Untangling the knot (Part II)

As a backgrounder, the controversy started with two factions squabbling over the three firms of Philippine Communications Satellite Corp. (Philcomsat). The government owns 40 percent of Philippine Overseas Telecommunications Corporation (POTC). POTC wholly owns Philcomsat which in turn owns 80 percent of Philcomsat Holdings Corp., a publicly listed company.

The boards of POTC and Philcomsat are both headed by Bildner and Victor Africa while PHC is led by Ramon Nieto and Enrique Locsin. Senator Enrile’s family reported owns 6.6 percent of Philcomsat.

The Supreme Court and the Securities and Exchange Commission have both upheld that it is the group of Nieto and Locsin that should takeover POTC and Philcomsat. Despite the rulings, however, the Bildner board of POTC and Philcomsat, continues to held on to their post and refuses to vacate their seats.

But instead of accusing PHC of mismanagement, the Senate should instead set its sight on Philcomsat and POTC and make sure its current officials accountable. From a P121.75 million enterprise in 2000, POTC and Philcomsat, according to reliable reports, are now only worth P6 to P8 million, as it even posted a net loss of P71.9 million.

PHC, whom Philcomsat and POTC officials have accused of mismanagement, on the other hand grew from a P10 million enterprise in 1996 to P1.5 billion with no liability whatsoever. Its bank accounts and assets are intact and it has a lucrative call center under its control and supervision.

According to reports, government officials led by the PCGG are being kept on the dark as to their financial standing because it has been years since the financial reports of POTC and Philcomsat have been audited. We all know that financial statements that are not audited are a mere scrap of paper and they are self-serving. The Africa-Bildner group has been repeatedly asked by the PCGG for an audit of its financial statements but Africa and Bildner have consistently and adamantly refused to open the books.

PHC, on the other hand, being a listed corporation, undergoes regular auditing so that its financial standing is always transparent for anyone who cares to know how much it is now worth and how its funds are being spent.

Based on reports, the financial downfall of POTC and Philcomsat started in 2000 when the Africa-Bildner faction in the two sequestered firms surreptitiously took over management of the two corporations.

Insiders say that their accusations on the so-called "mismanagement and dissipation of assets" of the Nieto-Locsin group of PHC are just a smokescreen to distract the public yet of their plan to take over its management.

The Africa-Bildner faction is reportedly getting a lot of help from Senator Enrile, a member of the committees investigating PHC.

The Senate leadership should look into the matter because the Upper Chamber may be wittingly or unwittingly being used by those who want to get a piece of the highly lucrative PHC.

An intricate web

Newsbreak, in its farewell issue, attempts to simplify and explain the otherwise complex and entangled web that has characterized the NAIA-3 controversy, which has turned for the worse when Assistant Solicitor General Nestor Ballacillo, the main government counsel on the case, was brutally and senselessly killed.

It has been years since the Supreme Court declared as void the contract between the government on one hand and Piatco-Fraport on the other. And yet, it has been largely a paper victory for government.

In an attempt to recover the full amount of its investments, Fraport went to the World Bank’s International Center for Settlement of Investment Disputes in Washington DC, while Piatco lodged a claim with the International Court of Arbitration of the International Chamber of Commerce in Singapore.

But the government’s legal team argues that because fraud and corruption attended the airport contracts, then Fraport and Piatco should be barred from recovering. Government lawyers say ICSID does not have jurisdiction over the case because the investment was illegal in the first place. They are also contesting Piatco’s $575 million compensation claim due to huge discrepancies in the amount actually spent.

Meanwhile, the government has secured a writ of possession from the Pasay RTC and is preparing for the soft opening of NAIA 3 in the first quarter of the year. It has paid Piatco a provisional amount of $62 million in the expropriation case and the market value of Terminal 3 is still being determined by a court-appointed committee.

Piatco lawyers are now arguing that the writ of possession merely allows the Manila International Airport Authority (MIAA) to complete and repair the terminal but not to exercise ownership rights such as selling or leasing the facility, Newsbreak says in its report.

On another front, the Asia ’s Emerging Dragon Corp. or AEDC led by businessman Lucio Tan is claiming the right to operate NAIA 3 being its original proponent. AEDC is arguing that it should take over the project after Piatco’s contract was nullified by the High Court. But AEDC is only willing to pay $300 million, which it alleges is the true cost of the project.

Further complicating the matter is the Sandiganbayan’s dismissal of the plunder case filed by state lawyers against Piatco and Fraport owners and transport officials who approved the highly-irregular deal.

How much government will actually spend to get the NAIA 3 going  has not been settled, but all indications show that it is not going to be cheap. Whether it is going to be safe to use (Newsbreak reports that Terminal 3 stands incomplete, largely untested, and replete with structural defects), well… that’s another issue.

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