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Jun 21

Dey wuz robbed!

Biggest headlines today: Attaché loses original copy of broadband deal (Philippine Star), Signed RP-China telecom contract stolen, official says (Inquirer). Fishy, fishy, fishy! As if the deal could get any murkier.

While the Times gets its nuances wrong in saying Malacañang says President forced Bunag to step down (the right nuance is in the Inquirer report, BIR chief fired, blames economic team, because yes, what the President did was fire her BIR chief), it’s proven true that Bunag was really on his way out; this report, I think, gives a sign of what the score really is: DOF reveals data that broke fiscal back on Buñag’s fate.

It seems plausible to me, that Bunag wanted to dress-up the government’s numbers by getting companies to pay their taxes ahead of time; for him to do so, it required the Finance Secretary and, ultimately, the President, to sign off on it: only by telling companies that advanced tax payments had the President’s ok did the BIR chief get companies to comply. But, the taxes having been paid, government numbers would eventually take a hit, which they did: at which point, a scapegoat would have to be found. And so, the BIR chief was sacked. So when a report like this comes out –Buñag: Teves convinced Arroyo to sack me– it suggests that Teves (who, lest we forget, is like his cabinet peer Favila: a politician as much as a technocrat) sensed someone would have to be sacrificed, and that Bunag had outlived his usefulness.

Now, Morales denies resigning as Customs chief. Other shoe about to drop? It gets curiouser: Fake resignation letter came from Customs chief’s office.

The thing is, no one is obeying the President. The latest is Palace set to clarify revamp plan: clarify what? That she’s the boss? Why else would you have this report: Palace extends resign deadline? As An OFW Living in Hong Kong puts it: it’s a mess, disorderly, and unpresidential.

Meanwhile, the fallout from the Bunag-era window-dressing has begun to be felt: BIR tightens watch on big business tax payments. Finance Sec. Teves tries to reassure everyone: Government says all efforts on to meet budget deficit goal. The President chimes in, too. In its editorial, the Manila Times tries to put the whole thing in context:

In its latest annual report on the Philippines, Moody’s explained at length why it withheld its vote of confidence on the government’s recent fiscal performance.

The credit-rating company’s decision went against Philippine officials’ expectation of an improvement in the country’s rating outlook to positive. Instead, Moody’s, much like Standard & Poor’s Ratings Services earlier, maintained its stable outlook, which means that the country would continue to bear the burden of a junk or below investment-grade credit standing for the next six to 12 months.

The burden comes via costlier borrowing, which the taxpayer – all of us – would have to bear in terms of higher taxes, poor public service, or both.

Moody’s said that the government’s success in keeping its budget deficit below ceiling last year, while noteworthy, was insufficient to keep up improvements in the fiscal sector over the long run.

This, it said, can be seen from the government’s difficulty in raising ample funds for its priority infrastructure projects. We may recall that the country’s economic managers just came from a road show in Japan, where they managed to convince foreign investors to pool a fund from where the government can draw funds to finance its priority projects.

Unfortunately, the fund pool is not exclusive for Philippine use – something our economic managers would prefer to mention as an aside.

A government or company usually undertakes a road show preparatory to borrowing other people’s money. The objective is to raise enough interest for investors to vote with their wallets and buy either the issuer’s new shares or debt papers.

In the case of their recent trip to Japan, Philippine officials said it was a nondeal road show aimed only at explaining to the investor community the government’s recent accomplishments. In other words, it was a junket.

That the country’s economic managers should return home with only commitments to invest in a fund pool meant not just for the Philippines says a lot about how people outside our borders regard our fiscal performance to date.

This is not meant to denigrate the achievements of the country’s economic managers. But as Moody’s said, the country’s current credit rating reflects its heavy debt burden relative to its peers. This burden leaves the country susceptible to financial shocks, similar to the Asian crisis of a decade ago, which closed down numerous businesses and rendered many Filipinos jobless.

Unfortunately, Moody’s statements, like those of Standard & Poor’s and one other major rating firm, are holy words for the international financial community. The government’s failure to meet tax collection goals in the first quarter only confirms these rating firms’ beliefs – that the Philippines is clearly not yet out of the woods.

Focusing purely on the political, my view is that where the President deserves to be pinned down, is that she’s suffering from political paralysis. She refuses to crack the whip (even the Bunag issue festered longer than it should). For example, the way the fight for the speakership is getting nastier and nastier (see De Venecia: ‘I’m up against Garcia dynasty’) is partly due to the inability of the President’s very own pet party, Kampi, to discipline the rebels within its ranks (Villafuerte, et al.), and the President’s apparent disinclination to exercise a traditional prerogative of the presidency: the Speaker of the House, since time immemorial, has been designated by the President of the Philippines.

But she refuses to anoint her chosen one, which means the fight’s getting more furious among her allies. Scuttlebutt is that what was supposed to result in the toppling of Villafuerte from the presidency of Kampi was called off, on the President’s instructions, which means she’s unwilling to call the shots -so it’s a cannibalistic status quo. Jet Damazo thinks the President’s in “legacy” mode: but the subtext in his report is that a big player, here, is the military. And the military is unsure of what to do. Esperon tries to pass the buck when it comes to Antonio Trillanes: and why would he do this? Because he’s in a lose-lose situation, in terms of military opinion, perhaps?

The Marcoses continue their offensive. First against Lucio Tan, now to reclaim property in Pasig: Bongbong Marcos stakes claim on Pasig prime land.

Overseas: Caste-based hiring widens divide in India; while in France, Regulations stifle French labor market; an interesting snapshot of Indonesian politics (reminiscent of ours) in We are good at destroying, but bad at building; and a look at how Taiwan’s diplomatic prospects keep on dimming, in Taiwan’s Weak Diplomatic Hand; and Bloomberg quits the Republicans (after having previously left the Democrats) and so, Bloomberg stokes rumours of 2008 presidential bid. Party-switching isn’t apparently a problem for Americans (as it wasn’t, in an earlier time, a problem for Churchill in Britain).

In the punditocracy, my column for today has a simple title: Lost.

Lito Banayo takes an interesting peek at goings-on in the Palace, but also, makes an interesting proposal:

Why doesn’t Congress first rationalize the number of our barangays? For instance, Manila with its 2 million population has 897 barangays. Why, it’s almost one street per barangay in certain places. Some barangays do not even have enough registered voters to fill up one precinct. On the other hand, Antipolo City with a population of half-a-million, has only 12 barangays. And Quezon City, which has about 2.6 million souls, makes do with a little over a hundred barangays.

In the same manner that we are supposed to have one congressman for every 150,000 voters, why can’t we likewise re-do the number of barangays so they are indexed to population? Assume that one barangay must manage 25,000 people, then Manila would have 80, Antipolo would have 20, and Quezon City about 100.

He also suggests something I’ve covered elsewhere:

I propose that we abolish city and municipal councilors, and give the task of legislating ordinances to our barangay chairpersons. In the case of Manila or QC or Cebu or some such other huge cities, they could elect among themselves who should sit in the council, or, they could take turns sitting in the council, assuming we adopt what I believe should be a standard term of office — six years for all elected positions.

In the case of provinces, do away with the board members, also called “bokal” in Tagalog. Let the municipal mayors take turns legislating for the province, much like a board of directors. For provinces with a dozen or so municipalities, they could all sit in the board for six years. For provinces like Pangasinan and Cebu with more than 40 towns each, let them take turns at terms of three years.

And he also makes a pitch for bloc voting:

And if we adopt bloc voting for all executive posts, voters would have a very simple ballot to fill every six years, whether manually or computerized as it should be. A vote for the President is automatically a vote for his vice; for the governor and mayor and their “vices” likewise. One congressman. And if we elect senators by region, at two each, regardless of size or population, then the voter writes two additional names. Six names is all it takes. In the case of cities, like those in Metro Manila and the other highly-urbanized cities, all it would take is five names. Simple and less expensive. And believe me, much more efficient and service-effective.

In the blogosphere, The Journal of the Jester-in-Exile painstakingly dissects Executive Order 464 and what the AFP Chief of Staff can and can’t get away with vis-a-vis Senate investigations.

Philippines Without Borders tackles the inefficiencies in ports management and interisland shipping -and why government won’t go past cosmetic solutions.

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34 comments

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  1. Beancurd

    Fishy indeed. I remember the braodband deal being hotly contested. I think Bedol has just opened a whole new possibility to hide anomalous contracts like these not just from the public but from the courts as well. Imagine, no court can invalidate such contracts if there is no way that a party questioning it can present an authentic or certified true copy of it.
    Not that that is the case here, but think of the possibilities and the difficulties it would pose to those who intend to question it before the courts. Hahaha, fishy indeed!

  2. DJB

    Where E-Vat has gone wrong is also the reason why the US rejected the idea in the past: once the government gets the tax money, it forgets what it originally promised to do with it: payoff the national debt. Instead, GMA declared at her last State of the Union that “Now we have the money for…[pork barrel!]. That’s the evil in Tax and Spend, and why even Moody’s knows Evat was not a long term solution. If not for the phenomenal OFWs there would not have been any basis for optimism at all. The real challenge is how to use those repatriations for capital formation and national investment. Since the money is not trickling down but being directly injected into OFW families, much of it goes to direct consumption, although I bet a lot of education is also getting paid for, as well as housing. But this means we have to get innovative about getting OFWs to save and invest in strategic areas of both their lives, and that of the nation.

  3. ay_naku

    Bunag said of the administration’s economic team, “There are higher authorities in the government’s financial institutions who would like to wash their hands of responsibility for the dire consequences of their unrealistic, failed and bungled policies, and who look for a sacrificial lamb and a scapegoat to which they can assign the blame. So be it. Their time to answer for their failure and incompetence will also eventually come.”

    Hear hear. The illusions being peddled by this administration will be unmasked, sooner or later. It will get really messy when things start crumbling down, and I’m afraid it is the nation that will pay. Oh well, we’ve let matters come this far, we’ve compromised our principles too much, we’ve looked the other way too many times. So maybe we deserve our bad fortune after all.

  4. Francis

    “an unprecedented situation”-Lt. Col. Bartolome Bacarro

    Lagi naman ganito situation natin kasi ang bagal natin kumilos.

  5. Jon Mariano

    So is it back to huge budget deficits? Teves said, they need to sell more assets to cover that! Galing! Paano kung wala nang maibenta?

  6. supremo

    GMA’s economic takeoff is actually a crash landing. The reason for firing Bunag revealed a weak government economic program. Selling government assets to reduce the deficit is not sustainable. What else can they sell next year, Mike Arroyo’s fat belly?

  7. watchful eye

    Esperon tries to pass the buck when it comes to Antonio Trillanes: and why would he do this? Because he’s in a lose-lose situation, in terms of military opinion, perhaps? – mlq3

    In a lose-lose situation in terms of growing a Ninoy out of a Sonny in the Marine Brig. But Sonny can be more effective – and possibly safer – while in the guardhouse. If let out (and he should be by ,vox populi), he should beware of Galmans who could be lurking everywhere.

    All the best Sonny boy. You’re a BIG man now.

  8. camry

    The lost original copy of the broadband deal is an unexcusable “boo boo”. Why in the world a very important document is not secured after it is signed?

    This only show that something “fishy” is included in the contract that the government is trying to hide after the issue caught the attention of no less than the US Ambassador to the Philippines. A US firm is offering half the cost of what the government had agreed with ZTE Corp of China. Tell me now, did they approved the China deal because they can get more “commission” compared with what the US firm had offered?

  9. inodoro ni emilie

    what, even contracts are not spared from being bedolized?!?

  10. Bencard

    she’s damned if she does and damned if she doesn’t. that’s just one of gma’s problems. in fact, this is one of the most pestering problems any president usually encounters in office.

    when gma decides to adopt a hands-off policy in the speakership rivalry, she is “sufferng from political paralysis”. should she “crack the whip”, and foist her own choice, she would likely be criticized for undue interference in the affairs of the house, if not accused of dictatorship.

    All appointed officials in the executive department serve at the pleasure of the president. she is the sole judge of their effectiveness and whether they have to go or stay in her team. afterall, she is judged for their success or failure.

    it is sad that almost every time a president replaces a cabinet official, there is a knee-jerk reaction from some hostile sector that the fired official is a “scapegoat”, a “martyr”, or “enlightened” convert (e.g., the “hyatt 10” turncoats).

    gma has a rare opportunity to “revamp” the cabinet now that she is free from the political demands of re-election. it would be easier for her to muster the necessary political will not only to combat all forms of graft and corruption, pursue wise, albeit unpopular policies, rid the government of deadwoods and incompetents, and retain the best of the best the nation could offer

  11. janie

    she is the sole judge of their effectiveness and whether they have to go or stay in her team. – Bencard

    on this i disagree. cabinet officials’ loyalty, irregardless of the president who appointed them to their post, belong to the people. that i think is the essence of democracy.

    i quote the 1987 constitution, article II Section 1.

    The Philippines is a democratic and republican State. Sovereignty resides in the people and all government authority emanates from them.

    the performance of officials shouldn’t depend on whether it pleases the president or not, and this doesn’t just apply to our present president. i am not saying we should elect them ourselves because our elections is too messed up. my point is, they our PUBLIC SERVANTS just the same, not the president’s.

  12. Bencard

    janie, your point is well taken. however, in a representative democracy, the “people” are not supposed to directly exercise governmental functions, such as hiring and firing appointive officials. they act through their elected representative who, in turn, they can replace or retain where appropriate.

  13. janie

    i do understand that Bencard, that’s why i made it clear that people aren’t supposed to elect even cabinet officials themselves. i just want to point out that the president isn’t the sole judge because of several reasons and i am not stating them in reference to our president.

    1. is the president’s judgment sufficient or objective enough? we, filipinos know this tradition of “utang na looob” and things like that can very much affect state affairs such as appointing and firing officials.

    2. officials remain accountable to its people who pay their taxes to give them due salary. if the people found a department secretary messing up his duties, and the president doesn’t see or bother to reprimand him, are we not in the position to judge?

  14. Beancurd

    Janie, Bencard is right. Your opinion or my opnion, or judgment for that matter do not count (in most cases) at least with respect to Gloria. Since when did public opinion (except when her survival is at stake) move her to do or undo something?
    Sure, democracy is premised on a strong citizenry and public opinion is supposed to matter. But does it matter here? Bencard is fortunate where he is.

  15. cvj

    Where E-Vat has gone wrong is also the reason why the US rejected the idea in the past: once the government gets the tax money, it forgets what it originally promised to do with it: payoff the national debt. – DJB

    I agree with your larger point but i’m not sure why you single out E-vat in this regard. Governments are liable to mis-spend any form of tax revenue regardless of its source.

    we have to get innovative about getting OFWs to save and invest in strategic areas of both their lives, and that of the nation. – DJB

    Well said. Here in Singapore, for example, in addition to the income tax (which is at a relatively low 10 to 15%), the government collects an additional 20% (from citizens and permanent residents) to go to the Countrywide Provident Fund (CPF) which it then invests. I think this accounts for the high savings rate over here. Maybe something can be then which could channel OFW earnings into housing, education and retirement and then allocate some for domestic industrial expansion.

    Given the low level of trust in government (no matter who runs it), either a parallel organization must be set up or representation and oversight from the remaining organizations that can be trusted (GK et. al) should be present.

    Lastly, capital controls should be put to make it harder for any money that is stolen to be transferred overseas.

    in a representative democracy, the “people” are not supposed to directly exercise governmental functions, such as hiring and firing appointive officials. – Bencard

    There lies the limitation of your assumptions (i.e. that Gloria Arroyo has been ‘elected’) as well as the concept of ‘representative democracy’. A continuing lesson that we’ve learned is that the failures of representative democracy can only be corrected by a dose of direct democracy.

  16. janie

    to beancurd, just because public opinion isn’t heard most of the time, doesn’t make it a right thing.

  17. ricelander

    She can’t crack the whip because the repercusions could be fatal. Imagine a scenario where her allies Kampi all of a sudden align themselves with the opposition in Congress. That’s the trouble with having a questionable mandate: there’s no fallback position. The people would instead be cheering from the sidelines to the utter horror of the likes of Bencard

  18. Jeg

    we have to get innovative about getting OFWs to save and invest in strategic areas of both their lives, and that of the nation. – DJB

    I remember talking to an executive of Heinz (the ketchup people) about when they were about to close down one of their UFC factories. Some of the workers have been with them for 30 years and so the severance pay to them ran to 7 digits. They thought, “We can’t just give them the money. We have to teach them how to invest it.” So they organized a seminar for them with bankers and business people conducting it. Then they gave them the money. He went on to recount the success stories. Some of their former employees, he said, ended up as their suppliers for materials.

  19. cvj

    About the lost contracts, maybe we can ask China for their copy? Kakahiya, but there you have it.

  20. Jon Mariano

    The contract was reconstituted last May 30.

    In my experience with having to reconstitute a land title, the reconstituted title has the same value as the original. The assumption of many though is that some of the provisions that might have been very disadvantageous to the Philippines were taken out. As CVJ said, we could get the a copy of the Chinese counterpart of the contract. That would mean a “national shame” as some of Gloria’s officials has mentioned. Maybe that’s why they didn’t go for that, they got the reconstituted contract instead.

  21. cvj

    Jon, thanks i did not know that. In any case, we better ask for China’s copy anyway for purposes of comparison with the ‘reconstituted’ contract.

  22. cvj

    Just read Ellen’s entry on this topic and it turns out that even China’s copies were in the same attache case that was stolen. IMHO, that doesn’t sound right.

  23. janie

    uh oh.

    okay, so some facts about Chinese regarding contracts and transactions like this.

    i am currently working for an online gaming company marketing around the globe but the largest chunk of our audience are Chinese. part of our marketing strategies are affiliate programs, a more beneficial form of advertising.

    when signing up for accounts, most Chinese affiliates disclose their information and even allow our affiliate managers to sign up on their behalf, which means, we have access even to their passwords which is a big NO-NO to western affiliates.

    this is how unquestioning and trusting they can get.

    so to lost our copy of the contract, and apparently even their’s, just sounds alarming and hmmm… fishy?

    tsk. tsk.

    stolen or lost, just goes to show that there’s no more safe place left…

  24. Bencard

    cvj, there you go again. aren’t you just tired of it? who is assuming what? isn’t it a FACT that gma is currently the sitting president – no matter what you and like-minded characters think? she wouldn’t be if she was not elected, would she? at the rate almost every defeated candidate hollers he has been cheated, if every elected official who is accused of “cheating” is illegitimate, then a good percentage of all incumbents from the president down to a barangay captain would be usurpers. how many times people like you have to be told to put up or shut up instead of foolishly making unsubstantiated conclusions? enough is enough.

    regarding your “dose of direct democracy”, try asking 80 million plus people to directly appoint or replace any cabinet official or a general in the military.

  25. Bencard

    ricelander, in this day and age in the philippines, when does a president get to have “unquestionable mandate”? is a plurality vote, which is what any candidate can ever hope to get, enough? and what is the “fall-back position” you’re talking about – people power against an irresponsible congress railroading an unjust impeachment conviction? some, but not all, of the people are as dumb as you think.

  26. Bencard

    correction last line: people are NOT as dumb as you think.

  27. Bencard

    re the “lost” copy of the broadband contract, i thought it is customary, and a legal requirement, in the philippines for a notary public to keep a copy of every document he acknowledges. if the allegedly missing contract is a public document (i.e., notarized) why not asked the notary for a copy of it?

  28. cvj

    Bencard, that’s a good suggestion. In any case, if the documents were lost prior to being notarized would it still be a valid contract?

  29. Bencard

    cvj, if is not notarized, it is a private document and is valid as such and enforceable between the parties. however, if by some statutory requirement, the nature of the contract requires for its validity that it be in the form of public document (i would tend to think it is because the government is a party and it involves communication) then, I believe, it is not valid unless notarized.

  30. cvj

    Bencard, thanks! So i guess we need to establish whether the contract is covered by a statutory requirement, and if yes, whether or not it has been notarized by either the Philippines’ or China’s notary publics.

  31. Bencard

    cvj, it at all, it would be notarized in the place where it was entered into and signed by the parties.

  32. cvj

    So that would mean that it is the notary public in Hainan province who should have a copy.

  33. Bencard

    it would appear so, although PDI reports that it got lost prior to “official” seal stamping by the chinese authorities. i’m not sure if this is the equivalent of notarization, the absence of which would render the deal invalid under the laws of china.

  34. vic

    Janine,
    May I intercede, the Cabinet Ministers and all Appointed positions, which under the specific law, is at the pleasure of the appointing authority is just that. Then it usually the appointing authority, in this case, the President is to be judged for her action in appointing, reshuffling, or removing those officers.

    That is why our Election is so transparent and clean, because all Returning Officers, in charge of enforcing the Electoral Codes in each riding (district) is at the Pleasure of the Chief Election Officer. Of course if they’re doing their job right and get fired, they can sue the Chief and laugh their way to the bank, otherwise they take their lumps and shut up. And our courts will have the final say on that. The same with the Cabinet Ministers, they can get fired, reshuffled, promoted, demoted by the PM anytime, except those that by law have the security of Tenure up to a certain years of up to retirement that they can only be fired with Cause or by the decision of the Courts upon resolution of complaints.

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