Dyed-in-the-wool yellow civil society group Caucus of Development NGO Networks (CODE-NGO) wrote to dispute that the PEACe (Poverty Eradication and Alleviation Certificates) bonds that it concocted during the maiden years of former President Gloria Macapagal-Arroyo fleeced the government of unpaid taxes.
It also defended the Citizen Participatory Audit (CPA) Program of the Commission on Audit (CoA), which this writer described as a partisan policy and a political machinery of the “yellow mob,” which it is.
It branded what was written previously as a “reckless impression of the CPA program and our organization.”
It went on length about the CPA program as being “piloted as early as 2000 by CoA, UNDP (United Nations Development Program) and the Concerned Citizens of Abra for Good Governance” and its being a tool to combat corruption.
“As to the PEACe Bonds, you may note that this issue has already withstood two rounds of congressional scrutiny in 2002 and 2010, both in the Senate and the House of Representatives. The final Supreme Court ruling in 2015 in favor of PEACe Bonds investors and reprimanding the BIR (Bureau of Internal Revenue) for retaining the final 20 percent withholding tax from this transaction asserts with finality that the government was not unduly disadvantaged from this initiative,” it claimed.
CODE-NGO gave a good spin in its letter, but this writer maintains that the PEACe Bonds float was the most elaborate rip-off on the government which had to suffer heavily for it.
The government had to shell out P5 billion that the Supreme Court (SC) ordered to release to banks from the amount that the Bureau of Treasury (BTr) secured as final withholding tax (FWT) in 2011 when the bonds matured.
CODE-NGO is identified with yellow stalwarts Dinky Soliman who became the Department of Social Welfare secretary of former President Noynoy Aquino, Teresita “Jing” Deles, Noynoy’s peace negotiator, and Marissa Camacho, the sister of former Department of Finance secretary Jose Isidro Camacho.
Soliman’s husband, Hector, was the first corporate secretary of Peace and Equity Foundation, which managed the proceeds from the bonds.
The bond float was among the onerous deals under the public-private partnership scheme, an investment model which Noynoy used as his administration’s economic development strategy.
The government was ordered by the SC to return P4.9 billion plus P1.4 billion in interest to banks.
Finance Secretary Carlos Dominguez III earlier said, “Every time I sign a check for some mistake that has been made in the past, my hands almost bleed.”
The SC issued its final ruling against the government in 2017 when Rody is already in power.
Shortly after the so-called EDSA 2 uprising that booted out former President Joseph Estrada, the Yuchengco bank Rizal Commercial Banking Corp. (RCBC), as representative of CODE-NGO, won an auction for P35 billion worth of 10-year zero-coupon bonds that the BTr issued.
Such type of a debt instrument was never heard of until CODE-NGO launched it and the PEACe Bonds were specially designed for the civil society group that supported EDSA 2 that installed Arroyo.
RCBC paid P10.17 billion for a bond that would pay up P35 billion 20 years later and in return CODE-NGO got a clean P1.4 billion in commission.
Prior to the auction, the BIR issued a ruling that the PEACe Bonds were not “deposit substitutes” and thus not subject to the payment of the 20 percent final withholding tax.
After RCBC won the 2001 auction, its unit RCBC Capital was appointed as underwriter for the bond float and distributed the debt papers to other banks on different dates.
The government bond issue was unique since it was issued not for any government need but tailor-fitted for CODE-NGO.
The sale of the bonds then was suspected rigged from the start as was the findings of a Senate hearing on the bond float.
Former Senate President Juan Ponce Enrile had said the government failed to protect public interest through the float since the BIR even granted tax exemptions on it.
After the Senate probe where the senators threatened to file plunder cases on government officials, then Internal Revenue Commissioner Kim Henares issued a belated ruling revoking the tax exemptions.
CODE-NGO leaders, including Danilo Songco, former executive director of CODE-NGO who was also a member of the board of the Development Bank of the Philippines, lobbied hard for the bond issue.
The BTr conducted a manual bid instead of the usual electronic auction for bond floats, which was irregular to say the least.
Even after Henares ruled that the bond issue should be subject to tax, the banks it dealt with and not CODE-NGO were required to pay.
After getting RCBC to buy the PEACe Bonds for P10.17 billion, CODE-NGO immediately turned around and sold the debt papers to RCBC Capital for nearly P12 billion to earn a windfall of P1.83 billion.
In all, the government was screwed of P25 billion in the racket paid to banks, just so the yellow mob-run CODE-NGO can secure P1.83 billion in brokers’ fee.
More on the CODE-NGO anomalies later.