The Department of Finance (DOF) said the government would not hesitate to call off guarantees extended to state-owned agencies and private companies obtained through misrepresentations.
The National Government may particularly cancel or suspend guarantees extended to government-owned and controlled corporations (GOCCs) if the conditions set under the guarantee agreement are not met, Finance Undersecretary and Acting National Treasurer Roberto Tan said.
State-run Philippine Export-Import Credit Agency (Philexim), an attached agency of the DOF, has already put on hold a guarantee for a P500 million-loan sought by mining contractor Platinum Group Metals Corp. (PGMC) amid lingering questions on PGMC’s ownership of the mine site used in applying for the guarantee.
PGMC applied for the loan from Deutsche Bank to bankroll its smelting plant in Mindanao.
The loan, however, was contingent on a state guarantee from Philexim and was hinged on the company being able to produce the necessary nickel ore to feed the smelting plant.
Tan said the government is closely scrutinizing the viability of projects securing state guarantees as it needs to safeguard the resources of the government.
In the case of PGMC, documents showed that the Philexim Board of Directors approved last April 30, 2007 the issuance of a guarantee to a bank acceptable to Philexim relative to PGMC’s P500-million loan to finance its ferronickel smelter plants project.
Conditions include an approval from the Office of the Government Corporate Counsel, submission of clearances from the Department of Environment and Natural Resources (DENR) and local government units, submission of PGMC board resolution to obtain a loan, and the submission of complies Mining Development Plan.
Pre-disbursement conditions include the assignment of all mining rights, ore- reserves, and extracted raw materials, goods in process and finished goods inventory; assignment of contract to sell agreement of PGMC and its buyers; submission of PGMC’s plan to address line of succession to be submitted and evaluated by Philexim before disbursement; and that the disbursement shall require prior approval from Philexim.
The company was also required to pay a guarantee fee of 2.5 percent per annum based on the outstanding guaranteed amount payable in advance.
Sources privy to the matter expressed hopes that Philexim, under its new leadership, would carefully scrutinize the PGMC project.
Malacañang recently appointed Francisco Magsajo Jr. as the new president and chief executive officer of Philexim replacing former president and CEO Virgilio Angelo who was named chairman of Small Business Guarantee and Finance Corp. (SBGFC).
Magsajo was sworn into office last Jan. 3 by Finance Secretary Margarito Teves.