Lawmakers enumerate graft in electricity GOCC ‘spinoff’

At least eight types of graft possibly were committed in the new operation of the wholesale electricity spot market (WESM). Those include officials’ unlawful dealings with relatives, conflicts of interest, favoritism, and patently disadvantageous contracts. Congressmen likened it, though on a grander scale, to the MRT-3 scam in which the Sandiganbayan convicted two kinsmen Thursday.

Entered into congressional records last week were interrelations of energy officials with private Independent Electricity Market Operator of the Philippines. IEMOP, incorporated May 2018 with mere P7,000 paid-up capital, four months later took over WESM, the multibillion-peso trading bourse of power generators and distributors. Thence it raked in more than P100 million a month, for 16 months now, in operating fee. The fee consists of 0.86¢ per kilowatt-hour paid for by consumers. Philippine electricity is the costliest in Asia.

“There are violations of Republic Act 3019 (Anti-Graft and Corrupt Practices Act) because the ones in the deal are related to each other,” Rep. Rosanna Vergara (3rd district, Nueva Ecija) noted. “IEMOP president Atty. Richard Nethercott admitted to be married to Dept. of Energy Asst. Sec. Caron Aicitel E. Lascano. He added that DoE’s National Transmission Co. president Atty. Melvin Matibag is married to IEMOP incorporator-treasurer Ma. Rene Ann Lourdes A. Garcia-Matibag.”

Ms. Matibag is also corporate services head of state firm Philippine Electricity Market Corp. (PEMC), TransCo stated. PEMC originally ran but gave WESM to IEMOP. Securities and Exchange Commission records show that other IEMOP incorporators are officers of PEMC. TransCo supervised PEMC as market operator, until the transfer of hundred-million-peso assets and equipment to the private IEMOP.

Among the other IEMOP incorporators of May 2018 are Oscar E. Ala, Francis Saturnino C. Juan, and Rauf A. Tan. Four months later, Sep. 2018, PEMC in an operating agreement turned over WESM to IEMOP. Signing the agreement were, among others, Ala and Juan as presidents of PEMC and IEMOP, respectively. Tan witnessed, as PEMC director/chief governance officer.

“There was graft in the self-dealing by PEMC government officers doubling as IEMOP incorporators,” Rep. Jericho Nograles (Puwersa ng Bayaning Atleta) said. IEMOP became market operator without competitive selection, added the lawmaker from Davao City. Broken was the Procurement Reform Act that requires open bidding. More so since the deal involved the transfer of state assets and equipment to a private entity, even if non-stock and nonprofit. Broken too was Implementing Rule 9-(6) of the Electric Power Industry Reform Act of 2001, which required the independent market operator to be “financially and technically capable, with at least two (2) years experience and expertise,” in operating an electricity market of similar or bigger size. IEMOP also had no fee-collection permit from the Energy Regulatory Commission, another breach of EPIRA. And PEMC usurped presidential powers in privatizing WESM’s operation without written consent by President Rody Duterte under the Governance Commission for Government Corporations Act.

The DoE, TransCo, PEMC, and IEMOP deny any irregularity.

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The eight violations of the anti-graft act, according to Vergara and Nograles, are of:

“Section 3. Corrupt practices of public officers. In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful: (xxx)

“(d) Accepting or having any member of his family accept employment in a private enterprise which has pending official business with him during the pendency thereof or within one year after its termination.

“(e) Causing any undue injury to any party, including the Government, or giving any private party any unwarranted benefits, advantage or preference in the discharge of his official administrative or judicial functions through manifest partiality, evident bad faith or gross inexcusable negligence. This provision shall apply to officers and employees of offices or government corporations charged with the grant of licenses or permits or other concessions. (xxx)

“(g) Entering, on behalf of the Government, into any contract or transaction manifestly and grossly disadvantageous to the same, whether or not the public officer profited or will profit thereby.

“(h) Directly or indirectly having financing or pecuniary interest in any business, contract or transaction in connection with which he intervenes or takes part in his official capacity, or in which he is prohibited by the Constitution or by any law from having any interest.

“(i) Directly or indirectly becoming interested, for personal gain, or having a material interest in any transaction or act requiring the approval of a board, panel or group of which he is a member, and which exercises discretion in such approval, even if he votes against the same or does not participate in the action of the board, committee, panel or group.

“Interest for personal gain shall be presumed against those public officers responsible for the approval of manifestly unlawful, inequitable, or irregular transaction or acts by the board, panel or group to which they belong.

“(j) Knowingly approving or granting any license, permit, privilege or benefit in favor of any person not qualified for or not legally entitled to such license, permit, privilege or advantage, or of a mere representative or dummy of one who is not so qualified or entitled. (xxx)

“The person giving the gift, present, share, percentage or benefit referred to in subparagraphs (b) and (c); or offering or giving to the public officer the employment mentioned in subparagraph (d); or urging the divulging or untimely release of the confidential information referred to in subparagraph (k) of this section shall, together with the offending public officer, be punished under Section nine of this Act and shall be permanently or temporarily disqualified ... from transacting business in any form with the Government.

“Section 4. Prohibition on private individuals.

“(a) It shall be unlawful for any person having family or close personal relation with any public official to capitalize or exploit or take advantage of such family or close personal relation by directly or indirectly requesting or receiving any present, gift or material or pecuniary advantage from any other person having some business, transaction, application, request or contract with the government, in which such public official has to intervene. Family relation shall include the spouse or relatives by consanguinity or affinity in the third civil degree. The word ‘close personal relation’ shall include close personal friendship, social and fraternal connections, and professional employment all giving rise to intimacy which assures free access to such public officer.

“(b) It shall be unlawful for any person knowingly to induce or cause any public official to commit any of the offenses defined in Section 3 hereof.”

The Ombudsman and the Presidential Anti-Corruption Commission have their work cut up for them.

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“Let’s put a stop to graft,” Vergara said, exemplifying the sentencing of former MRT-3 general manager Al Vitangcol and wife’s uncle Arturo Soriano to 16 years in prison.

Vitangcol was found guilty of hiring incorporator Soriano’s PH Trams as MRT-3 maintenance. PH Trams was only two months old, with P625,000 paid up, when given $1.15-million (P52.5-million) monthly fee. Inexperienced in rail works, it merely took over the technicians, machines, and parts inventory of 12-year-long predecessor Sumitomo, which transport officials suddenly had yanked out. The Procurement Act was breached as well. MRT-3 consequently deteriorated, with frequent train crashes and breakdowns.

Vitangcol and Soriano are appealing their conviction.

The interrelation was first exposed in this space (see https://www.philstar.com/opinion/2014/05/26/1327279/mrt-3-chief-gave-p517-m-contract-uncle-law).

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