Second of two parts
IN 1998, Jose Victor ‘JV’ Ejercito, then 29 years old, became the biggest shareholder of the newly formed Best World Construction Corp., an affiliate of BW Resources Corp., the gaming company now in the dock for stock manipulation and insider trading.
Apart from Ejercito, the other incorporators of the construction firm were businessman Dante Tan, a key figure in the BW scandal; Tan’s lawyer Jose Salvador M. Rivera Jr.; Francis Ablan, who was named BW chairman early this year; and Malaysian businessman Kenneth Eswaran, Tan’s business associate who is a major shareholder of another BW affiliate, Best World Gaming & Entertainment Corp.
Corporate records show that the other shareholders of Best World Gaming include Tan, and lawyer Rivera—both of them JV Ejercito’s business partners in Best World Construction. In December 1998, the Philippine Amusement and Gaming Corp. (Pagcor), the government’s casino company, gave Best World Gaming the sole authority to conduct nationwide computerized online bingo gaming for 10 years.
|Company Name||Nature of Business||Year|
|Aeromax Aircraft Services Inc.||public/private carrier||2000|
|Vegas Foods Inc.||restaurants||1999|
|International Maximum Entertainment Inc.||entertainment||1999|
|Grandmeadows Properties Inc.*||real estate||1999|
|Best World Cons. Corp.||construction||1998|
|EG Properties*||real estate||1998|
|Apex Land Inc.*||real estate||1998|
|Pro-Advance International Inc.||trading||1996|
|GTWJ Food Corp.*||restaurants & catering||1996|
|Foremost Credit Resources Inc.||lending||1995|
|Buildworth Development Corp.||construction||1995|
|Paisa Champagne Bar Inc.*||restaurants||1995|
|WT Partnership Phils Inc.*||management & engineering||1995|
|Agri-Power Equipments Inc.||manufacturing & trading||1993|
|Wegtec International Corp.*||management consultancy||1993|
|Stallion Intertrades Center Inc.*||trading||1992|
|Meiji Inc.*||real estate||1992|
|JV & G Inc.*||real estate||1992|
|Job Employment Staffing Assistance and Allied Services Inc.*||machinery maintenance||1989|
*Companies with mother, Guia G. Gomez, also as incorporator
Source: Securities and Exchange Commission
In a congressional hearing in March 1999, Pagcor chairperson Alice Reyes admitted that Best World Gaming got the bingo license “because it had the endorsement of the Office of the President.” In addition, Best World Gaming’s affiliate, BW Resources, signed a memorandum with Pagcor on June 30, 1999, in which Pagcor agreed to be the “anchor tenant” at the Sheraton Marina, a casino, shopping and tourism complex BW is building in Malate, Manila.
In 1999, BW and Best World Gaming became co-borrowers of a P600-million loan obtained from the Philippine National Bank, in which the government was then the major shareholder.
These interlocking relationships illustrate the ethical problems posed by the involvement of presidential relatives in business. In an interview, Ejercito explained that he was drawn into Best World Construction by Tan and his partners. “Since they were family friends, they told me they were going to put up a development corporation and since I was in real estate and construction, I thought okay, that’s in line with my business.”
But Ejercito said that he pulled out of the partnership when BW shifted from real estate development to gaming in late 1998. “I told them I can’t help you, I wouldn’t be an asset to you, it wouldn’t be good for me and for my father. It’s not nice manipulating stock prices, I even told them that.” In the end, nothing ever came out of Best World Construction, Ejercito said.
Even if that were so, the incident illustrates the apparently close business and personal relationships between members of the Estrada family and individuals who have obtained government loans, contracts and franchises. Such relationships are bound to raise thorny issues of conflicts of interest.
There was nothing illegal about Ejercito’s short-lived partnership with BW. But the fact that the President’s favorite son was once involved with businessmen alleged to have received preferential treatment from government entities and now currently undergoing government investigation reveals the fuzziness of the line that separates business from politics.
Earlier this year, former Securities and Exchange Commission (SEC) chairman Perfecto Yasay Jr. had already accused the President of undue interference in the SEC’s investigation of BW and Dante Tan who, apart from having been JV Ejercito’s business partner, is also widely known to be Estrada’s friend.
Ejercito, however, insisted that his family has not taken advantage of Estrada’s presidency to further their business interests. “I don’t want shortcuts,” he said. “I see to it that everything is done legally. Even my bank loans are obtained not because of who I am, I want them to lend me because of the projects I am doing. I don’t want them to see me as a political client. It’s actually hard to be the president’s son – you can’t go into this, you can’t go into that because you’re partly a political figure. I just can’t wait for the President’s term to finish.”
Despite these supposed difficulties, the businesses of Estrada’s various families appear to be doing well. In fact, our search of corporate records showed that the President’s wives and children have engaged in a rash of company formation, establishing at least 11 new corporations since June 1998, a month after Estrada’s election. Most of these firms are in real estate and entertainment.
In a country where the fortunes of businesses are often determined by political connections, the entrepreneurial activities of Estrada’s various families, while not illegal, tread on fragile ethical ground.
JV’s mother, Guia Gomez, for example, has a long list of business partnerships with individuals who are now in government. Her business activities are those of a politically well-connected entrepreneur whose interests have expanded with Estrada’s rise to power.
All but one of the 33 companies in which Gomez is listed as an incorporator were formed since 1987, when Estrada was first elected to the Senate. Of these, 13 were set up while he was senator, 15 during his vice presidency, and four in the first two years of his presidential term.
|Company Name||Total Assets||Year Declared|
|Buildworth Development Corp.||83.3||1998|
|Feluisa Development Corp.||1.8||1998|
|First LPL Syndication Inc.||126.6||1998|
|GTWJ Food Corp.||23||1998|
|JE Films & Video I Inc.||4.3||1997|
|JELP Real Estate Development Corp.||194||1998|
|JOI’s Food Corp.||9.2||1998|
|Magic Star Food Corp.||6.1||1998|
|Paisa Champagne Bar Inc.||1.5||1999|
|Paisa International Inc.||6.2||1999|
|Powerhouse Staffbuilders International Inc.||8.8||1999|
|Star J Management Corp.||45||1998|
Source: Financial statements submitted to the Securities and Exchange Commission
Gomez operates a range of businesses involved in real estate, trading, and even environmental impact assessments. All of these businesses would require government clearances and permits and some of them involve transactions with government entities.
Gomez finds herself in sticky situations as several of her business partners have been appointed to government posts since Estrada became President.
For example, SEC records show that Gomez and Julius Topacio, assistant secretary of the Department of Interior and Local Government, are partners in five companies. Topacio is the president’s chief accountant and is listed as such in Estrada’s 1987 statement of assets. In 1998, Topacio was appointed the government representative to the board of Legaspi Oil Co., a sequestered company.
He and Gomez are partners in Meiji Inc., a company formed in 1992 and currently developing a subdivision and housing project in Cavite, which presumably needed to obtain local government permits and clearances. In addition, Topacio and Gomez are shareholders in Paisa Champagne Bar Inc., operating restaurants that again need all sorts of local government permits.
They are also partners in Paisa International Inc., a trading company; two project management firms, WT Partnership Philippines Inc and., Wegtec International Corp.; JV& G Inc., a real estate company; and Powerhouse Staffbuilders International Inc., a labor recruitment firm.
Another shareholder of that recruitment firm is Rosario G. Yu, formerly tobacco tycoon Lucio Tan’s secretary. Yu was named presidential assistant in 1998, and is frequently seen in Malacañang.
An even more controversial business associate of Gomez’s is Cecilia Ejercito de Castro, who is known as the President’s cousin. De Castro was appointed presidential assistant in 1998. In 1999, she figured in a P200-million textbook scandal in which Education Secretary Andrew Gonzalez said she approached him for the speedy release of textbook funds.
De Castro is Gomez’s business partner in the real estate firm, Meiji Inc., and Xytox Corp., a trading firm.
Another Gomez partner is Talreja Mangharam Shivandas, the Indian businessman who runs the restaurants and VIP lounges at the Ninoy Aquino International Airport and who was responsible for the ill-fated construction of a restaurant on the Malacañang grounds. Gomez and Shivandas are partners in Paisa International Inc., a trading company.
Gomez’s network of business associations include presidential brother in-law, academic Raul P. de Guzman, who was appointed to the San Miguel Board and named presidential adviser on development administration in the first few months of Estrada’s term. In 1989, De Guzman and Gomez were both incorporators of Environmental Primemovers of Asia, Inc., a company that conducts environmental impact studies for firms seeking environmental clearances from the government.
In 1996, Environmental Primemovers was bought by Woodward-Clyde Philippines, although the original incorporators retained their investments in the new company.
These included De Guzman’s son, Raul Roberto, who was appointed presidential assistant for environment and water in 1998, even while he was still involved with the environmental firm.
Raul Roberto is also in partnership with Gomez in two other companies, including Paisa International and Risktrack Inc., as well as Environmental Primemovers. The two are also among the original incorporators of Poongsan Philippines, a wholly owned subsidiary of the Korean firm Poongsan Precision Corp., but had since unloaded their shares.
The involvement of Gomez and Raul Roberto de Guzman with Poongsan Philippines, a wholly owned subsidiary of the Korean firm Poongsan Precision Corp., is nominal but still raises questions. Poongsan manufactures semiconductors and is located in the Clark Special Economic Zone, and therefore leases government property and receives government incentives.
Yet another business associate is Jose Fernando B. Camus, Gomez’s partner in WT Partnership Philippines Inc., a management and engineering company, and in Meiji Inc. He was named to the board of the Bases Conversion Development Authority also in 1998.
Meanwhile, Rolando Macasaet, who currently heads the Philippine National Construction Corp., the government corporation that operates the country’s toll roads, is JV Ejercito’s business partner in Foremost Credit Resources Inc., a lending company formed in 1995.
The first two years of the Estrada presidency was a period that saw a burst of entrepreneurial energies among Estrada’s wives and children. The busiest appear to be Gomez and her son JV. Gomez formed four real estate firms in 1998 and 1999: El Pueblo Builders, Grandmeadows, Inc., EG Properties and Apex Land Inc. Her son is a partner in three of these firms while Estrada’s other illegitimate children – Joel Eduardo and Ma. Theresa Ejercito – hold shares in EG Properties.
JV, on his own, formed three new companies since his father’s election: Aeromax Aircraft Services, Inc., a carrier of mail and merchandise; Vegas Food Inc., a restaurant and catering firm; and International Maximum Entertainment, Inc., which is involved in movie, TV and musical productions.
In addition, the assets of JV’s construction firm, Buildworth, grew from P14 million in 1997 to P83.3 million in 1998, according to financial statements submitted to the SEC. Meanwhile, his Ang Bayang Makulay Production Inc., a foundation formed last January 3, is producing the Philippine version of the Broadway hit, “Miss Saigon.”
Often referred to as the family’s black sheep, Jude Estrada, the President’s second son with the First Lady, did not show much entrepreneurial inclinations before his father’s election. But in 1999 alone, Jude and his associates formed three new companies: Primeval Commodities, Inc., which is engaged in the trading of petroleum and food products; Paragon Security Management and Investigation Services, Inc., which provides security services; and Reach Management Corp., which is into personnel and management consultancy.
In addition, Jude with his two other siblings, Jinggoy and Jacqueline, his mother Luisa and uncle Jesus Ejercito, formed Millennium Cinema in 1999. Barely two years old, Millennium hopes to rival the big film companies, Regal and Viva, in the movie production business.