Politics behind revival of 'PEACe bonds' issue, NGO says

Politics is behind renewed calls to investigate one of the President's trusted officials, Social Welfare Secretary Dinky Soliman, for the P1.48 billion profit her former organization earned from government flotation bonds in 2001, a group of non-government organizations (NGO) said Thursday. Sixto Donato Macasaet, executive director of the Caucus of Development NGO Networks (CODE NGO), said some sectors are apparently seeking the removal of Soliman from the Cabinet of President Benigno Simeon Aquino III. “Malinaw na nabubuhay itong isyu na ito dahil na-appoint si Secretary Soliman sa Cabinet at apparently may mga tao na hindi gusto yun at gustong matanggal sila sa Cabinet," he said in a press conference in Quezon City Thursday. (It is clear that this issue persists because Secretary Soliman was appointed to the Cabinet and apparently, there are people who do not like this and want her removed from the Cabinet.) Code NGO, which Soliman used to head, allegedly earned a P1.4-billion commission from the P10-billion Poverty Eradication and Alleviation Certificate (PEACe) bonds issued by the government in 2001. The PEACe Bonds are 10-year, zero coupon bonds issued by the Bureau of Treasury on October 2001. These were government debt papers that were sold at a discount to investors, who have to pay for the bonds after 10 years. The investor collects the interest earned only after 10 years. Macasaet said the Senate and the House had already investigated the PEACe bonds in 2002. He said CODE NGO welcomes the proposed investigation of the Truth Commission into the issue. “We look forward to a transparent and independent investigation by the Truth Commission to put closure to his rehashed issue which critics are now using to attack personalities who were not even involved," he said. Why investigate issue only now? Macasaet added those calling for a probe on Soliman, like Ang Galing Pinoy Rep. Juan Miguel Arroyo, son of former President Gloria Macapagal Arroyo, could have initiated an inquiry into the matter two or three years ago. “Nakapagtataka nga na yung mga nagsasabi na dapat imbestigahan ng Truth Commission si Sec. Dinky, halimbawa si Cong. Mikey Arroyo, pwede naman sanang ginawa niya ito noon pa. Bakit ngayon lang? Ano ba ang nag-iba two, three years ago at saka ngayon. Ang nag-iba lang ngayon ay na-appoint na sina Sec. Soliman," Macasaet said. (It is strange that those who are saying that Sec. Dinky should be investigated by the Truth Commission, such as Cong. Mikey Arroyo, they could have done this before. Why only now? What changed, two or three years ago and now? The difference is that Sec. Soliman has been appointed now.) Aside from Mikey, Senator Edgardo Angara earlier said the Truth Commission should investigate Soliman on the issue. Aquino had said he will let the commission decide whether to probe Soliman's alleged involvement on the PEACe bonds or not. In the House of Representatives, Representatives Rufus Rodriguez (Cagayan de Oro City)and Maximo Rodriguez (Abante Mindanao) filed House Resolution 58, urging the House committee on good government to conduct an inquiry on the matter. “Up until the present, no one knows, except CODE-NGO, how the funds generated were spent," the Rodriguezes said in the said resolution. CODE NGO clarified that Soliman served as the chairperson of the group from July 1998 to January 2001, months before the PEACe bonds program was conceived. It was under the leadership of Marissa Camacho Reyes that the CODE NGO conceptualized the use of government bonds as an innovative means to raise revenues for poverty reduction programs of NGOs and people’s organizations. The group clarified that Reyes inhibited herself from the transactions when her brother Jose Isidro Camacho was appointed as Finance Secretary in June 2001. Part of Arroyo's Cabinet Soliman was the DSWD secretary under the Arroyo administration from 2001 until she left the Cabinet in 2005, during the height of the "Hello Garci controversy." According to GMA News Research, on July 8, 2005, eight Cabinet members (including Soliman) and two bureau heads tendered their irrevocable resignation and called on Arroyo to follow suit. The group became known as the "Hyatt 10" because they announced their resignation at a press conference at the Hyatt Hotel in Pasay City. "Hello Garci" refers to the alleged wiretapped conversations where the vote rigging in the 2004 elections was discussed by a woman presumed to be Arroyo and man presumed to be Comelec Commissioner Virgilio Garcillano. Putting Soliman in a bad light Anna Marie Karaos, of Partnership of Philippine Support Service Agencies and chairperson of CODE NGO board of trustees, believed that the peace bond issue is being used to put Soliman in a bad light. “Malaking bahagi ang politika, marami pilit na dinidikit yung personalidad dito sa peace bonds kahit walang kinalaman, parang ginagamit yung peace bonds at Code NGO para sila ay ilagay sa hindi magandang pagtingin," she said. Sale of the PEACe bonds CODE NGO set up the Peace and Equity Foundation (PEF) to preserve and manage the income derived from the sale of the PEACe bonds in the financial market. Explaining the issue, Karaos said Rizal Commercial Banking Corporation (RCBC), as an agent of CODE NGO) purchased the PEACe bonds for P10.169 billion from the Bureau of Treasury through a public auction. She said RCBC was chosen because it offered the lowest interest rate at 12.75 percent per year. RCBC sold the bonds for P11.995 billion and remitted the profit P1.826 billion to CODE NGO. The CODE NGO paid fees to its agent and financial advisers amounting to P340 million, retained a small fund for its network members amounting to P168 million and transferred P1.318 billion as endowment fund to PEF. Veronica Villavicencio, PEF executive director, said the PEF preserves the endowment fund as a capital or trust fund and invests this so that only the income can be used to fund poverty reduction projects. PEF engages professional investment bankers to invest the money in corporate stocks and government securities. Presently the four investment banks are Banco de Oro, BPI Capital, ING Investment Management and Asia United Bank. “Through proper management, the endowment fund has earned a cumulative total of P1.06 billion as of December 31, 2009. Today (1st half of 2010) the endowment fund ha an unedited value of P1.628 billion," Villavicencio said. Karaos explained the government has to pay P35 billion to investors upon maturity of the bonds next year. That figure is equivalent to the amount that the government borrowed plus the P12.75 percent interest per year compounded over 10 years. –VVP, GMANews.TV