MANILA, January 14, 2003 (STAR)  By Sammy Santos And Donnabelle Gatdula  - Cabinet officials of deposed President Joseph Estrada testified before the Senate yesterday that they did not approve the controversial $470-million build-rehabilitate-operate-transfer (BROT) deal between the government and Argentine firm Industrias Metalurgicas Pescarmonas Sociedad Anonima (Impsa).

Instead, they insisted that former justice secretary Hernando Perez was the one responsible for the "approval" of the BROT deal for the 750-megawatt Caliraya-Botocan-Kalayaan (CBK) power plant complex in Laguna.

But CBK Power Co. Ltd., Impsa’s local subsidiary, insisted in a statement yesterday that Estrada gave his finance secretary Edgardo Espiritu "full powers" to sign a government undertaking on the deal.

The Arroyo administration also maintained yesterday that the contract was signed during Estrada’s time.

In a press briefing at Malacañang, Energy Secretary Vincent Perez and acting Justice Secretary Merceditas Gutierrez took turns explaining that the Impsa contract was ‘perfected and finalized" during the Estrada administration. They also insisted the Arroyo administration did not guarantee Impsa-CBK’s loans to its creditors.

The two officials also said the legal opinion issued by Hernando Perez on Jan. 24, 2001 and released a week later was meant merely to reiterate that the contract was in correct form from a legal point of view.

"I just want to emphasize that the CBK-BROT agreement between Napocor and Impsa was definitely concluded during the Estrada administration," Vincent Perez said. "All in all, there were 10 agreements that were concluded or executed during the Estrada administration."

However, Espiritu’s successor, former finance secretary Jose Pardo, maintained that the Impsa deal did not take effect during the Estrada administration.

"The Impsa contract, as documents and intervening circumstances will prove, did not, I repeat, not become effective during the Estrada administration," Pardo testified during the Senate probe on the deal.

The investigation is being conducted by the Senate committee on government corporations and public enterprises, chaired by Sen. John Osmeña, but was attended only by his cousin Sergio Osmeña III.

Pardo testified that a month after Estrada granted him "full powers," Espiritu indeed signed the government undertaking (GU) on July 12, 1999. Espiritu was relieved from the DOF later that year.

On March 16, 2000, Pardo said Japan’s Ministry of International Trade and Industry asked him if the government would guarantee the loans incurred by Impsa for the project.

The issue was then forwarded to the Department of Justice for a legal opinion, Pardo said.

Former justice secretary Artemio Tuquero also testified that he signed a legal opinion on June 28, 2000 validating the government undertaking and clarifying that the undertaking did not extend a sovereign or government guarantee on the project.

After the issuance of Tuquero’s legal opinion, Pardo then signed on Dec. 18, 2000 a government acknowledgment and consent agreement (GACA) which, according to energy experts, was a standard agreement in all energy-related projects.

The agreement was signed at the height of Estrada’s impeachment trial at the Senate.

A question of guarantees

Pardo said he even insisted on inserting a clarificatory paragraph in the GACA, which reads:

"For the avoidance of doubt, it is understood that nothing in this letter agreement shall be construed so as to convert the Government Undertaking to a direct guarantee by the Government of obligations of CBK to the lenders under the Omnibus Agreement."

Pardo said he then sent the GACA to Federico Puno, then president of the National Power Corp. (Napocor), on Jan. 15, 2001, or only five days before Estrada’s ouster, with the admonition that another legal opinion be sought on the GACA.

Pardo said neither the GU nor the GACA was a direct or sovereign guarantee but was simply a "comfort letter."

On Jan. 24, 2001, or four days after Estrada’s ouster, then Justice Secretary Perez, one of the first appointees of the Arroyo administration, signed a legal opinion on the GACA.

But Sen. John Osmeña said that Perez’s legal opinion actually converted the "indirect guarantee’ in the GU and GACA into a "sovereign guarantee."

The committee chairman said Perez’s legal opinion included the key phrase, "The Republic of the Philippines has validly and effectively consented to the transfer of and assignment to the Lenders of all the CBK’s rights under the Government Undertaking."

Sen. Sergio Osmeña said such a "direct guarantee" was illegal because the government cannot guarantee the loans of a private contractor like Impsa, and that this was not even part of the original agreement.

CBK: No guarantees

However, Impsa’s local subsidiary CBK Power Co. Ltd., a joint venture between Impsa and US firm Edison Mission Energy, said in a statement that neither the GU nor the GACA guaranteed any loan incurred by Impsa.

"Impsa loans are not, and have never been, guaranteed by either Napocor or the national government," the Impsa statement read.

"It is absurd... to suppose that Napocor could guarantee any obligations. It is a widely known fact that Napocor’s credit standing is so abysmal that it cannot procure loans without a guarantor itself," Impsa said.

"Besides that," Impsa added," CBK Power Company is Napocor’s counter-party to the BROT Agreement. Napocor cannot act as guarantor for someone to whom Napocor would have payment obligations."

Erap testimony set today

Meanwhile, Estrada is set to appear before the Senate committee today to clarify his involvement in the controversial agreement.

Philippine National Police (PNP) chief Director General Hermogenes Ebdane Jr. said security preparations are in place to bring Estrada from a Quezon City military hospital, where he is being detained, to the Senate in Pasay City.

Ebdane said they have the go-ahead from the Sandiganbayan, which is trying Estrada for alleged plunder and other corruption charges, to bring Estrada to the inquiry.

"We will escort him to the Senate. There is already a resolution in connection with the appearance of the former president at the Senate," he said. "We have the contingency plan, the personnel and the mobility that is needed. He will be there on time."

About 1,000 to 1,500 police officers will be deployed to protect Estrada, said Deputy Director General Edgar Aglipay, PNP director for operations.

"We are prepared to provide the necessary security in any scenario," Aglipay said, but added that the final decision to bring Estrada to the Senate "depends on the situation from now to tomorrow (today)."

Estrada was invited to testify on the contract on Dec. 17 but the police did not bring him to the inquiry, claiming it needed a formal Senate notice ordering them to bring Estrada to the hearing.

Estrada had earlier claimed he turned down a $14-million bribe offer from his estranged friend Manila Rep. Mark Jimenez, who is now jailed in the Untied States for a string of criminal charges. - With Paolo Romero, Cristina Mendez

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