Noynoy rejects Code NGO

While debates raged yesterday over the Bureau of Internal Revenue’s (BIR) belated decision to slap a 20 percent tax on the controversial Poverty Eradication and Alleviation Certificate (PEACe) bonds that matured yesterday needing the government to shell out P35 billion to pay for the P10 billion borrowings 10 years ago, the architect of the so-called zero bond float that counts among key figures in the Aquino administration appeared to be let off the hook.

President Aquino insisted that the bond holders will have to pay the 20 percent percent final withholding tax on the total P25 billion payout but rejected suggestions to explore the liability of key personalities in his administration that include Social Welfarte and Development Secretary Dinky Soliman and Peace Adviser Teresita “Ging” Deles who are officials of Caucus of Development NGO Networks (Code NGO) that conceptualized the bond issue.

The bond float was given full tax exemption when it was created in 2001 but subsequent rulings of the BIR removed such perks but the

BIR issued a ruling to implement the removal of the exemption only a few days prior to the maturity of the bonds.

In an ambush interview, Aquino shrugged off suggestions that he should discuss the issue with Soliman and Deles following the maturity of the 10-year PEACe bonds, which in effect gives investors the right to fully recover the value of their bond plus interests.

Aquino said the PEACe bond issue only involved the Department of Finance and the Bureau of Internal Revenue and insisted that Soliman and Deles no longer have anything to do with it despite their having engineered this scheme and convinced former President and now Pampanga Rep. Gloria Arroyo to sanction the float of the 10-year P10 billion PEACe bonds that guaranteed investors a 12.75 percent interest payout.

Commercial banks involved in the PEACe bonds transaction sued for a temporary restraining order (TRO) with the Supreme Court on the imposition of the 20 percent tax and Sen. Edgardo Angara warned that the BIR’s belated decision to impose a tax on the issue constituted a breach of contractual agreement.

The Freedom from Debt Coalition stated its support for the imposition of taxes on the PEACe bonds while at the same time comparing the bonds issue to the financial scams by huge Wall Street banks, which triggered the 2008 financial crisis that led to the collapse of major world economies, stealing ordinary people’s pensions and life savings, putting them out of their homes and schools, and causing them to lose their jobs.

“These banks want super profit and risk-free and no-tax investments, and expect government to bail them out in case of default, using public money,” FDC secretary-general Milo Tanchuling said.

“This is the same with the PEACe bonds case. The banks who bought the bonds know of the taxes, but because of greed they still bought the controversy-ridden bonds. These banks are as greedy as the major banks in Wall Street,” Tanchuling added.

Bayan Muna Rep.Teddy Casino said the liability of who should pay the taxes for the P35-billion transactions should be determined first.

“Today, the P35B Code-NGO Peace bonds mature and gov’t is supposed to pay the bond holders their P25B profit from interest. Considering the controversy over who should pay the 20 percent withholding tax, which Code-NGO is liable but which the present bond holders will unjustly pay, the DoF should stop payment first until the matter is clarified, including whether Code-NGO and officials of the GMA administration are liable for incurring a behest loan and making huge profits at the people’s expense,” Casino said.

“The DoF should not redeem those bonds today until the matter is cleared,” Casino stressed.

The P10-billion 10–year treasury zero coupon notes was awarded in October 2001 by the former Arroyo government to the Rizal Commercial Banking Corporation in behalf of Code-NGO which had Soliman and Deles, who were then ardent allies of Arroyo as former officials.

Soliman denied any involvement in the transaction, saying she was no longer the head of Code-NGO or the group that purportedly received the P1.4 billion of the total commission from the PEACe bonds during the time when the transaction happened.

But Soliman’s husband, lawyer Hector Soliman was then the corporate secretary and one of the board of directors of the Peace and Equity Foundation (PEF) or the foundation that received the P1.3-billion out of the P1.4-billion commissions from the Code-NGO at the time of the controversial transaction materialized.

In one of the hearings by the House committee on good government and public accountability, Anna Marie Karaos, chairman of Code-NGO, replied in the affirmative when asked by House Deputy Minority Leader and Zambales Rep. Milagros Magsaysay that Soliman’s husband was part of the board of directors of the PEF which got 90 percent of the P1.4 billion earned by the Code-NGO.

Reports said that the transaction allowed the Code NGO to earn a P1.4-billion commission on a government bond flotation in 2001 and was allegedly engineered by Marissa Camacho-Reyes, the sister of Arroyo’s former Finance Minister Jose Isidro Camacho. –Virgilio J. Bugaoisan, Daily Tribune