Second of three parts
SINCE THE nineteenth century, discreet brokers, many of them ethnic Chinese, have played a key but often invisible role in Philippine politics. Filipino officials have relied on such middlemen to make under-the-table arrangements away from the glare of public scrutiny.
For sure, men like these take a cut for themselves, but that is the price of the connections and the maneuvers they bring into the transaction. They also provide politicians the plausible deniability the latter need if, for some reason, the deal is exposed. They are the fall guys. They take the flak.
Premchai Karnasuta, the Thai construction tycoon who heads the Ital-Thai conglomerate, was apparently aware of the importance of the brokering function, even in the late twentieth century, the era of transnational capital flows. That is why he let the well-connected George Triviño do his work.
Triviño admitted to the Senate that he helped Ital-Thai in its bid to get the contract to build the Clark airport and the North Luzon Expressway. For various reasons, both these deals fell through. Ital-Thai opted out of Clark and a related project to build a railway from Makati to Angeles City when it was clear that the Manila airport would remain the premier airport. Ital-Thai also lost the North Luzon Expressway contract to the Lopezes of Benpres.
In both cases, Triviño said he sought de Venecia’s intercession. The Speaker, however, did not succeed in mustering enough support in government for the company’s proposals. During the Senate investigation, Triviño also admitted that he and Premchai got as far as meeting the President twice, the first time in August 1994.
“Mr. Triviño was introduced to me as a possible investor,” Ramos replied in response to our queries. “I receive or meet several of these a week and give them only the Philippines 2000 investment list.”
When Premchai and his family saw the three islands along the coastal road on one of their visits to Manila sometime in 1994, the Thai magnate, eager for a project, immediately saw the potential of the property.
His business partner Manuel Sy told a Senate hearing that Premchai then asked for a meeting with Chua and Co, which Sy arranged. The two brokers, in turn, brought in Benito Cuevo, who made the link to Bobby Montano, deputy manager of the Public Estates Authority (PEA) and other PEA officials.
At that point, Triviño did not know of the deal and so was left out of the negotiations. By November 1994, the details of the deal were ironed out. Chua and Co assured Premchai that they could get government approval for Ital-Thai’s purchase of the three reclaimed islands in Manila Bay.
Premchai was apparently so convinced of this that on November 25, 1994, he signed a memorandum of agreement promising that Ital-Thai would pay Chua and Co P1,250 per square meter or a whopping total of P1.973 billion for “securing the acquisition of the subject asset and the subject reclamation project.”
The contract bound the two brokers to deliver a deed of sale on the property and an agreement with PEA that the three islands would be purchased by Ital-Thai at P1,000 per square meter, and that an additional 250 hectares to be reclaimed by the project would be shared 70-30 between Amari and PEA, with the latter getting the smaller percentage.
This contract, which was withheld from the Senate, provides positive proof that under-the-table negotiations between Ital-Thai and PEA took place even before the project was formally taken up by PEA, which officially received word about Amari’s proposal only seven weeks later, on January 13, 1996.
The contract guaranteeing the commissions was also signed even before Amari, named after a chain of Thai hotels owned by Premchai, was incorporated on December 5, 1994. It is apparent from this contract that the two brokers had already wangled an assurance from PEA that the deal would be approved.
Why else would the extremely savvy Premchai agree to pay such a huge commission at that point? The truth was, various sources familiar with the deal told us, Bobby Montano, through Chua and Co, had assured Ital-Thai that PEA would deliver.
It was abundantly clear to Montano and the pair of brokers with whom he was negotiating that a transaction of this magnitude would move only if it had the presidential seal of approval. By then, PEA had received four other offers for the property and was basically sitting on them. The Senate found proof that Montano was transacting with Malacañang on his own, without the knowledge of then PEA general manager Amado S. Lagdameo.
On December 3, 1994, Amari wrote a letter to Ramos proposing to develop the three islands. The letter contained exactly the same conditions set out in the November agreement between Premchai and the two Chinese brokers: a purchase price of P1, 000 per square meter on the reclaimed property and a 70-30 sharing scheme on the land that was still to be reclaimed.
During the Senate hearings, Montano admitted that he personally took the letter to Malacañang. What he did not say was that it was Agnes Montano, the WARM vice president and Palace hanger-on, who made sure it got to the President. Indeed, Ramos endorsed the letter on December 13, with a marginal note that said, “To GM/CEO Lagdameo, for study/comments ASAP, President Ramos.”
That letter reached Lagdameo only a month later, but without a transmittal note from Malacañang, leading Lagdameo to conclude, when queried in the Senate, that it was probably hand-carried back to PEA by Bobby Montano.
On December 14, Montano wrote to Amari to inform the company that its proposal had been “favorably acted upon by the President by referring the matter to the PEA for immediate response.” Moreover, Montano wrote, “all indications centered into the acceptance of your said offer and proposal, which under our observation are legally tenable.”
On what authority did Montano write the letter? It would take a month before Lagdameo would even have a look at Amari’s proposal and the President’s recommendation. Montano also did not have the power to say that the transaction was “legally tenable,” as this was a function of the Office of the Government Corporate Counsel (OGCC).
Ramos’s role in this entire transaction remains one of the many mysteries surrounding the Amari scam. Despite the letters and Montano’s own admission that he delivered Amari’s proposal to Malacañang, the President insists he did not deal with Montano. “Either Montano has unusual access (to the President) or pretends to have such access,” says Senator Franklin Drilon, chairman of the Senate blue-ribbon committee which investigated the Amari deal.
Members of the Montano family insist it was the former. They reveal that Bobby met with the President on the Amari proposal; on at least one occasion, the meeting took place at the Malacañang golf course.
Moreover, they say that when push came to shove in December 1996, and Bobby had resigned from PEA in disgrace and was in fear of being exposed by the Senate investigation, Presidential Security Group commander and senior aide-de-camp Brig. Gen. Jose Calimlim phoned Agnes Montano at 2 a.m. to relay the message to Bobby that “we are in control. We are on top of everything.”
Calimlim does not deny making the call, but insists that he merely wanted to assure Agnes and Auring Montano, who were his friends, that they should not worry despite an arrest warrant issued by the Senate. “I assured them of their safety,” Calimlim recalls, adding that he escorted the women to the Manila Hotel to meet with National Bureau of Investigation (NBI) Director Santiago Toledo. “They are my friends…Baka ang sinabi ko, tell Bobby not to worry about this.”
Unfortunately, the Senate investigation did not pursue Ramos’s possible role. But it is clear from the Senate hearings that whether or not the President was dealing with Montano, Malacañang’s blessings went a long way in ensuring the deal’s approval.
Lagdameo, in his disjointed Senate testimony, admitted that “in the normal course of business, the marginal notes of the President receive immediate attention.” Indeed, on January 26, 1995, barely two weeks after Lagdameo received the letter with Ramos’s instructions, he informed to Amari that PEA had accepted the company’s offer.
When asked by senators how it was possible to approve in only two weeks a business proposal involving something as technical as land development, Lagdameo reasoned that PEA had been studying the technical issues involved in the project since 1991.
To be fair, Lagdameo, by everyone’s account, was completely clueless about the back-door negotiations taking place right under his nose. It appears that he was merely following the President’s instructions.
In his testimony, Lagdameo revealed that Montano and the PEA management group assigned to the three islands were insisting on selling the property to Amari at only P750 per square meter despite a 1991 resolution by the PEA board requiring public bidding for the property and a minimum bid price of P1,680 per square meter.
It was he, Lagdameo said, who fought for raising Amari’s offer from P1,000 to P1,200 per square meter. When the price of the property was raised, the brokers’ share was proportionally decreased.
It is clear from the way events unfolded that Premchai was willing to pay a total of P2,250 per square meter, or P3.3 billion altogether, for the property. The brokers could split the change from whatever price they could negotiate from the government. When PEA insisted on P1,200 per square meter, the total brokers’ commissions, as indicated in a receipt signed by Chua and Co, was reduced to P1.75 billion from the original P1.89 billion.
It is an eye-popping amount. If the deal were done legitimately, this money (and more, because the property was undervalued) should have gone into PEA’s coffers, for doing what the agency was mandated by its charter to do: build low-cost housing for the poor. Instead, the money went into various well-lined pockets.
By all indications, Amari got the three islands for a song.. By the admission of PEA’s own officials, the cost of reclaiming land stood at P2,000 to P5,000 per square meter. While it is true that a good portion of the three islands remains under a few feet of water, P1,000 per square meter was still barely the cost of reclamation.
In fact, three other firms had offered P1,400 to P1,600 per square meter for the property, but PEA did not negotiate with them. Moreover, reclaimed land near the three islands was selling at up to P90,000 per square meter.
Yet the Amari deal was approved by PEA without much questioning from either the agency’s management or board. In fact, one of the most incredible – and instructive – things about this transaction was that it passed the scrutiny not only of PEA but also of a range of government entities established precisely to prevent scams such as this.
Among the many lessons from Amari is that the check-and-balance mechanisms against corruption are flexible: they can be bent by those with the right connections and sufficient cash. The scam would have slipped right through the Senate as well, had one of the disgruntled parties in the transaction not squealed. But that is getting ahead of the story.
What helped convince the PEA management and board to accept Amari’s proposal were three appraisals of the property made by different companies that priced the three islands from P750 to P1,000 a square meter. There are indications that these appraisals were tailor-made to favor Amari’s bid.
One firm, Asian Appraisers, had valued the property at P1,680 per square meter in 1991, yet it pulled down its estimate to P1,000 in 1995. A year later, when asked by Amari to appraise the same property, the company put a per square meter price tag of P4,500.
PEA records show that Bobby Montano contracted the appraisers. “The appraisal process was clearly flawed and designed to justify what is otherwise a flawed transaction,” says Drilon. “Talagang maliwanag, niyari nila ito (It’s clear that it was fixed).”
The records also show that PEA used the appraisals to cast aside the minimum base price of P1,680 per square meter set in 1991. Recalling previous failed biddings, PEA also decided not to auction the property, but to negotiate with prospective developers.
At this stage, PEA was seriously considering only two proposals: Amari’s, which Lagdameo believed had the presidential endorsement, and that of Hyosan Prime Construction, a Korean company that had found a patron in PEA chairman Rivera.
In his speech exposing the Amari scam, Maceda alleged that Amari paid Rivera and his cohorts P200 million “to settle (their) competing claim to the property.” Congress sources say that the payoff was actually P300 million and that it was given to Rivera and various individuals in Hyosan.
Part of the payoff, we were told by various sources, reached a presidential relative who had helped Hyosan push its bid. Hyosan, Senate sources say, merely held on to its bid so it could be bought out.
With Hyosan out of the way, the field was left to Amari. On April 8, 1995, Amari increased its offer to P1,100 per square meter. On the same day, Lagdameo said that PEA would accept the proposal if Amari raised the price to P1,200. On April 21, Amari agreed. Immediately, Lagdameo asked the OGCC to review the draft of PEA’s joint venture agreement with Amari.
Suspiciously, the OGCC said that the joint-venture agreement was “valid and in order” in just half a day. At the Senate, OGCC assistant counsel Anthony Sison admitted that he received the agreement late morning of April 21 and finished his opinion before 5 p.m.
Sison’s boss, OGCC chief Oscar Garcia, approved the opinion. Drilon recalls that when he was justice secretary, he appointed Garcia to the OGCC on the intercession of de Venecia, who was the government counsel’s friend and fellow Pangasinense. Moreover, when Garcia reached the obligatory retirement age of 65 in December 1994, his term was extended by the President, who also comes from Pangasinan.
In April 1995, when de Venecia tried to stop Benpres from getting the North Luzon Expressway contract, partly by initiating a House investigation of the transaction, Garcia issued an opinion questioning the legality of Benpres’ contract. After he resigned in the wake of the controversy generated by Amari, Garcia joined de Venecia’s staff.
In a similar fashion, the agreement slipped through the justice department. In the Senate hearings, PEA chairman Rivera admitted that he personally delivered to the Department of Justice (DOJ) PEA’s request for an opinion. Rivera reasoned that there was nothing unusual about his action, as he merely wanted to speed up the approval process.
Actually, Rivera also took with him a draft opinion approving the agreement. “They already had a ready opinion for DOJ to sign,” says Drilon, who heard about it from his old staff at the DOJ. But then DOJ secretary Teofisto Guingona Jr., played it safe. The DOJ declined to render an opinion on the ground that the agreement fell within the purview of the OGCC.
“After all, the DOJ secretary is a political animal and he is an extension of the President,” Drilon surmises. “It’s possible he saw the President’s approval in writing and felt he had to sustain the President’s approval. The next best thing was to refrain from rendering an opinion.”
The PEA board was also swayed by a perception of Malacañang support for Amari. At the Senate, board member Arturo Trinidad revealed that PEA management presented to the board a memo which said that the agreement had been submitted to and approved by the President.
“That is a major consideration insofar as the members of the board are concerned,” he said. Trinidad added: “I was also concerned with (sic) my stay in the board of directors and that my questioning the position of the general manager could lead the general manager to propose that my appointment be terminated.”
Another board member, Marylou Ventura, recounted: “When the board gave the authorization to the then general manager, Mr. Lagdameo, to negotiate with the Amari people, we expected that he would come back to us and spell to us for approval the terms and conditions of the JVA (joint-venture agreement). However, the JVA came to us already signed.”
Lagdameo had signed the agreement on April 25, 1995 without the board’s authority. The board also approved the Amari contract in record time three days afterward.
Maceda, in the course of the Senate investigation, concluded that the rush was due to the fact that elections were scheduled on May 11, 1995, and the ruling Lakas party was anticipating a hefty donation from Amari.