More on the "non-partisan" CODE-NGO group

that wants to whitewash, este... investigate the GLORIAGATE scandal.

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Wrong choice of acronym for CODE-NGO

2/8/2002

By Alvin Capino
COUNTERPOINT

The acronym “code-ngo” might have been a bad choice as name for the umbrella group of some 3,000 nongovernmental organizations which earned P1.4 billion in the controversial sale of the so-called peace bonds.

As we all know “Code” is usually part of the name used by the CIA or other organizations engaged in covert espionage and counterespionage. The use of the name code-ngo gives the group a furtive and sinister image.

However, some people who are not exactly enamored with the people and organizations composing code-ngo believe that its ominous name is appropriate, especially if you consider the way it was able to cook the peace bond deal which earned it P1.4 billion.

The sinister image of the name “code-ngo” is also quite apt, given the way it cooked the deal à la lutong macao. The information being ferreted out in the Senate investigation shows that code-ngo has indeed made such a huge killing. Sen. Tessie Aquino Oreta has described it as nothing more than “laway at koneksyon” as “puhunan.”

If other parties had been involved in exactly the same deal, code-ngo and the other members of “civil society” would have denounced the transaction as a “crony deal.” We all know how those in civil society hate crony deals except when they themselves do it. In their case, crony tactics are allowed because what they earn would be used to finance worthwhile projects for the poor and other less privileged members of our society—after setting aside a substantial sum for administrative costs and consultancy fees, of course.

The first two hearings of the John Osmeña committee in the Senate drew out some very interesting facts on what is building up as a case study of a crony deal.

The hearings have established that code-ngo designed the peace bonds and had worked on the Bureau of Treasury and the Bureau of Internal Revenue to approve the first-ever issuance by the Philippine government of zero-coupon bonds with several “sweeteners” that would make it a profitable investment for whoever gets the bonds. Among the special features of the bond is that it is exempted from the payment of the 20-percent withholding tax and its eligibility as secondary reserves.

Code-ngo, led by its chairman, Maria Socorro Camacho Reyes, sister of Finance Secretary Jose Isidro Camacho, had wanted a negotiated sale of the bonds. But because of the strong objections of the national treasurer, it agreed to have the bond sold in open bidding.

The public bidding, however, was held in such a way that rcbc, which code-ngo contracted as its agent bank, cornered the bidding. The bank knew about the sale of the bonds as well as their features months ahead of everybody else. Apparently the other bond dealers were kept in the dark about the peace bond offering until the last minute.

The analogy used by Osmeña explains what happened. He said that the situation is akin to prospective buyers, except a favored one, being told that there is a house for sale in Quezon City without mentioning that the sale includes the cars in the garage as well as all the furnishings.

Osmeña said that the deal is clearly lutong macao because code-ngo and its agent bank, rcbc, had been deeply involved in the project for more than six months before the actual bidding, contrary to normal practice wherein the Bureau of Treasury designs the whole thing and informs bidders only a few days before the actual auction.

Oreta, who authored the resolution that led to the Senate investigation, said it was actually a “done deal” even before the actual bidding. This is clear from the admission of rcbc Capital’s Valentin Agustin during the hearing that code-ngo and rcbc Capital had arranged the bid of 11 percent as early as April 2001, or a full six months before the public auction on October 16.

Ironically for code-ngo, its allies in civil society—Action for Economic Reform, Freedom from Debt Coalition and Citizens Alliance for Consumer Protection—are most critical of this deal.

The people might be lost in all the explanations about the intricacies of this peace bond deal, but they can easily understand what the Freedom from Debt Coalition points out. What’s wrong with the deal is that code-ngo would earn P1.4 billion but the taxpayers would be paying P25 billion for this accommodation to code-ngo after 10 years.

Indeed, the claim of code-ngo that it will be able to give out P100 million yearly for the propoor projects of their member organizations sounds preposterous when we consider that the government would have to set aside P2.5 billion every year to pay for the interest on the peace bonds.