COPA seeks audit of Code-NGO funds

The Council on Philippine Affairs (COPA) has urged the non-government group Code-NGO to make a full disclosure on how the P1.4-billion commission it had received from the sale of the controversial "Peace Bonds" in 2001 was disbursed, including the complete list of its beneficiaries.

COPA secretary general Pastor Saycon said that Code-NGO, a network of non-government organizations headed by Maria Socorro Camacho-Reyes, sister of former finance secretary Jose Isidro Camacho, needs to account for the fund as it was allegedly already transferred to the account of another foundation.

Saycon emphasized that the fund is considered public since the Peace Bonds were issued and sold by the Bureau of Treasury and any proceeds arising from this transaction is considered public in nature.

He noted that Code-NGO has been coming out with newspaper advertisements critical of the government from which it has won countless favors in the past.

Saycon said COPA will file a petition with the Securities and Exchange Commission (SEC) on behalf of the Filipino people to compel Code-NGO as well as the Peace and Development Foundation and its officers to open their books to the public.

When the Bureau of Treasury issued some P35 billion worth of the so-called Peace Bonds in 2001, the transaction was conceptualized and facilitated by Code-NGO, thus entitling it to P1.4 billion in commissions.

The financial instrument with a 10-year maturity period was purchased through auction by the Rizal Commercial Banking Corp. at a discounted rate of only P10 billion. This means that the Philippine government will pay RCBC the face value of P35 billion upon maturity in 2011.

Code-NGO, on the other hand, was supposed to deposit the P1.4-billion commission it received and only use the interest income to finance pro-poor and other development projects of other NGOs under its wing.

Saycon alleged that only P20 million is left of this amount in Code-NGO’s deposit account, the bulk of which has been transferred to the account of the Peace and Development Foundation, which is chaired by Ateneo de Manila University treasurer Fr. Noel Vasquez. Other officers of this foundation reportedly include the Camacho siblings, former social welfare secretary Dinky Soliman, and her husband, Hector.

Saycon said that the legislative investigation of Camacho, his sister and Code-NGO for their role in the issuance of the Peace Bonds did not prosper because of the influence of the so-called civil society, represented by Code-NGO, in the affairs of the state.

Two former Code-NGO chairwomen had been appointed to the Cabinet — Soliman and Karina David. Other key leaders of the group who clinched plum posts in the Arroyo administration, include Ging Deles, who became chair of the National Anti-Poverty Commission; Percy Chavez, who headed the Presidential Commission on the Urban Poor; Ayala Foundation’s Vicky Garchitorena, who was appointed to head the Presidential Management Staff and later as member of the board of the Philippine Charity Sweepstakes Office. KOMPIL II’s Dan Songco was also named to the board of the Development Bank of the Philippines. All have since resigned from their posts.

Since these officials cut their ties with the Arroyo administration, Saycon insisted it is only proper that they account for the funds they received from the government or return the P1.4 billion to the nation’s coffers as it is the Filipino taxpayers who stand to shoulder the P35 billion needed to redeem the bonds in 2011.

"Why should the Filipino people be asked to raise P35 billion to redeem the Peace Bonds when they did not benefit from it?" Saycon asked.

He added that the Office of the Ombudsman should also look into the possibility that government officials and private executives involved in the Peace Bonds deal may have violated the provisions of the Anti-Graft Law when they entered into a deal that unduly favored Code-NGO.

In October 2001, the Bureau of Treasury auctioned Peace Bonds, but did not disclose all details of the bonds, such as their tax-exempt status, until the day of the auction. Other financial institutions in fact criticized the Bureau of Treasury for giving Code-NGO an undue advantage over other bidders since it was involved in the underwriting of the bonds from the start. Code-NGO eventually cornered all the peace bonds and earned windfall profits from the secondary sale of the bonds to RCBC Capital.

During the Senate finance committee investigations, the other bidders had complained about the delay in the dissemination of information on the features of the bond. The reserve requirement feature, for instance, was released to bidders only the day before the auction while the clarification on the 20-percent withholding tax exemption was given an hour-and-a-half after the start of trading.

Apparently, Saycon said, this gave Code-NGO an undue advantage. It had also been established that Code-NGO knew beforehand that the sale of debt instruments would be exempt from the 20-percent withholding tax for as long as there were fewer than 20 primary buyers, which was not clear to other bidders.

Saycon stressed that the Ombudsman’s office is mandated by law to conduct an investigation of these matters, especially if the transaction was grossly disadvantageous to the government.

He also urged the Ombudsman to file a criminal case against RCBC and Code-NGO executives and others who were directly involved in the Peace Bonds underwriting process.