Unfair competition

The end will never justify the means.

How can some sectors even suggest that the government turn a blind eye on the illegal act of dumping Turkish flour into our territory and then threaten to increase bread prices if anti-dumping duties are imposed on Turkish flour.

Two lobby groups of bakers have warned that they will increase the price of pandesal from P3 to P3.50 per piece if government decides to impose a 20 percent dumping duty on Turkish flour, which the bakers apparently have been using. They have in fact already petitioned the Department of Agriculture and the Tariff Commission not to impose the dumping duties.

Aside from entering the country at dumped prices, this is the same Turkish flour which in the past has been pestered by health and safety issues.

Dumping, a special case of price discrimination, is a situation in which the price a firm charges for its goods in a foreign market is lower than either the price it charges in its home market or the production cost. Dumping thus is the sale of surplus output of a firm on foreign markets at below cost price. Dumping also occurs when a firm sells its products at a higher price in the home market and at a lower price in the foreign market. (http://www.economicsconcepts.com/dumping.htm)

In 2012, Turkish flour was sold to the Philippines at $340 per metric ton while their domestic price in Turkey was $470 per ton. In 2011, the export price of Turkish flour averaged $388 per MT while in Turkey it was $600 per MT.

Last year alone, Turkish flour exports to the Philippines skyrocketed by 71 percent after posting increases of 16 percent in 2011. In contrast, the local flour industry grew by only one to two percent in the same period.

There is no justification to unfair competition, not even the promise that it can bring down prices of locally sold commodities, such as bread.

Mysterious orders

Justice delayed is justice denied.

Equally, justice that takes on different versions is justice denied.

Recently, the Department of Justice issued a number of conflicting orders that seems to derail the administration of justice that is the very foundation of our “Daang Matuwid” battlecry.

Take the rehabilitation case of Philippine Investments 2 (SPV-AMC) Inc. (PI2), an asset management company that was formed in 2007 to acquire foreclosed but otherwise attractive properties all over the country. The asset management compeny had the Lehman Brothers group of New York as its parent institution.

The currently booming property sector is proof of the foresight of the founders of PI2 and its continuing feasibility. Late last year, the company released a list of some 3,000 properties that Filipinos overseas welcomed as a rare opportunity to invest in their own country.

It may have been a runaway success, if the 2008 financial crisis in the United States had not pushed Lehman Brothers to bankruptcy and pushed PI2 to corporate rehabilitation, currently under the Makati Regional Trial Court.

One of its creditors is Standard Chartered Bank which loaned P819 million to PI2 in 2007. During the course of the rehabilitation proceeding, PI2 claimed to have paid back StanChart up to P240 million for the loan.

However, PI2 and the Makati rehabilitation court later learned that in 2009, StanChart New York also claimed from the US bankruptcy court payment of almost $26 million in loans extended to Lehman Brothers, including the P819 million StanChart Philippines was claiming from the Makati rehabilitation court.

In effect, the bank claimed payment for the same loan from both PI2 in Makati and Lehman Brothers in New York.

Moreover, both PI2 and the rehabilitation court learned later that the original P819 million loan was actually secured with high-grade corporate bonds as collateral. The corporate notes were worth a minimum of $90 million dollars, or P3.9 billion.

Officials of the bank initially told the rehabilitation court that they had no knowledge of the collateral. Later, they told the court that Lehman Brothers failed to deliver the collateral, which, they said, was not even enough to cover StanChart’s exposure in the first place.

But they were forced to admit receiving the collateral and the settlement with the New York bankruptcy court when the latter finalized the details of the deal.

Metrobank, another creditor of PI2, claimed that since StanChart already received money from the bankruptcy proceeding and released the pledged collateral in New York, the local rehabilitation court should review StanChart’s right to participate in PI2’s rehab process as a creditor.

PI2 then learned earlier this year that the Department of Justice filed two criminal suits in December last year against StanChart officials for perjury and withholding information relevant to the company’s rehabilitation.

The case underwent preliminary investigation by Makati City prosecutors. In fact, the prosecutors had already ended the investigation and reached a conclusion. The papers, in fact, were just waiting for final signatures.

Last May 20, the Makati City prosecutors received a bewildering order from no less than Justice Secretary Leila de Lima.

Department Order No. 347 mysteriously ordered the Makati prosecutors to transfer all records of the cases to DOJ prosecutor Caterina Isabel Caeg.

But seven days later, De Lima issued DO 417 revoking DO 347, only to be followed by a third DO 460, dated June 18, which again transferred jurisdiction of the cases to Caeg. Worse, they did not even inform plaintiff PI2 about DO 460 and the company’s lawyers had to run around looking for where the case had landed.

The DOJ never explained the grounds for the transfer of a concluded preliminary investigation. It never showed any motion seeking the transfer. In fact, the prosecutors had already denied such a motion when the preliminary investigation was still open. By all accounts, the DOJ transferred the case on its own. But why?

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