A shameless Senate licks Abad’s boots

by Rigoberto Tiglao on July 24, 2014

The Senate hearing yesterday where Budget Secretary Florencio Abad was supposed to enlighten our people on what the Disbursement Acceleration Program (DAP) was all about turned out to be a bootlicking show.

Since the time the DAP was declared unconstitutional by the Supreme Court, we have been waiting for a proper explanation from the executive, alongside the appropriate “checking and balancing” by the Senate. Instead, Filipinos saw a scripted show that was obviously intended to deodorize that scandalous unconstitutional hijacking of taxpayers’ money.

Except for Senators Grace Poe and Nancy Binay who asked very revealing questions, all the senators proved to be mouthpieces of Abad and Aquino. The incarceration of three opposition senators, and Senator Miriam Defensor-Santiago’s illness, certainly proved helpful for Abad.

Remember the names of the senators yesterday who spoke like marionettes – you don’t want a dummy for your next president, vice president, or senator. The following senators do not care where your hard-earned tax money are going: Escudero, Drilon, Trillanes, Bam Aquino, Angara, Guingona, Recto, Osmena.

Senators Ralph Recto and Sergio Osmena asked the right questions that revealed how the DAP created Aquino’s own budget beyond the scrutiny of Congress, but only to conclude that a “future president” could abuse such a DAP-scheme.

The senator-puppets talked for and on behalf of Abad that all Abad needed to say was, “That’s correct.”

We know now where Abad has been spending the past several days since the Court declared DAP unconstitutional: Preparing himself, the other secretaries, and even their favorite senators, for yesterday’s moro-moro.

It is shocking how senators even seemed to clap and applaud over details of how President Aquino disregarded the Senate’s role over the country’s purse.

How obsequious is that? It is the legislative department, which has the power of the purse. The strict limits set on the executive from interfering with that power is even discussed at length in the Constitution’s Article VI, which is devoted to “The Legislative Department.” But in yesterday’s hearing, it is the Senate that supported the President’s hijacking of its role over the budget.

Well-paid prostitute

Former Senator Joker Arroyo’s analogy was that the Senate has become a willing rape victim in the DAP issue. He is wrong. Rather, the Senate led by its President Franklin Drilon has become a well-paid prostitute under Aquino, willing to do any perverted sex act before the public as long as it gets its pork barrel money.

Our country has moved into dangerous territory. The Supreme Court stands alone in enforcing the rule of law—or an enlightened people’s armed forces.

After asking only the most inane questions, Senator Antonio Trillanes blamed Abad and the administration for one thing: “You do not have a good communications program.” Senator Edgardo Angara, Jr., whose home province, Quezon, got a P750-million windfall from DAP, after saying how happy he was over DAP, asked Abad to advertise his purported reforms at his department. Senator Teofisto Guingona III even told Abad—a point most probably fed to him in a note—how to get the Court to reverse its ruling.

I could write a list of questions triple the length of this column on what a real, genuine Senate could have asked Abad. Among the most important questions that the brown-nosing senators failed to ask:

• How much in new pork barrel funds, that is, not in the 2011 budget law, especially those given to Congress shortly before and after the Senate decision to remove Chief Justice Renato Corona in 2011, came from the DAP? How much in new funds under the sole discretionary control of Aquino, Abad, and Mar Roxas were raised through it?

• If the DAP was so important to the economy as Abad and Aquino claimed, why had they kept it secret, why wasn’t it even mentioned in the President’s budget messages from 2011, 2012, and 2103? If the DAP-funded projects were so important, why didn’t Aquino and Abad propose these in the appropriations bill for these years?

• If the DAP was intended to stimulate the economy, how were these projects determined? To her credit, Senator Grace Poe asked this question, and she got only a vague reply from a stammering Abad, that such projects “could have been proposed” by Cabinet secretaries.

• Why is it that over half of the P144 billion DAP funds released were not, by any stretch of the imagination, designed to stimulate the economy? Among these: the distribution of P9 billion to politicians in the Autonomous Region in Muslim Mindanao, P8 billion for “livelihood” projects that would benefit rebels with whom Aquino has been undertaking peace talks, P14 billion for “local projects” disbursed under the discretion of Mar Roxas, P30 billion to build up the central bank’s capitalization, which actually takes that much money out of the economy; and P500 million spent for advertisements abroad for the tourism slogan, “It’s more fun in the Philippines.”

• How could P12 billion given to local projects that members of Congress proposed be considered to be priority projects that would stimulate the economy? Look at the list, even of the small DAP projects, and they not only do not stimulate the economy, but only make the offices of top Cabinet secretaries as comfortable as they wanted, for instance, the P250 million move to the posh Makati district by the tourism department and certain offices of the interior and local government department.

• Some P65 billion or half of the DAP releases were lump-sum funds, in contrast to appropriations under the budget laws, which are minutely examined during the yearlong budget hearings of the Congress. How much of these are disbursed solely under the discretion of Aquino, Abad, and Roxas?

Grand scheme

And no senator asked Abad the most important question:

How do you interpret Section 29 (Section 1) of Article VI of the Constitution: “No money shall be paid out of the Treasury except in pursuance of an appropriation made by law?”

This goes to the crux of the DAP controversy. It was a grand scheme to go around the Constitution, so Aquino would have his own budget he can use at his whim, by changing the definition of “savings.”

Why were there so many projects that were haphazardly chosen, like in a mad rush (stem cell project, spanking new offices anyone?). The reason is that the projects were a mere smoke-screen for DAP’s main purpose – to secretly raise bribe money for the Congress to take out Corona, and then to accumulate such a huge slush fund for the 2016 elections in a magnitude unprecedented in the history of this republic. Even the finance secretary said that they couldn’t get enough projects for DAP that he proposed settling a P2.5 debt of the Bureau of Customs to the Philippine Deposit Insurance Corp., which already had P85 billion in deposit insurance funds.

Instead of asking Abad probing questions such as why was Tarlac, of all provinces, given P2 billion in DAP funds (even if we assume these were for legitimate projects), instead of Samar or any other of the country’s poorest provinces, Senate President Franklin Drilon, instead presented, in the guise of asking questions, a legal defense of DAP, which I think he himself knows, so that all Abad had to do was to say, “That’s correct.”

I couldn’t believe how Drilon has prostituted his once brilliant legal mind. He said in the hearing that the DAP couldn’t be unconstitutional as it violated only the budget laws that defined what “savings” were, which funded the DAP. (And the Senate he heads was a part of the Congress that enacted those budget laws!)

But that’s precisely what the Supreme Court does, which is not only to declare certain government actions as directly violating the constitution, but that they violate laws, and therefore, are unconstitutional. A prime example of this was the Court’s decision declaring Hacienda Luisita’s scheme of land reform as violating agrarian reform laws.

Again, the big lie

As I pointed out in an earlier column (“World Bank backtracks on DAP,” The Manila Times, July 2014), Aquino and Abad’s big-lie propaganda technique in the DAP issue is to repeat again and again ad nauseam the fallacy that their hijacking of funds benefited the economy.

Abad repeated this lie again and again in yesterday’s hearing. The Aquino government’s claim of the DAP being good for the economy was based on the World Bank report of March 2012. However, subsequent reports of the World Bank showed that it backtracked on its original pronouncement.

In its July 2012 update, the World Bank pointed out that in the first place, the DAP meant only a “mere realignment of funds”. That is, the DAP were funds already in the budget but which Aquino and Abad hijacked to use for other projects. Secondly, the World Bank pointed out that the DAP amounts were “miniscule (at less than 0.01 percentage point) relative to the size of the economy” to have any effect on its growth. In contrast, former President Arroyo’s program to stimulate the economy to weather the 2009 global financial crisis, involved P220 billion in new funds, mostly approved by Congress, and almost all devoted to infrastructure.

Succeeding WB reports, especially its annual updates on the Philippine economy, didn’t bother to mention the DAP as it was so irrelevant to the country’s economic performance.

Even Abad yesterday unwittingly admitted how irrelevant the DAP was to economic growth when in his attempt to downplay its size, he claimed that it was only 2.7 percent of the budget for the three years. How could this stimulate the economy?

To realize the stupidity of the claim that the DAP stimulated the economy, consider this: DAP’s P144 billion from 2011 to 2013 is smaller than the P169 billion sales revenue of Philippine Long Distance Telephone Co. in one year. San Miguel Corp’s revenue in 2012 is five times the total DAP, at P700 billion.

However, DAP money certainly would be gargantuan as bribes to members of the Senate and Congress. And that’s not an understatement. It was a good “investment” for the Aquino government, as the senators certainly gave all a toady show.

Never have we had such a sycophantic Senate as we have now.

Nationalize Meralco

by Rigoberto Tiglao on July 22, 2014

It’s been a week, and many parts of the National Capital Region and Southern Luzon are still without electricity. And these are supposed to be the country’s most developed areas, which account for 50 percent of our GDP and a third of our population.

The company in charge of this area is the country’s biggest power firm, Meralco. It has never been as profitable as it has been in the past several years, with its ultimate biggest controlling stockholder, Anthoni Salim, remitting about P20 billion in Meralco profit since 2010 to his Hong Kong corporate headquarters, and then to his four firms in the tax-free havens in British Virgin Islands and Liberia (See my column, “Indonesian Magnate Controls Meralco,” Feb. 23, 2014).

How an Indonesian can get to control such a monopoly in an industry that affects the lives of millions of Filipinos is, indeed, another indictment of our weak state, in which crucial regulatory agencies are captured by corporations and elites. In the cases of Meralco and its mother firm, Philippine Long Distance Telephone Co., the capture agency is mainly the Securities and Exchange Commission that is supposed to enforce nationality requirements.

Meralco a failure
But the failure of Meralco’s infrastructure in withstanding a typhoon also exposes the bankruptcy of a policy – really a gargantuan lie—adopted since President Cory Aquino’s watch.

This is the idea, propagated of course by the elites, foreign and local, that would profit from it, which our country stupidly mimicked from the West: privatization, that public services, to be more efficient, must be run by private enterprises.

The notion actually defies common sense and logic:

Public utilities are, by definition, essential services a state has the duty to provide its citizens. How does it do this? By getting contributions from its citizens, which we call taxes, which in principle should be provided mostly by the rich, the elite.

But what does privatization do?

It even makes public utilities a source of profits for the elite. In Meralco’s case, the private owners would first have to recover at least 6 percent of what it spent to buy the shares – or the cost of borrowing the funds from banks. Then it would need to make at least 10 percent—the minimum profit rate of capital in our country.

That means a total of 16 percent returns the owners need to make Meralco worth their investments, which they, of course, can recover only by raising the prices of the firm’s product, electricity. That’s how much more—at the very least ‚Meralco’s electricity rates are than if it were run by a non-profit state firm.

The usual argument against government ownership is that it is inherently inefficient, as it does not have the profit motive, and its managers don’t have to answer to shareholders.

Rather than arguing about this theoretically, I will just stick to facts. Many government corporations or state-run firms in the world are even more efficient than their private counterparts. Even here, the Bangko Sentral ng Pilipinas is considered to be as efficient as any private firm.

One of the biggest investment firms in the world is Temasek Holdings, which is owned by the government of Singapore. And even our elite capitalist group, the Ayalas obviously are in awe of Temasek’s capability: its subsidiary Singapore Telecoms is the biggest stockholder of Globe Telecoms, and reportedly has full control of the technical side of the business.

Except Singapore
Except for Singapore, which is after all, just a fourth of Quezon City in area and population, we are the only country in Southeast Asia that got fooled by the propaganda that the power industry must be run by private firms.

Indonesia: The electricity market of Indonesia is dominated by the state-owned Perusahaan Listrik Negara (PLN, National Electric Company). Except for several small, closed private networks operating in industrial areas, PLN is virtually the only supplier of electricity in the country. This is because under the 1985 Electricity Law, only public utilities are allowed to supply electric services.

Malaysia: Three state-owned utilities—Tenaga Nasional Berhad (TNB), Sabah Electricity SDN Berhad, and Syarikat Sesco Berhad—operate and manage each of the country’s three separate grid systems for Peninsular Malaysia, Sabah, and Sarawak. While Malaysia also has privately-owned independent power producers like us, all power is sold and distributed only to the state-owned TNB.

Thailand: Most of the generation and all transmission activities are operated by a state-owned utility, Electricity Generating Authority of Thailand (EGAT), with a few very small power producers. The distribution and supply activities are the responsibility of the Metropolitan Electricity Authority and Provincial Electricity Authority, which gets its power from EGAT.

People’s Republic of China: While private power firms have been allowed in the past several years, China’s electricity industry is controlled and dominated by 11 state firms. The State Grid Corporation of China (SGCC), the largest state-owned electric utilities company in the world, distributes electricity throughout China.

This SGCC is the state corporation which is the partner—the controlling partner, some allege —of mall-magnate Henry Sy’s son in our National Grid Corp. of the Philippines (NGCP), the firm privatized out of the National Power Corp.’s transmission part. How ironic is that? We privatize a state firm, which is taken over by a state firm of another country? It is NGCP which Meralco had blamed for not being able to power parts of Southern Luzon.

The electric power industry in Cambodia, Laos, Brunei and Burma, are all run by state firms, of course.

An academic in Australia who specializes in this issue, Prof. Sharon Beder, summarizes what happened in the rest of the world that got fooled by the myth of privatization:

The global experience
“Dozens of governments have embarked on the pathway to electricity deregulation and privatization since the mid­1990s. It has become the accepted wisdom amongst governments and opinion leaders despite the consequent price rises and disasters that have followed in its wake: the series of blackouts that have been experienced from California to Buenos Aires to Auckland; the government bailouts of electricity companies that have been necessary in California and Britain; the need for electricity rationing in Brazil; and the fact that it has become too expensive for millions of people from India to South Africa.

Electricity deregulation and privatization is referred to as ‘liberalization’ by its advocates who use the term to disguise what is in essence a massive shift of ownership and control of electricity from public to private hands, in the name of economic efficiency and in the cause of private profits.

‘Liberalization’ has meant that maintenance teams that were once fully staffed have been dramatically cut leading to frequent equipment failures. It has meant that privately owned electricity conglomerates are able to blackmail governments into bailouts and high prices with threats of blackouts.

And it has meant that the planning function of electricity authorities that once ensured adequate generating reserves for times of peak demand, and kept infrastructure up to date in developed countries, have been abandoned to market forces. Because of market forces, electricity prices are based not on the cost of production, but on how desperately consumers want electricity and this has led to sky­rocketing prices whenever private companies have been able to limit supply in times of high demand.

The privatization of electricity is not something that citizens have demanded nor wanted. In general, there has been very little public participation in electricity reform decisions and as the consequences are observed, there have been many bitter protests against electricity privatization.

Popular uprisings have occurred in Argentina, India, Indonesia and Ghana. Protests have halted privatization proposals in Peru, Ecuador and Paraguay. In the Dominican Republic several people were killed during protests against blackouts imposed by privatized companies.

In South Africa, thousands marched during a two-day general strike to protest privatization, which they labeled “born­again apartheid.” In Papua New Guinea, students were killed when thousands rallied against the planned privatization of government services including Elcom, the electricity authority. Even in China, workers protested the sale of a power plant in Henan province to a private company and threatened to “block the state highway and lie on the railroad while the trains run over us”.

Meralco, a microcosm
Meralco is a microcosm of our history, and the sad situation we are in:

It was set up during our period of US colonialism, by —who else—US corporations. In 1962, the landlord-political clan headed by Eugenio Lopez, Sr. took control of it, funded by massive loans from a government bank. During martial law, the strongman Marcos took it over from the Lopezes, had his wife’s brother Kokoy Romualdez supervise it, and pretended to turn over ownership to its consumers. Cory Aquino handed it over back to the Lopezes. The Lopezes in turn, as their other firms were sinking to bankruptcy, sold it to firms controlled by the Indonesian tycoon Anthoni Salim.

I would like to think reforming the microcosm that is Meralco could be a template for reforming the country. Ironically, such reform could be along that which was proposed by Eugenio Lopez, Sr. in his letter to Marcos dated Feb. 19, 1973, after Marcos imposed martial law, and which had the Lopezes fleeing abroad, and his son thrown in jail:

“Nanding [Eugenio’s brother and former vice president Fernando] and I are also in accord with your concept of democratizing property in the Philippines and believe that ownership of industries vital to the economy should be dispersed as widely as possible. For this reason, Nanding and I would like to offer the sale of our holdings to a cooperative composed of Meralco employees, customers and the general public that could be organized with the assistance of the government.”

I would like to believe such a window of opportunity for such a nationalization of Meralco —in the word’s two senses of reverting it back from foreign hands and putting it under government control—would occur when the Indonesian magnate Salim is required to comply with the Supreme Court ruling on the nationality requirement of public utilities.

That could be soon, with the Supreme Court’ s newfound strength in imposing the rule of law in this land.

Screw Indonesian-controlled Meralco

July 20, 2014

“Insanity: doing the same thing over and over again and expecting different results.”—statement attributed to Albert Einstein. As a nation with one of the most backward electricity industry structures in the world, unchanged for decades, we are indeed mad. Every year since Marcos fell in 1986 we suffer power outages throughout the summer, and then [...]

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Aquino’s big-lie propaganda technique

July 15, 2014

It was Adolf Hitler who pointed out first what is known as the big-lie propaganda technique, which his Joseph Goebbels perfected: “Tell a big lie, keep repeating it, and people will eventually believe it.“ Hitler in his Mein Kampf even explained why it is so effective: “(The masses) would not believe that others could have [...]

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World Bank backtracks on DAP

July 10, 2014

The Aquino administration is not above lying through its teeth, but one of its biggest fabrications is its claim that the Disbursement Acceleration Program (DAP) was beneficial to the Philippines economy. It was President Aquino who first tried to fool us with this lie when in his prime time televised speech in October, he said: [...]

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P8 billion to P21 billion DAP funds missing

July 8, 2014

With the secretive and utterly irregular nature of the Disbursement Acceleration Program (DAP), billions of pesos have escaped government accounting, raising the distinct possibility that they were stolen in a scheme similar to Janet Napoles’ pork barrel scam. Only President Benigno Aquino 3rd and Budget Secretary Florencio Abad know where the money went since only [...]

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With DAP money, Aquino was a Marcos

July 6, 2014

President Benigno Aquino 3rd acted like the dictator Marcos in handling his P149 billion Disbursement Acceleration Program (DAP) money, allocating billions of pesos in taxpayers’ money to whatever use he decided solely on his own, according to documents as well as sources from the Budget department. Just as Marcos flooded his Ilocos Norte province with [...]

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DAP: A tale of bribery, greed, and Hacienda Luisita

July 3, 2014

“The Disbursement Acceleration Program (DAP) was implemented in good faith, and it stimulated the economy as was its intent,” President Aquino’s usually clueless spokesperson Edwin Lacierda said as he wriggled to defend what the Supreme Court ruled the other day as unconstitutional. Lies from Lacierda are becoming too commonplace. The Supreme Court should take to [...]

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Aquino used P9B of DAP funds for his Nobel Prize fantasy

July 1, 2014

President Aquino’s fantasy of winning a Nobel Peace Prize has cost us taxpayers a total of P8.6 billion, which was taken from the Disbursement Acceleration Program (DAP) that was declared unconstitutional by the Supreme Court yesterday. The P8.6 billion was packaged and released from 2012 to early 2013 as the “Transition Investment Support Plan” (TISP) [...]

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Biggest secret of all: Aquino’s P220 billion pork barrel

June 29, 2014

In my column on Friday, I explained that behind the pork barrel furor engulfing the nation are three cover-ups managed by the Aquino administration. The first is the fact that with the utter demonization of “pork barrel queen” Janet Lim Napoles, the Aquino government has covered up the bigger operations of a mysterious person or [...]

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