House agri panel chair opposes Quedancor bailout

MANILA, Philippines – The chairman of the House agriculture committee opposed yesterday the P3.5-billion rescue package that bankrupt Quedan and Rural Credit Guarantee Corp. (Quedancor) is seeking from Congress.

At the same time, Palawan Rep. Abraham Mitra said he is against the consensus of an inter-agency government committee to close down the state firm, which is P12 billion in debt.

“There is a middle ground between funeral rites for Quedancor and its business-as-usual stance, and that is to retool the agency,” he said.

He said the corporation should go back to its original mission of providing rural credit guarantee and should stop its lending program, which has caused its present financial troubles.

He suggested that President Arroyo should now appoint a new president and chief executive officer for Quedancor.

The appointee should be “a professional who can lead the organization to survival, not a politician,” he said.

Federico Espiritu, who rose from the ranks in the state corporation, is now its officer-in-charge.

In a House budget hearing last week, Espiritu said Quedancor’s troubles started during the time of Nelson Buenaflor as president and CEO when the agency embarked on a swine-lending program.

He said the corporation has accumulated more than P11.7 billion in loans, including P5 billion obtained in 2004 from Land Bank and Equitable PCI (now Banco de Oro).

“We are paying about P1 billion a year in interest alone on our loans,” he said.

Mitra said Quedancor should “run after those who ran away with the swine funds.”

“Recouping these funds could be management equity to the war chest needed to restart Quedancor as a viable corporation,” he said.

Last Wednesday, Finance Secretary Margarito Teves told a House appropriations subcommittee chaired by Pangasinan Rep. Mark Cojuangco that an inter-agency committee has decided to recommend the “deactivation” or phase-out of Quedancor.

He said the committee is composed of himself, Agriculture Secretary Arthur Yap, who is Quedancor board chairman, Budget Secretary Rolando Andaya Jr., and a Land Bank representative.

He said Land Bank would take over the rural credit guarantee function of Quedancor.

He said the bankrupt corporation would no longer be effective if it is kept operating as “it has already lost its credibility as a credit guarantee institution.”

Cojuangco said he supports the government’s plan to phase out Quedancor.

“We should collapse it. We should no longer infuse taxpayer’s money in this agency. We should allow it to die a natural death, retire its personnel and pay them retirement benefits,” he said.

He said about P100 million would be needed for these benefits.

According to a Commission on Audit report, much of the billions lent under the swine program could not be accounted for as the alleged beneficiaries could not be located or were fictitious.

In places where auditors found the beneficiaries, they were in arrears and could no longer pay for their loans because their projects have failed. Other defaulting borrowers have misused their loans. 

Too costly

Andaya, defending the proposed rescue package, noted that the infusion of funds to Quedancor has nothing to do with the current economic crisis but has everything to do with its internal operations.

“That was brought about by their internal operations. It has nothing to do with the economic crisis,” he said.

Teves, who disclosed the plan to assist and phase out or deactivate Quedancor, said the bailout plan would cost the government around P475 million.

The P475 million would be in the form of an equity infusion which would help the government corporation settle part of its past due obligations to creditor banks.

However, Quedancor employees and officials would rather have the government provide a bailout package to make it financially sustainable and save it from being phased out or deactivated.

This proposal would cost the government P3.5 billion which, based on the statements made by Teves, would not be viable. – Marvin Sy