissions to the Makati Regional Trial Court that now serves as the rehabilitation court for PI II.
In its ruling, the DOJ said SCB had “intentionally” concealed that it received $90 million in collateral on an P819-million loan that it granted to PI II in 2007. Its failure to reveal this important fact resulted in hundreds of millions of pesos in actual losses for PI II and its other creditors.
Because SCB did not come clean on the collateral it was holding, PI II forked over P237 million in loan payments as part of the rehabilitation plan set by the Makati RTC. Worse, it was discovered later that SCB was negotiating directly with PI II’s former parent firm, Lehman Brothers, to collect payment for the same loan in New York.
SCB also concealed this from the Makati RTC, leading PI II and Metrobank and Trust Co. to file urgent motions to prevent SCB from collecting twice for the same loan.
PI II is an asset management company that is the former local unit of the defunct Lehman Brothers of New York.
The US financial crisis of 2007 brought Lehman Brothers to bankruptcy and PI II was placed under the receivership of the Makati RTC. A management committee with Metrobank and SCB as members was formed to oversee PI II’s rehabilitation plan for the payment of its creditors.
The DOJ agreed that SCB deliberately did not inform the court and the other creditors that in 2008 it already got $90 million in high-grade bonds as collateral from Lehman Brothers for the PI II loan. It should have just foreclosed and sold the collateral and returned the surplus amount to PI II for the other creditors.
That is precisely what SCB did in the United States when it settled with PI II’s former parent Lehman on this very same PI II loan. Last January, SCB and Lehman signed a compromise agreement covering the PI II loan that was approved by the New York bankruptcy court. Under the agreement, SCB sold $90 million in bonds and returned the excess amount to Lehman.
SCB conveniently cited “confidentiality” to keep these developments secret. It denied at first the presence of the $90-million collateral, and then when it finally admitted this, it claimed the bonds were not enough to cover its exposure to PI II.
If this is true, how was it able to return the $64 million in change to Lehman? And why did it fail to disclose that it had settled fully for the PI II loan from Lehman in New York?
Last Aug. 30, the Makati RTC ordered SCB to return the P233.6 million that it had received from PI II.
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