CoA: Gov’t lost P460M from Tadeco deal

IT was Speaker Pantaleon Alvarez who blew the whistle on the Tadeco-Bucor deal.

The Commission on Audit’s (CoA) Consolidated 2017 report on the Bureau of Corrections (BuCor) affirmed Speaker Pantaleon Alvarez’s contention that the land deal between BuCor and the Tagum Agricultural Development Co., Inc. (Tadeco) is grossly disadvantageous to the government.

The 2017 CoA report held that the government lost even more than what Alvarez had estimated, at least for 2016 and 2017.

Alvarez had insisted that the P5,000 per hectare per year Tadeco has been paying for the lease of 5,308.36 hectares of BuCor’s lands is way below the prevailing rate of P25,000 per hectare per year.

The House leader said the government has been prejudiced by as much as P106,167,191 per year.

“The annual guaranteed income, including the profit share as consideration for the use of the reserved land of the BuCor, is grossly disadvantageous to the government considering the prevailing rental rate of P50,000 per hectare in the locality, or a revenue loss for the government of P460,181,652,” the CoA report said.

According to CoA, while BuCor received from Tadeco guaranteed annual income of P35,327,174 both for 2016 and 2017, the agency should have received P265,418,000 per year, or a total loss of P460.18 millon.

The CoA noted that based on data from 2014 up to 2017 the Annual Guaranteed Income earned against the total land area of 5,308.36 hectares leased to Tadeco, the average annual rental income per hectare is P6,655.01.

But based on ocular inspection and interviews conducted by the CoA Regional Technical Services, Region XI, Davao City, it was found that the prevailing rental rates in the area ranges from a low of P15,000 to P25,000 per hectare annually for undeveloped land area, to a high of P40,000 to P50,000 per year per hectare for developed banana plantations.

Comparing the rental of developed banana plantation at the beginning of the year and the actual amount paid to BuCor, CoA said the government stands to incur losses in the amount of P438,840,855.82.

“Indeed the JVA entered into by BuCor with Tadeco is grossly disadvantageous to the government. Hence the same has to be revisited with the view to increase the guaranteed rates in time that the same JVA is not yet declared unconstitutional by proper authority,” CoA said.

In April 25, 2017 CoA expressed the view that the JVA between BuCor and Tadeco is unconstitutional and recommended not only the cancellation of the deal but also for the filing of criminal action before the Office of the Ombudsman for the patent violation of the laws and the Constitution.

BuCor explained that the lease amount was based on the prevailing rates at the time the JVA was entered into in 2003.

However, the CoA noted that while BuCor has already sent its intent to the Tadeco management for the increase of rentals the bureau is still awaiting the company’s response on the matter to date.

CoA likewise found under-remittance of Tadeco of the BuCor’s profit share for 2015 to 2016 amounting to P5,826,567.01. Data obtained by CoA indicated that for this period BuCor received an average of P9.5 million a year as profit share in the total exports of bananas by Tadeco.

“Since BuCor formally turned over 5,308.36 hectares of land for use of Tadeco and an average yield of 5,000 boxes of bananas per hectare, CoA said BuCor should have at least a profit share of P12,433,566.62,” CoA said in its report.

The CoA recommended, among others, that BuCor closely monitor the production of bananas by Tadeco in order to ensure accuracy on the reported volume of production and the corresponding profit share of the agency.

Alvarez has also filed a graft case against Davao Del Norte 2nd District Rep. Antonio Floirendo Jr. over the land deal between BuCor and Tadeco, which is owned by the Floirendo family.

The Office of the Ombudsman had indicted Floirendo, citing the Anti-Graft and Corrupt Practices Act which bars a public official from directly or indirectly having financial or pecuniary interest in any business, contract, or transaction, where he intervenes or takes part in his official capacity.

The Tadeco-BuCor land deal, which started in 1969, was renewed for another 25 years in 2003 when Floirendo was an incumbent congressman. At that time he directly owned 75,000 shares of Tadeco with a subscription cost of P7.5 million.

Likewise, the Ombudsman noted that Floirendo owned 537,950 shares of Anflo Management and Investment Corporation (Anflocor) which in turn owns 4,730,000 shares of Tadeco, amounting to a subscription cost of P473 million. Anflocor is the listed parent company of Tadeco.

Floirendo offered a plea of not guilty when arraigned before the 6th Division of the Sandiganbayan. Following the arraignment, the court set the start of the trial of the graft case against the lawmaker on August 15.

By Alvarez’ own reckoning, from the time the contract was renewed in 2003 to date, the government has lost around P1.592 billion in terms of lease payment for Tadeco’s use of 5,308.36 hectares of Bucor land alone.