Firms linked to 4 legislators, governor awarded projects

AT LEAST four congressmen and a governor have personal and family interests in companies that secured multi-million-peso civil-works contracts over the last seven years, according to the online registry of the Department of Public Works and Highways (DPWH).

The five elective officials, in reply to PCIJ queries about possible cases of conflict of interest, acknowledge their interest in the companies but also stress that the contracts were awarded before they took their oaths of office.

One says he had divested of his shares in the company, in favor of his brother who is living in the United States. Two others say they have relinquished their role in their companies, but do not exactly say how.

Yet by the letter and spirit of the law, in particular Republic Act No. 6713, or the Code of Conduct and Ethical Standards for Public Officials and Employees, the explanation of these officials may not suffice at all. The Code, an anti-graft instrument in truth, prescribes that “a public official or employee shall avoid conflicts of interest at all times.”

The Code states that “conflict of interest” arises “when a public official or employee is a member of a board, an officer, or a substantial stockholder of a private corporation or owner or has a substantial interest in a business, and the interest of such corporation or business, or his rights or duties therein, may be opposed to or affected by the faithful performance of official duty.”

To cure or prevent conflict-of-interest situations, the Code stipulates that public officials must resort to “divestment,” which it defined as “the transfer of title or disposal of interest in property by voluntarily, completely and actually depriving or dispossessing oneself of his right or title to it in favor of a person or persons other than his spouse and relatives.”

No bilas, inso, balae

Under the Code, the term “relatives” refers to “any and all persons related to a public official or employee within the fourth civil degree of consanguinity or affinity, including bilas, inso and balae.” Bilas, inso, and balae are Filipino terms for specific relatives-in-law.

No divestment records or deeds of assignment have been filed with the Securities and Exchange Commission (SEC) or the Department of Trade and Industry (DTI) by any of the companies to attest to the divestment supposedly made by three of the five officials: Catanduanes Governor Joseph C. Cua, and Representatives Glenn A. Chong (Biliran) and Aurelio D. Gonzales Jr. (3rd District, Pampanga). (see table)

DTI records show that the businesses of Chong and Cua are still under their names, while Yakal Construction is owned by Rep. Eufrociño Codilla Sr.’s daughter-in-law Violeta T. Codilla.

Rep. Elias C. Bulut Jr. Bulut declared EBJR Construction and Hardware in his 2004 Statement of Assets and Liabilities (SALN), but DTI records show a company with the same name had its registration renewed in February 2006, with one Joel Flores Fernando as owner.

As for ADG Construction, SEC records show and his staff says that Congressman Gonzales still is the company’s current president, even as the SEC had revoked the firm’s registration status.

“We’re not sure as to when the SEC revoked the company’s certificate of registration for its non-submission of the Commission’s reportorial requirements,” wrote Ramon Navarra Jr., Gonzales’s chief of staff. “However, this was only brought to our attention recently, when the Congressman initiated the divestment of his shares of stock in the Company.”

Gonzales is a vice chairman of the House Committee on Public Works and Highways, which also counts Bulut, Chong, and Codilla as members for the majority.

Codilla and Gonzales are affiliated with pro-administration parties Lakas-Christian Muslim Democrats (Lakas-CMD) and Kabalikat ng Malayang Pilipino (KAMPI), respectively. Bulut is a member of Nationalist People’s Coalition (NPC), while Chong is with the Liberal Party (LP).

Apparently, the committee has not discussed the Code of Ethics for Public Officials, which is crystal and exact as to when and how such officials should divest from businesses that could expose them to conflicts of interest.

When conflict-of-interest situations arise, the Code says that the official “shall resign from his position in any private business enterprise within thirty (30) days from his assumption of office and/or divest himself of his shareholdings or interest within sixty (60) days from such assumption.”

Rep. Chong explains that the contracts listed under Glejoben Construction and Services were awarded before he became congressman. “I was elected in the May 2007 elections so all those contracts, it cannot give rise to a conflict of interest,” says the congressman, who is on his first term.

A lawyer, Chong argues that there is no prohibition on his part because when he won the elections, he gave up the construction business. “I divested it in accordance with Section 9 of R.A. No. 6713 in favor of my brother (Benjie Chong),” he says. “(E)ven now in my district, wala kaming pinangongontrata na projects under Glejoben and also under my mother’s construction firm (Adelfa and Charlie Enterprises).”

DTI records, however, show that Glejoben is still owned by the congressman, based on the company’s latest renewal of registration on August 28, 2008.

Rival’s complaint?

On October 28, 2008, Naval Councilor Victor Del Rosario filed a complaint with the Office of the Ombudsman in the Visayas, claiming that “Rep. Chong and his family, through Adelfa and Charlie Enterprises, did not divest (of) their interests in the construction business with the aforementioned company.”

Del Rosario’s complaint-affidavit indicated that “it seems that it is now a requirement for these companies undertaking infrastructure projects with the DPWH to rent equipment from A and C Enterprises.”

In response, Chong says that Adelfa and Charlie has only three dump trucks. “There are actually 14 national roads being constructed in Biliran right now — 14 separate sections worth P249 million,” he says. “How can three dump trucks be required to work all those 14 national road projects?”

The congressman says that this is the third case filed against him by his political opponents in Biliran, referring to Councilor del Rosario as an ally of the province’s former representative Gerardo Espina Jr. The complaints are simply “political harassment,” he says.

“This councilor is the one who had been hitting me on radio almost every day,” he says, referring to del Rosario. “What they’re trying to point is that all these companies bidding are all my dummies. Can you imagine me putting up dummy firms for every P200,000 project for all 132 barangays every year? I have more important things in my mind… I cannot spread myself too thinly.”

Chong: No conflict

But he adds, “(W)hen you look at the law, there is actually no prohibition on our part to rent out our equipment because in the first place, we are imposing an inhibition on our part to join contracts.”

Chong cites a case wherein he says the Supreme Court upheld a mayor who was the president of a corporation awarded with a contract by the mayor’s municipality. “Yet the Supreme Court said there was no violation of Section 3, Paragraph H of R.A. No. 3019 (Anti-Graft and Corrupt Practices Act),” Chong says, “because for liability to attach, there must be actual intervention on the part of the official who has financial or pecuniary interest in the subject of transaction.”

“So the way I look at it,” says Chong, “following the case, hindi nga kinonvict ng Supreme Court ‘yung mayor because they said there was no actual intervention, how much more if I’m just simply renting them out?”

Chong was apparently referring to Generoso Trieste Sr. v. Sandiganbayan (G.R. No. 70332-43 November 13, 1986). Records show that the Supreme Court saw as weak the assertion that Mayor Trieste of Numancia town in Aklan province had not divested himself of his shares in a company that had business with his town, and thus acquitted Trieste of the offenses charged against him.

Gonzales: No conflict

As for Rep. Gonzales, Navarra says that the contracts listed in the DPWH registry under A.D. Gonzales Jr. Construction and BPDG Construction were all awarded before June 30, 2007, the day Gonzales took oath as congressman of Pampanga’s third district. (see also Navarra’s letter to the PCIJ)

“From the time the congressman assumed office, up to the present, both companies have not participated in any government bidding and no contract has been awarded to either firm,” says the congressman’s chief aide.

While A.D. Gonzales Jr. Construction’s registration with the SEC is currently revoked, Navarra maintains that the freshman legislator is still the company’s president.

In his 2007 Statement of Assets, Liabilities, and Net Worth (SALN), Gonzales declared shares of stocks worth P16,151,200 in A.D. Gonzales Jr. Construction.

DTI records also show that A.D. Gonzales Jr. Construction is listed under the name of Aurelio D. Gonzales Jr., from it latest renewal of registration on June 3, 2008. BPDG Construction and Trading, meanwhile, lists Gonzales’s wife Elizabeth P. Gonzales as owner.

Cua: No conflict

From Catanduanes, Prince Subion, Catanduanes Governor Cua’s assistant information officer, says there is no “conflict of interest” because the contracts were awarded to J.C. Cua Construction and Supply before Cua was elected into office in 2007.

Subion also maintains that the governor relinquished his role in the company upon assumption of office in favor of his brother Peter Cua. DTI records, however, show that the company is still owned by Joseph C. Cua, the governor. Subion could not confirm that there was any deed of assignment filed by Cua that would prove the governor had divested of his interests in the company in favor of his brother.

According to West Dimalanta, Bureau of Trade Regulations and Consumer Protection specialist, anyone registered as owner of a company with DTI is considered as such so long as there is no deed of transfer that states the business has been transferred or sold to a new owner. In such a case, too, the existing registration must be cancelled and the new owner must file for registration.

Republic Act No. 3883, as amended by R.A. No. 41476 and R.A. No. 863, otherwise known as the Business Name Law, also says that that the application for registration of a business name must be personally signed by the applicant or owner of the business. The application for registration may also be signed by his attorney-in-fact, who is authorized in a proper legal instrument (Special Power of Attorney).

Bulut: No conflict

Meanwhile, Jerome Lacambra, Rep. Bulut’s chief of staff, says no “conflict of interest” may arise because the congressman only had heavy equipment under lease agreement with EBJR Construction, a sole proprietorship entity owned by a Joel Flores Fernando. There was no direct involvement on the part of Bulut, says Lacambra, who adds that since 2007, Bulut had stopped renting out heavy equipment with EBJR Construction.

Asked how Rep. Bulut acquired the heavy equipment or if he had owned a construction entity, Lacambra says Bulut had owned heavy equipment ever since and that these were originally used in Bulut’s farmland.

He also clarifies that EBJR does not stand for Elias Bulut Jr., but are taken from the first letters of the names of Fernando’s four children.

In his 2004 SALN, Bulut, now on his third term in Congress, not only declared EBJR Construction and Hardware as one of his business interests, but also identified himself as its owner. By his 2007 SALN, though, he no longer has the firm listed among his businesses.

As of this writing, Lacambra says that Rep. Bulut’s staff is still tracing how the legislator was listed as owner of EBJR Construction in his 2004 SALN when he just rented out heavy equipment to the said firm.

Lacambra adds that Bulut’s being listed as owner of EBJR Construction in his 2004 SALN — a document Bulut himself signed — was a mistake made by his previous secretary.

Codilla: No reply
Rep. Codilla, for his part, has yet to respond to PCIJ queries about his interest in Yakal Construction, which is owned by his daughter-in-law Violeta T. Codilla. Yakal Construction has been awarded with 55 contracts from February 2004 to July 2008 worth a total value of P888.1 million.

Two sons of Rep. Codilla, a third-termer, are Leyte local officials: Mayor Eric C. Codilla of Ormoc City and Mayor Elmer C. Codilla of Kananga.

According to DPWH Bureau of Research and Standards Director Antonio Molano Jr., public officials should have divested of their interest in their respective construction firms. “I think they’ve done that but, of course, their relatives are still there,” he says. “So that’s one issue, that it looks like they are still the contractors. We have several of those kinds of politicians in Congress. That’s among the serious issues thrown at us.”

“As long as they participate in the bidding properly, it’s okay,” says Molano, who is also a member of the DPWH Bids and Awards Committee (BAC). “I mean, it’s a competitive bidding, and their companies can win. But people look at things another way if previously they (officials) are identified with that company, (and) even if they say they’ve divested, but their relatives are still the ones handling the company.”

Interference banned

Molano says everything should be okay “as long as it’s open competition.” But, he says he has heard of companies who drop the name of supposed legislator-owners and try to bully competitors.

“I’m not privy to those complaints, although I’ve heard some,” he says. “I wish they’d complain in the open because of course interference is not allowed, particularly during biddings. And especially when there’s a risk someone could intimidate the bidding committee.”

Republic Act No. 9184 or the government Procurement Reform Act states that public officials who “unduly influence or exert undue pressure on any member of the BAC or any officer or employee of the procuring entity to take a particular action which favors, or tends to favor a particular bidder” shall suffer the penalty of imprisonment of not less than six years and one day, but not more than fifteen (15) years.

In addition, the public officer involved shall also suffer the penalty of temporary disqualification from public office. But if the record of the Ethics Committee of the House of Representatives is any reference, it seems like the DPWH’s Molano is in for more worrying about contractors linked to lawmakers and their kin.

Inertia, indifference?

Lawyer Amador P. Lanuza, secretary of the House Committee on Ethics and Privileges, admits to a light caseload and a 100-percent dismissal rate of only five cases filed with his office in the 24-month-old 14th Congress. In the 12th and 13th Congresses, about 10 cases were filed with the Ethics Committee, he told the PCIJ in a phone interview.

Not one of the five cases filed and all dismissed by the Ethics Committee tackled conflict of interest situations. The last two were filed, in fact, by congressmen against former House speaker Jose de Venecia Jr. “for unethical behavior” when he was interviewed as saying that “congressmen are for sale.”

Lanuza says the Ethics Committee “is not privy to divestment information” filed by legislators as this is “not within our jurisdiction.” Neither can the Committee take cognizance of reports of possible conflict-of-interest situations facing the four congressmen with interest in business entities awarded DPWH contracts because the Committee has no powers to act motu propio on such matters.

According to Lanuza, the Committee merely receives complaints that “must conform to the requirements of form and substance.” That means the complaint must be subscribed to and notarized, and the allegations should be clear, specify “the acts being complained about,” and identify the members of the House who are the subjects of the complaint.

Of dignity, integrity, etc.

Moreover, he says the complaint must focus on subject matters within the jurisdiction of the present Congress, and that reads as matters that “pertain to the dignity, integrity, reputation and privileges of the members of the House.”

But the big damper is no complaints may be filed against former legislators, or about acts that incumbents may have committed before the 14th Congress opened in June 2007.

According to Lanuza, the Ethics Committee does not bother with complaints against ex- legislators, or even with those alleging acts committed by incumbent legislators on their second or third terms or while serving in the 12th and 13th Congresses.

”Our mandate is, upon receipt of the complaint, calendar it in the next meeting of the Committee,” Lanuza adds. The Committee is scheduled to hold meetings twice monthly but “kung walang complaints, not necessarily walang meeting.”

Three persons make up the secretariat of the House Committee on Ethics chaired by Rep. Eleandro Jesus F. Madrona (Romblon, Lakas-CMD), a first-term congressman who got to chair a committee because Lanuza says, “second coming na niya.” Madrona had served three terms in Congress before. He sat out the 2004 polls, but ran again in 2007.

Only two opposition members — Rep. Risa Hontiveros-Baraquel (Akbayan) and Rep. Rufus Rodriguez (United Opposition) sit in the 24-member Ethics Committee.