Sunday, January 07, 2007 Gov’t denies getting pressured to drop dummy raps v. airport builder
THE Department of Justice (DOJ) has denied that it succumbed to pressure when it dismissed the complaint for violation of the anti-dummying law filed by the National Bureau of Investigation (NBI) against the officials of the Philippine International Air terminals Company (Piatco) and its German partner Fraport AG.
State Prosecutor Phillip dela Cruz likewise denied intervention by Justice Secretary Raul Gonzalez Sr., in coming out with the resolution dismissing dummying charges against members of the Cheng family, corporate owners of Piatco, builders of the mothballed Terminal 3 of the Ninoy Aquino International Airport (Naia).
"Hindi naki-alam si Secretary ditto (The secretary did not meddle here). The resolution is based on the merits of the case, jurisprudence and evidence that we have. Wala kaming pakialam sa (We do not care about the) arbitration. As far as we are concerned, no Malacañang influence (was wielded in the case)," said dela Cruz in an interview.
In his 13-page resolution, the DOJ ruled that based on the corporate structure of Piatco, "it is far-fetched that a foreign corporation like Fraport could gain dominion, control and ascendancy in the management or control of Piatco considering 60-percent of its shares are owned by Filipino."
"The fact that Fraport has direct investments in Pags Terminals Inc (PTI) and Piatco Terminals Holdings (PTH) and Philippine Airport and Ground Services (Pags) does not result to a violation of the Anti-Dummy Law, considering that, notwithstanding these direct investments from Fraport, PTI and PTH and Pags, indisputably remain a 'Philippine National' within the purview of the Foreign Investment Act, being 60-percent Filipino-owned," the prosecutor said.
Dela Cruz further said what the law prohibits is the granting of a franchise or the operation of a public utility by a corporation already in exercise without the required proportion of Filipino capital.
Named in the charge sheet were Piatco president Cheng Yong, Fraport's senior vice president Peter Henkel, Jason Cheng, Jefferson Cheng, Rita Bonifer, Samin Aydin, Lilia Cheng, Hachiman Yokoi, Gil Camacho, Katherine Agnes Arnaldo, Jorg Seyffart, Marife Opulencia, Mary Antonette Manalo, Ricardo Castro Jr., Hans Arthur Vogel, Dietrich Stiller and Noemi Dacanay.
If proven guilty, the executives of Fraport, Piatco, and domestic firms Pags, Philippine Airport and Ground Services Terminal, Inc. (PTI), Philippine Airport and Ground Services Terminals Holdings, Inc. (PTH) and People’s Air Cargo and Warehousing Co. Inc. (Paircargo) could suffer imprisonment of five to 15 years.
Meanwhile, lawyer Jose Bernas, convenor of the Concerned Lawyers for Moral and Effective Leadership (Clamor) that initiated the filing of anti-dummy charges against Piatco, said they will appeal the prosecutor's ruling before the justice secretary.
Bernas, who also lawyers for Ilocos Sur Representative Salacnib Baterina who intervened in the government's expropriation case against Piatco, said government to have given in to perceived pressure from European business interests with its ruling junking the complaint questioning the ownership shares of Fraport in Piatco.
He said government should pursue the criminal prosecution of Piatco and Fraport officials for violating the anti-dummy law and the constitutional provision limiting foreign ownership on public utilities. Article 12, Section 11 of the 1987 Constitution proscribes ownership of foreign entities of public utilities.
Under that provision, "No franchise, certificate or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty-percent of whose capital is owned by such citizens."
"The DOJ ignored Fraport's own admissions that it owns more than 40 percent of Piatco. By dismissing the complaint, the DOJ has in effect showed how the limit on foreign ownership may be circumvented," he said.
In fact, Bernas said, this was the basis used by the NBI in recommending the criminal prosecution of Piatco and Fraport for violation of Presidential Decree (PD) 715, which amended Commonwealth Act 108 or the Anti-Dummy Law.
Bernas alleged that while Fraport represents 30 percent of Piatco's equity, which is within the allowable limit of 40 percent equity by foreign firms in utilities, the threshold is exceeded when the indirect holdings of Fraport are factored. He claimed that Fraport itself has admitted exceeding the allowable equity cap in its request for arbitration before the World Bank.
In paragraph 38 of its request for arbitration, Bernas said Fraport stated that "it directly and indirectly owns 61.44 percent of Piatco, through the cascade of companies that hold interests in Piatco."
According to him, the 61.44 percent ownership of Fraport of the Piatco project, aside from the earlier declared 30 percent, includes additional equity in Piatco representing direct investment in Piatco Terminals Holdings (PTH), the Pags and the Pags Terminals Inc (PTI).
Bernas said when Fraport's foreign equity is consolidated with Nissho Iwai's 10 percent direct foreign holding in Piatco, Piatco would be 71.44 percent foreign-owned, or 31.44 percent over and above the 40 percent foreign ownership limit prescribed by the constitution.
He claimed that by controlling or withholding the flow of funds and the technical expertise, Fraport may be able to influence the management and operations of Piatco's Naia 3.
The recommendation stemmed from the complaint filed by Attorney Melanio Elvis Balayan, a convenor and executive director of Clamor, that respondent directors and officers of Piatco, Fraport and other firms should be criminally charged for operating a public utility such as the Naia 3 when the firm's outstanding capital stock is owned by foreigners.
A five-page evaluation report of agent-on-case SA Palmer Mallari of the NBI Anti-Fraud and Computer Crimes Division showed that during investigation, none of those summoned appeared personally, further bolstering claims that the respondents were evading scrutiny.
Balayan said there existed an "indicia of dummy relationship" when Fraport admitted that it extended loans and payment guarantees to Piatco, Pags, PTH and PTI and Piatco’s lenders and contractors.
In fact, he said, Piatco was granted financing by Fraport in the form of credit facilities, against which Piatco could draw amount needed to pay its creditor banks, contractors and other parties.
Fraport also guaranteed the obligations of Piatco when the latter entered into a bank loan agreement with Dresdner Bank, Kreditanstalt Fur Wiederaufbau and Landesbank Hessen-Thuringern Gironzentrate.
It even lent to the Cheng family, one of the Piatco’s stockholders and the majority shareholder of Paircargo, sums of money that enabled them to directly and indirectly (through respondents Paircargo, Pags, PTH and PTI) make its capital contribution to Piatco, the complaint stated.
If not for the funds provided by Fraport, the Cheng family could not have financed its investments in Piatco through the several layers of corporations established by them and Fraport, Balayan said.
This would show that the Cheng family, Paircargo, Pags, PTI, and PTH were fronting as dummies for Fraport in acquiring shareholdings in Piatco.
"The extent of this authority becomes more manifest in light of the fact that Piatco enters into its long-term loans only upon Fraport’s recommendation and endorsement, sometimes even over the serious reservations of the other stockholders of Piatco about the accomplishment of the conditions precedent attendance to such loans," the complaint said. (ECV/Sunnex)
