7 face graft raps over PCGG’s sale of Cojuangco aircraft

The Presidential Commission on Good Government (PCGG) has filed a graft case against seven people, four of them its former officials, in connection with the 1989 sale of an aircraft sequestered from businessman Eduardo "Danding" Cojuangco Jr.

Charged with violation of Republic Act 3019, or the Anti-Graft and Corrupt Practices Act, were former PCGG chairman Mateo Caparas, commissioners Zosimo Malabangan and Maximo Macaren and legal director Ismael Sanchez.

Joining them are Mario Galang, resident auditor of the Commission on Audit at the PCGG and Benito Cuevo, a broker. Another broker, Arturo Condes, has been charged with the crime of corruption of public officials under Article 212 of the Revised Penal Code.

The graft case stemmed from the PCGG’s sale of a 1982 Falcon jet to Walter Fuller Aircraft Sales Inc. of Dallas, Texas for $5.02 million in September 1989.

The aircraft had been sequestered by the PCGG in 1986 from United Coconut Chemicals Inc. owned by Cojuangco.

In a 15-page complaint, PCGG Commissioner Ruben Carranza said the "patently illegal and highly irregular sale of the Falcon jet caused undue injury to the Republic of the Philippines through evident bad faith."

Carranza pointed out that the transaction caused losses to government in the amount of $7 million.

"This is not to mention the embarrassment and humiliation the Philippine government had to endure in the international community," he said.

Records showed that on May 11, 1989, or before Walter Fuller came into the picture, Condes’ International Enterprise Inc. won a public bidding for the jet for $5.9 million.

However, the PCGG declared the bidding a failure due to non-compliance of certain requirements. Nevertheless, the PCGG still authorized Condes to make the necessary repairs of the aircraft.

Four months later, Cuevo brokered the sale of the Falcon jet to Walter Fuller for $5.02 million.

While not mentioned in the deed of sale, it appeared that $2.16 million had been set aside to reimburse Condes for repair of the aircraft.

In October of the same year, Hong Kong-based Faysound Ltd. sued Walter Fuller in a US district court, claiming ownership of the aircraft. The court later ruled in favor of Faysound.

In turn, Walter Fuller had filed a suit in a Texas court for breach of warranty or title with damages against the Philippine government and the PCGG to recover some $12.9 million, including legal fees and other expenses in defending the case, transaction costs and the current market value of the aircraft.

After counter-petitions filed in court, Walter Fuller and the PCGG reached a compromise agreement for the latter to pay the aviation firm a total $14 million, plus 10 percent interest a year.

For the payment, the PCGG relied on proceeds of the sale of the jet deposited in escrow with the Philippine National Bank.

"In a nutshell, the PCGG’s full remittance to Walter Fuller amounted to $16.3 million. Deducting from the proceeds of the escrow deposits, the government sustained losses of $7 million," Carranza said.