February 27, 2016

Roxas and Corruption: Campaign Planes, Election Spending, Mining Interests and Lumad Rights

Quid pro quo. Whether we want to admit it or not, this phrase defines the game of life. This same rule applies to every electoral campaign: something for something, this for that.

 When I first heard that Liberal Party (LP) bet Manuel “Mar” Araneta Roxas III spent ₱ 257 million just for August 2015 TV ads, my initial reaction was “meh, mayaman naman talaga si Mar.”. I know that he belongs to the wealthy oligarchy, so I guess that was expected. If my clan owns the Araneta Center, I guess I can afford to do that. After all, how many Filipinos can afford to go to Wharton?

That’s why I was inclined to believe Roxas’ allies when they said he “uses his own funds”.

Even if I felt something just doesn’t add up, I just can’t seem to put my finger on it, so the Roxas August TV ads news came and went without me giving a damn. Why? Because I don't really subscribe to half-baked truths.
Roxas and Robredo, on their way to a campaign sortie, aboard a helicopter owned by Gutierrez's Air Juan. (Courtesy: Miro Quimbo's Instagram Account)

Then follow-up reports came in. Oh, boy.

This is the part where I tell myself to calm down and examine the situation objectively, so let’s do just that.

I would like to warn the reader that this is much longer than the usual Thinking Pinoy article, but I assure you that your ten-or-so minutes will be time well spent.

Election Spending Caps

The Manila Times reported that Roxas spent ₱774 million from January to December 2015 on TV, radio, and newspaper ads. The Philippine Star even reported that Roxas has the money to pay for Anti-Binay ads.

₱774 million does not even include the expenses he incurs during out-of-town events, where he gives out motorcycles and bags of food to all attendees. This does not include the gargantuan costs of running his fleet of private jets that he uses to transport his entire team from province to province. It also does not include the online ad spending: I check my Facebook wall everyday and sponsored Roxas-Robredo ads – run through Roxas’ official page – pop up left and right.

The amount of money Roxas has hemorrhaged so far is mind-boggling, especially since ₱10-per-voter cap limits presidential campaign spending at about ₱ 545 million, based on 54.5 million registered Filipino voters.

At this rate, Roxas should’ve already been disqualified, as any elementary school student will agree that 774 is a lot more than 570. We don’t need a Wharton degree to figure that out.

Roxas SALN vis-a-vis Election Spending Spree

Amid the over-spending allegations, YACAP Party-list Rep. Carol Jane Lopez  and Presidential Spokesperson Edwin Lacierda, were quick to defend Roxas. They said Roxas “used his own money”.
Roxas 2014 Statement of Assets, Liabilities, and Net Worth (SALN) indicates a net worth of ₱ 202 million, according to the Inquirer. No other details were made public about his 2014 SALN declaration.

TV 5 was somehow able to secure a copy of Roxas’ 2012 SALN that showed a net worth of ₱ 183.1 million, approximately 10% less than the 2014 figure.

In this 2012 SALN, Roxas stated that his cash and time deposits in 2012 were ₱ 9.5 million. Even if the ₱ 19 million increase from 2012 to 2014 was in pure cash, it still won’t allow him to afford this degree of election spending.

Even in the extreme scenario where he liquidated all his assets, there’s no way  ₱ 202 million can pay for ₱ 257 million in TV ads, let alone that ₱774 million figure that he purportedly spent from January to December 2015.

Roxas cannot “use his own money” because according to Roxas SALN, even if he’s one of the richest cabinet members, the kind of election spending he’s doing is on an entirely different level.

With this said, it’s safe to say that he relied heavily on campaign donors, and this leads to the next question: who are his donors?

That is, Thinking Pinoy asks: What kinds of people are funding Roxas’ ascent into the presidency?

Roxas and the Mining Industry

A closer look at Roxas’ 2012 SALN shows that Roxas has a personal interest in the mining sector. His stockholdings, officially amounting to ₱ 120 million, include shares in seven mining companies, namely:
  1. Lepanto Consolidated Mining Company, 
  2. Manila Mining Corporation, 
  3. Philex Mining Corporation, 
  4. Marinduque Mining and Industrial Corporation, 
  5. Mindanao Mother Lake Mines, 
  6. Samar Mining Company, and,
  7. Western Minolco Corporation.

Being a stockholder in these seven wealthy firms indicate that he should have a lot of wealthy friends and wealthy acquaintances in the mining industry. And when in a pinch, such as when he needs campaign contributions, wouldn’t it be reasonable to say that his group of wealthy friends would be the first ones he’ll run to?

Thinking Pinoy had no way of verifying who among these miner friends are helping Roxas fulfill his presidential ambitions.

I needed leads. Luckily, the Philippine Star’s Jarius Bondoc gave me just that.

Roxas and his Campaign Planes

Bondoc of the Philippine Star reported Friday that private Cessna planes Roxas uses for his campaign sorties are wrapped in various anomalies. The aircraft are registered under Air Juan Aviation Inc., owned by a certain Francis Eric Gutierrez. These planes are also used to fly VP candidate Leni Robredo and the Liberal Party (LP) senatorial lineup..

A 2013 PCIJ report showed the billionaire Gutierrez is 2013’s 87th highest taxpayer in the country.
To give the reader an idea of Gutierrez’s net worth, GMA Network’s Jimmy Duavit is 83rd and SM Prime Holding’s Henry Sy Sr. is 85th. Their corresponding tax returns differ by less than a million pesos.

Bondoc’s sources said that the planes comprising the Air Juan fleet were acquired with VAT and import duty exemptions, privileges that were never given any other aviation company.

Signed for Finance Secretary Cesar Purisima by Usec. Carlo Carag, the tax exemptions were granted on the basis “that said importation is necessary in the operation of its business.”

If we go by that logic, jeepney drivers should also be exempted from VAT on diesel, right? After all, diesel is necessary in the operation of a jeepney business.

But no, lowly jeepney drivers won’t be exempted. As to why, it’s best to ask Purisima.

Then came the lead I was looking for:  Bondoc cited Gutierrez’s illegal mining activities in Mindanao. Bondoc explained how Gutierrez skirted tough laws to exploit the rich nickel ore reserves of Tubay, Agusan del Norte.

When asked about it, Roxas’ camp said Mar leased the aircraft from from SR Mining Inc. (SRMI) owner Francis Eric Gutierrez and that the said transactions were "above-board".

My subsequent research on Roxas' mining links and its implications terrified me so much, I actually fervently prayed that I am wrong.

Gutierrez owns San Roque Metals Inc. (SRMI), one of the largest mining companies in the country.
Interestingly, reports indicate that LP Spokesperson Edgar Erice is a business partner at SRMI and that Erice’s son is an SRMI shareholder. LP’s Erice also served as SRMI’s chairman in the mid-2000’s.

Through a memorandum of agreement with the Lumads of Tubay, SRMI engaged in “small scale mining” of 572 hectares of land in Tubay, Agusan del Norte.

With the “small scale” tag, SR Metals was able to bypass severe environmental and legal restrictions imposed on large scale mining operations.

Small scale miners are allowed to extract no more than 50,000 metric tons of ore annually, as opposed to large scale miners that are given higher limits, albeit with more financial, legal, and bureaucratic restrictions.

Small-scale permit, large-scale mining

A decade or so ago, environmental non-profit Caraga Watch formally sued SRMI for vastly exceeding its extraction limits, causing massive environmental damage.

A simple Google satellite image shows the extent of SRMI’s over-extraction and its effects on the otherwise pristine Tubay environment:

 SRMI's Tubay Mining Site: 5 square kilometers, twice the size of Pateros.

The yellow area surrounded by lush green forests, equivalent to about 570 hectares, shows the extent of SRMI’s “small scale” mining activities.

That’s twice the size of the municipality of Pateros.

The Small Scale Mining Act (RA 7076) defines small scale mining as "mining activities which rely heavily on manual labor using simple implement and methods and do not use explosives or heavy mining equipment". This is the same definition used in the RA 7942, the Philippine Mining Act.

However, using Google maps and zooming a bit further into the yellow area reveals several intriguing objects:

Small scale mining is supposed to rely mainly on manual labor, but SRMI's Tubay Mine appears to rely on heavy equipment and facilities commonly found in large-scale mining operations. Clockwise from Top-left: an excavator; an office building or a processing facility;three tailings ponds; a convoy of dump trucks; another dump truck; yet another pair of dump trucks

Eventually, DENR ordered the closure of the three mining sites in 2006.  The agency also ordered the collection of ₱7 million in fines, or 0.25% of ₱ 2.9 billion that SRMI earned in 2006-2007, a mere slap on the wrist.

Some reports indicate that SRMI earned ₱ 29 billion instead of ₱ 2.9 billion, but to give SRMI the benefit of the doubt, let’s just consider the smaller amount.

Kung baga, partidahan na natin.
Despite the DENR order, SRMI continued mining operations in Tubay, pending a Supreme Court (SC) decision.

That’s why in 2010, Agusan del Norte provincial officials and Tubay townsfolk urged PNoy to halt SRMI’s Tubay operations on the following grounds:
  • SRMI failed to pay municipal taxes and business fees (₱100 million).
  • SRMI did not pay extraction fees (₱120 million)
  • SRMI did not pay 1% royalty fees to the lumads, identified as Accredited Tribal Sectoral Leaders of Indigenous Cultural Communities of Tubay.

LP Spokesperson Edgar Erice, SRMI’s chairman at the time, argued that SRMI, as a “small scale miner”, is “exempted from paying extraction fees under the Mining Act or R.A. 7942.

A little more math reveals a different and even more disturbing story.

Based on Mining and Geosciences Bureau (MGB) data, SRMI earned ₱2.9 billion in the 15 months leading to December 2009. Hence, the royalties due (1%) is about ₱29 million.

The 2007 market rate for nickel ore is US$ 30 per metric ton. Using Jan 2 2007 USD:PHP exchange rate of 1:48.86, Php 2.9 billion translates to about 1.98 million metric tons of nickel ore.

That is, aside from non-compliance with financial obligations, SRMI appears to have over-extracted ores from Tubay, mining almost 40 times their annual 50,000 metric ton limit.


SRMI continued its Tubay operations and on an even larger scale. The SC affirmed DENR’s 2006 order in June 2014. However, the SC did not penalize SRMI for its operations from 2007 to 2014.
To make matters worse, Bondoc’s sources said the SRMI mines still operate today.

PNoy and Mining

Since 2010, the PNoy’s LP administration did nothing to contain SRMI, despite incessant calls from genuine indigenous peoples’ groups.

For example, MGB reported that for the year 2014, SRMI paid ₱45.3 million in royalties to Tubay’s Lumads, representing 1% of SRMI’s total mining review for that fiscal year. That is, SRMI 2014 revenues from their Tubay site were at ₱4.53 billion. The 2014 market rate was US$ 41 per ton. 

Courtesy: Fight Corruption in Caraga

Using the Jan 2 2014 USD:PHP exchange rate of 1:44.49, ₱ 4.53 billion translates to about 2.48 million tons of ore mined in 2014.

Again, that’s almost 50 times the 50,000-ton annual limit for small-scale miners.

Moreover, in 2012, while the Lumads (David) battle SRMI (Goliath), President Noynoy Aquino issued Executive Order (EO) No. 79, which forbids granting of new large-scale mining contracts, pending the passing of a new law that would overhaul revenue sharing of revenue between mining companies and the government.

The caveat: As of May 2015, Congress, dominated by the Liberal Party, has yet to conduct a single hearing on this mining bill.

EO 79 covers only new mines, and not the old ones. That is, contracts held by SRMI, along with the contracts held by Roxas’ mining companies, were left untouched. Hence, this EO allowed existing mining companies to collectively hold a de facto monopoly on because of the lack of new competition.

Again, quid pro quo: SRMI is an avid supporter of the PNoy administration from start to finish.
  • In 2010, then-Presidential candidate Noynoy Aquino used a Gutierrez-owned plane for his campaign sorties, said Bondoc.
  • In 2012, Rappler reported that Gutierrez accompanied President Aquino in his official 2012 US and UK trips, where he was included in the group of “Top 26 Filipino businessmen” that comprised official Philippine delegation.
  • In 2013, Former PCDSPO Secretary Ricky Carandang, who served the PNoy administration, was reported to have plans of becoming the Head of Corporate Communications for either one of Gutierrez’s companies after his resignation from his cabinet-level position in 2013, according to The Manila Times. A recent report suggests that Carandang currently works for Air Juan.
Sec. Ricky Carandang
  • In 2014, aerial footage of SunChamp’s Batangas farm was captured using a Gutierrez-owned helicopter, according to the United Nationalist’s Alliance. The footage was used in the senate hearings concerning corruption allegations against Vice-President Jejomar Binay.
And here came 2016, when Gutierrez leased his entire Air Juan fleet to Roxas and the rest of Daang Matuwid.

Future of Mining in a Roxas Presidency

The story of Gutierrez’s SRMI is just a glimpse at how cozy the LP’s relations are with mining companies. Add the fact that LP’s Roxas is a shareholder in at least 7 mining companies, the future seems brighter in a Roxas presidency for SRMI and friends.

How exactly will a Roxas presidency benefit SRMI and friends?

First, Roxas runs on a platform of continuity, i.e. he's bent on preserving the new status quo created by the PNoy administration.  Roxas has never criticized PNoy’s decisions, and this includes EO 79. In a Roxas presidency, there is no reason to speculate the reversal of EO 79. Coupled with chronic absenteeism in Congress, we can expect the mining monopoly to last until 2022.

In particular, despite falling nickel prices in the past few years, this monopoly will come in handy as nickel prices are expected to shoot up after Indonesia decided to implement a nationwide export ban on mineral products. Bloomberg says this is great news for Philippine nickel miners like SRMI.

Second, Roxas isn't likely to pass FOI. LP has never been able to pass Freedom of Information (FOI) under PNoy and there’s no reason to believe that Roxas, who’s weaker than Aquino, will manage to rally congress to pass this during his term. Roxas and PNoy dropped FOI like a hot potato as soon as Congress insisted on the right of reply provision. They didn't fight for it. They didn't even certify it as urgent.

This way, the common people, including citizen journalists like Thinking Pinoy, will still find it extremely difficult to discover anomalies like SRMI’s Tubay operations. For example, it took Thinking Pinoy several days of research for this article. If FOI existed, Thinking Pinoy could have just requested documents from the SEC, the MGB, the BIR, Customs, and every other related government agency and consequently write a more detailed, more authoritative report. But it isn’t the case.

Third, the final version of the Bangsamoro Basic Law (BBL) is morely likely to favor SRMI and Friends under a Roxas presidency. Under the original version of BBL, the Bangsamoro government will have jurisdiction over mining permits in their area (House Bill 4994, Art. V, Sec. 3, Item 29). This doesn’t sit well with SRMI and Friends whose owners hail from either Luzon or the Visayas.

The ARMM has significant oil and natural gas reserves. Major deposits have been discovered in Liguasan Marsh in Central Mindanao, and various points in the the Sulu Sea. Of course, Guttierez and friends want a stake in that, and of the four presidentiables, LP’s Roxas is their best shot.

If Binay wins, he will want revenge: SRMI will have hell to pay. If Poe wins, she will obviously want revenge too, after the LP-led disqualification cases that she’s still battling right now, where she even had to dig up graves just to prove she's qualified to run. If Duterte wins, his Federalism will work in a similar way as the original version of BBL in as far as Bangsamoro mining is concerned. That is, SRMI and Friends will lose their throne.

And these benefits just came off the top of my head. There may be other more sophisticated benefits, and I leave it to the reader to figure them out, if any.

Regardless, it's quid pro quo: Gutierrez helps Roxas become president, Roxas helps Guttierez in his business. Quid pro quo, to the detriment of the regular Filipino.

Another presidential candidate asked, If this is not corruption, what else do we call it?

Let me answer that: if isn't corruption, it's sheer stupidity. If coddling the corrupt is Roxas' intent, then it's corruption. If it isn't his intent, then he's a moron.

Plane and simple.

Pun intended.

As pointed out by one of my readers,  Bayan Muna's Rep. Zarate of the Makabayan Bloc is not administration stalwart. Zarate is one of the solons who had raised banners of protest inside the House during the SONA.  Zarate was also one of the first to ask for Roxas's resignation from the DILG, and said it was a matter of delicadeza especially as there was speculation on where he is getting campaign funds.

Article content has been corrected to reflect this clarification.

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