The President also said Camacho should be commended for helping restore business confidence in the country.
"Welcome to the club (of controversials)," she greeted Camacho who is now the object of what has been called a "game of political hardball" and a probe into the alleged P35-billion Poverty Eradication and Alleviation Certificates (Peace) bonds scam.
Camacho is one of four Cabinet members whose appointments were bypassed by the CA, composed of 12 senators and 12 congressmen and chaired by Senate President Franklin Drilon, because of the objections of the opposition.
The Senate finance committee is also investigating allegations that the bidding for the Peace bonds was rigged to favor the Caucus of Development for NGO Networks (Code-NGO), headed by Camacho’s sister Ma. Socorro Camacho-Reyes.
Camacho claims he did not get involved in the transaction which was aboveboard but the opposition, particularly Sen. Teresa Aquino-Oreta, claims the alleged irregularities were committed with Camacho’s full knowledge.
But Camacho’s camp claims there were no irregularities in the bidding and that Oreta was only getting back at Camacho because he put up a streamer in front of his house blasting the senator for her behavior during the impeachment trial of then President Joseph Estrada.
The President has also said she believes there were no irregularities in the bidding and at least five foreign banks, which usually have strict policies on auctions, even participated in the bidding.
Mrs. Arroyo also recalled that when she went to New York for the World Economic Forum last week, many of the 2,000 business leaders who attended the forum were impressed by the country’s economic managers, particularly Camacho.
"They were impressed by my economic team. They were particularly impressed on how Lito Camacho explained the risk management of our bond floats because he diversified it," Mrs. Arroyo explained.
She also credited Camacho for getting good prices for recent bond floats and for balancing the country’s financing requirements with the need for fiscal discipline because of the huge budget deficit.
But Oreta, in a statement, said there is enough evidence to show that the bidding was rigged to favor Code-NGO.
She said the even an exemption from the usual 20-percent withholding taw was utilized to favor Code-NGO to the detriment of the government.
Oreta claimed the Bureau of Treasury conducted a trial auction where government securities dealers were made to believe the Peace bonds would not be exempt from the 20-percent withholding tax although it was later granted a tax exemption.
"What we have here is another proof of the asymmetric information involving the Peace bonds transaction, which clearly favored Code-NGO and gave it a mile-long head start than the other bidders in mobilizing funds for the purchase of these zero-coupon instruments through its agent-bank Rizal Commercial Banking Corp," Oreta said.
Oreta explained that on Oct. 2, 2001, the Bureau of the Treasury informed traders about a trial auction for the Peace bonds on Oct. 5 and that the bonds would be subject to the 20-percent withholding tax.
However, as early as May 31, the Bureau of Internal Revenue (BIR) already issued a ruling granting an exemption on the transaction at the request of Code-NGO.
"While the other bidders had to work on the assumption that the bonds would be subject to the 20-percent withholding tax, Code-NGO knew right from the start that the sale of the Peace bonds would be tax-exempt and this, it was able to price its bid lower or more competitive that those of the others," Oreta said.
The bureau, an agency under the Department of Finance, also failed to adequately inform other bidders of the tax exemption because it only issued a memorandum on the matter on the day of the auction itself, according to Oreta.