Dinky, a no-show at House probe on PEAce bonds

Department of Social Welfare and Development (DSWD) Secretary Corazon 'Dinky' Soliman did not show up on Wednesday at the congressional inquiry on the P1.48 billion profit her former organization earned from government flotation bonds in 2001. The lawmakers wanted to ask Soliman about the role of her husband as a former member of the board of directors of the Peace and Equity Foundation (PEF). The PEF was set up to manage the income derived from the sale of P10-billion Poverty Eradication and Alleviation Certificate (PEACe) bonds in the financial market. In a letter sent to the House committee on good government and public accountability, Soliman said she was in Mindanao to meet Maguindanao Gov. Toto Mangundadatu. In the same letter, the DSWD secretary reiterated that the agency has nothing to do with the transaction. “I would like to let you know that DSWD as the national government agency was not involved in any way or any of the transactions related to the PEAce Bonds," she said. She added: "As citizen Dinky, I would like also to say that I had resigned as chair of CODE-NGO (Caucus of Development NGO Networks) even before the concepts of the Peace Bonds were being developed." 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. Disappointed over Soliman's absence Sorsogon Rep. Salvador Escudero was disappointed with the absence of Soliman. “Iyung ganoong paliwanag hindi puwede sa Commission on Appointments (That kind of response is not acceptable in the Commission of Appointments)," he told the panel. “The fact na hindi siya nag-attend hindi maganda, mas maganda nang ipaliwanag niya. Kasama niya ang kanyang esposo araw-araw, alangan namang hindi nila ito napapag-usapan para maliwanagan na ito, naiwan pa naman ang asawa niya ng wala na siya," Escudero told reporters in a separate interview. (The fact that she did not attend is not good; it would have been good if she explained her side. She is with her spouse everyday, it's impossible that they have not discussed this, to clarify the issue. Her husband was still with the foundation even though she wasn't.) Congressional hearing During the hearing , Anna Marie Karaos, chairperson of CODE NGO, was asked by Zambales Rep. Ma. Milagros Magsaysay if Soliman’s husband was part of the board of directors of PEF. “Your honor (Magsaysay), the names you have enumerated (including Hector Soliman) were the members of the board that the Peace and Equity Foundation which is a new foundation established to manage the endowment fund, this is a separate organization from CODE-NGO," Karaos said. In a phone interview with GMANews.TV, Veronica Villavicencio, PEF executive director, said Mr. Soliman was PEF's corporate secretary from November 27, 2001 to March 1, 2002. "Tumulong lang siya para mapabilis ang incorporation, siya ang nagfile ng incorporation papers. After nun nagresign na siya," she said. (He helped us speed up the incorporation [of the organization]; he filed the incorporation papers. After that, he resigned.) During the hearing, Giselle Lood, deputy treasurer of the Bureau of Treasury, admitted that the initial proposal of CODE-NGO lacked transparency. “On transparency, the mode of the transaction was not transparent. The Code NGO has no capacity to transact with the government on a negotiated sale," she said. Despite this, the government proceeded with the transaction through public auction. “We did not issue the bonds in accordance with the proposal, but we did issue these bonds on our terms because at that time it was not only the CODE-NGO that submitted the proposal for the submission of zero coupon, there were several financial institutions also who made proposals to the treasury for the issuance of zero coupon bonds," said Lood. Cagayan de Oro City Rep. Rufus Rodriguez and his brother Abante Mindanao party-list Rep. Maximo Rodriguez filed House Resolution (HR) No. 58 calling for the probe on the issue. Earlier reports sid the transaction allowed the Code NGO to earn a P1.4 billion commission. This was allegedly engineered by Marissa Camacho-Reyes, former Finance Secretary Jose Isidro Camacho. Soliman earlier said the negotiations for the bonds came after she left the NGO to join the Cabinet of former President Gloria Macapagal Arroyo. She was replaced by Camacho-Reyes as chairperson, and Dan Songco as executive director. Politics behind calls to investigate Soliman? CODE NGO believed that politics is behind the calls to investigate Soliman on the PEACe bonds. Sixto Donato Macasaet, CODE NGO executive director, 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. (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.) Macasaet said the Senate and the House had already investigated the PEACe bonds in 2002. Lowest interest rate Karaos also said earlier 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. Villavicencio 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. 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