PMP: Bond deal reeks of crony-capitalism

The opposition Partido ng Masang Pilipino (PMP) charged yesterday that "crony-capitalism" has emerged under the Arroyo administration, citing as proof the P1.38 billion worth of government bonds floated in October last year.

PMP spokesman Crispin Remulla said the acquisition by the Caucus of Development for NGO networks (CODE-NGO) of P10 billion worth of the so-called PEACE bonds without actually paying for it, "shows that leaders of these civil society groups have become the new cronies under the present administration."

PEACE stands for Poverty Eradication and Alleviation Certificates.

Under the scheme, the government will redeem or buy back the PEACE bonds in 10 years to the tune of P35 billion.

Remulla said the arrangement "has all the trademarks of a crony deal, considering that the CODE-NGO chairperson who had lobbied for this highly lucrative deal is the sister of Finance Secretary Jose Isidro Camacho, Malacañang’s fair-haired boy whose department has control of the BTR (Bureau of Treasury)."

He was referring to Camacho’s sister Socorro Reyes, chairwoman of the CODE-NGO.

"The officers of CODE-NGO must now take a bow as the new cronies, because they have shown to our people that political connections and the supposed EDSA II goodwill are the only capital needed to make a profit of P1.38 billion from a P10-billion bond float that would cost Filipino taxpayers a staggering P35 billion in 2011, or 10 years from now," Remulla said in a statement.

He said it was obvious that even if CODE-NGO had neither the financial resources, experience nor license as a government securities eligible to deal in the capital market, "it was able to wrangle concessions from the government to engage in such a business."

Remulla said CODE-NGO served as the secretariat of KOMPIL II, a coalition of organizations that spearheaded EDSA people power which toppled the Estrada administration in January last year.

"What is appalling is that civil society groups like CODE-NGO are supposed to vigorously oppose cronyism and other acts anathema to good government, only to embrace the very practices that they condemn as soon as they become close to political power, in this case the EDSA II government," the PMP said.

Remulla noted that the Senate hearing on the controversy indicated that the PEACE bonds were specifically meant to enable CODE-NGO to raise funds for its project without having to spend a single centavo.

Reyes, along with CODE-NGO national coordinator Dan Songco and financial advisers Bobby Guevarra and Red Mayo, testified in the Senate inquiry.

During the hearing, Reyes and Songco reportedly admitted that they tapped Rizal Commercial Banking Corp. to underwrite the cost of the PEACE bonds.

After cornering the purchase with an offer of 12.75 percent interest rate, CODE-NGO turned around and sold the certificates to RCBC Capital at a lower 11 percent, making a profit of P1.8 billion.

The PMP dared the Arroyo administration to file appropriate charges against government officials and private individuals involved in the PEACE bond scam.

"If the Arroyo administration is bent on weeding out corruption during its watch, and demonstrating that it has not singled out the Estradas, it should take a serious look at this CODE-NGO financial caper and take legal steps against those involved in this anomaly for plunder. Launching a thorough probe of CODE-NGO’s money-making scheme would also show that the present government is not singling out its political foe, (former) President Joseph Estrada, who is now facing plunder charges (before) the Sandiganbayan," Remulla said.