MANILA, January 15, 2003 (STAR) By the Philippine Center for Investigative Journalism

Ramos administration (July 1992 — June 1998):

• Invited the Argentine firm Industrias Metalurgicas Pescarmona Sociedad Anonima (IMPSA) to invest in the Philippines and laid the groundwork for Impsa’s participation in the power sector.

• Offered Impsa the project to rehabilitate the Kalayaan hydro plant in Laguna. Impsa in turn submitted an unsolicited proposal. In December 1994, then Presidential Legal Counsel, now Supreme Court Justice Antonio Carpio issued an opinion saying that there were no legal obstacles to the Impsa proposal as the Build-Operate-Transfer Law had already been amended to accommodate such proposals.

• Allowed Impsa to amend its proposal to include the Caliraya and Botocan plants, also in Laguna, with the new proposal costing over $400 million.

• Ironed out legal problems in the contract. When Ramos stepped down, he wrote an aide memoir saying that the Impsa contract was one of the projects to be favorably endorsed to the new administration.

Estrada administration (July 1998 — Jan. 20, 2001):

• Signed the contract to rehabilitate the Caliraya-Botocan-Kalayaan (CBK) plants, with Estrada himself as witness.

• Filed libel charges against the Manila Times for reporting, in February 1999, that Estrada had stood as "unwitting godfather" to the signing of an anomalous contract. Later, the Manila Times was sold to Estrada crony Mark Jimenez, whom Estrada himself identified as a lobbyist for Impsa.

• According to then National Power Corp. president Federico Puno, the government "bent over backwards" to accommodate Impsa despite Impsa’s failure to post the $70 million security deposit after at least three deadline extensions, which Puno said was already enough to warrant a cancellation.

• Gave in to Impsa’s request for a government guarantee. Finance Secretary Edgardo Espiritu signed a "performance undertaking" that was a thinly worded guarantee. This undertaking was issued because Impsa was facing financial difficulties because of the 1997 Asian crisis. The guarantee or undertaking was intended to help the firm raise funds to finance the CBK project.

• Still unable to raise the funds to undertake the project, Impsa brought in the American firm Edison Mission Energy. EME’s entry required numerous amendments to the contract, including the drafting of a Second Accession Undertaking that now listed EME as a partner in the CBK project.

• Impsa’s lenders continued to insist on a ruling from the Department of Justice before it could provide funds for the security deposit. The DOJ ruling would ensure that CBK’s financial obligations were guaranteed by the government.

• In January 2001, then Finance Secretary Jose Pardo asked the DOJ to issue this ruling. Pardo withdrew his request in light of political developments at that time.

• In the second week of January 2001, Philippine ambassador to Argentina Carlos Villa Abrille accompanied Impsa officials to Estrada’s Greenhills home, asking him to intercede with DOJ secretary Artemio Tuquero for the issuance of a DOJ ruling. Estrada, however, was ousted a few days later.

Arroyo administration (Jan. 20, 2001 to present):

• Seeing the political winds blowing the other way, Villa Abrille and Impsa official Francisco Ruben Valenti shifted their focus to the new administration. They were seen at the Linden Suites, headquarters of Gloria Macapagal Arroyo, just before she was sworn in as the next president at the EDSA Shrine.

• Justice Secretary Hernando Perez approved Impsa’s request for a DOJ ruling, dated Jan. 24, 2002, just four days after Mrs. Arroyo took over the presidency. The ruling removed legal obstacles to the implementation of the contract and committed the government to cover CBK’s obligations.

• Shortly after the issuance of the DOJ ruling, Impsa posted the $70 million security deposit. By Feb. 7, 2001, the NPC formally turned over to Impsa the management and operation of the CBK power complex. What’s wrong with the Impsa contract?

Research by the Philippine Center for Investigative Journalism

• The government - and the Filipino taxpayer - pays Impsa $4 million (about P21.6 billion) every month for rehabilitating the Caliraya-Botocan-Kalayaan hydroelectric plant in Laguna. National Power Corp. (Napocor) engineers say that despite such payment, little work has been done on the CBK project.

• Negotiations for the contract illustrated the lack of transparency in multibillion peso deals and showed how various officials of the Ramos, Estrada and Arroyo administrations gave special favors and unusual accommodation to Impsa.

• The haste which marks the issuance of the DOJ opinion of Jan. 24, 2001 by then Justice Secretary Perez showed at the very least the lack of due diligence on Perez’s part. The opinion was dated only two days after he was appointed, giving him little, if any, time to read and review the boxes of documents covering the Impsa deal.

• DOJ opinions are issued in response to a request from specific executive departments. Perez’s DOJ opinion was not made in response to any request from any Arroyo department secretaries. It was also unpublished and unnumbered, meaning it was not enrolled in the DOJ’s records section.

• Through the DOJ ruling, Impsa got a government guarantee, which means that its financial obligations in the CBK plant would be borne by the government in case the company is unable to pay. The amended Build-Operate-Transfer law prohibits such guarantees for unsolicited proposals such as Impsa’s.

• The government pays Impsa in advance. Napocor has paid Impsa more than $50 million for the first 18 months of its operation, even if Impsa had only invested $9 million in the plant. Impsa has also increased what it charges Napocor from the original P0.65 per kilowatt-hour in the contract to P0.81.

• In July 2002, the IPP (independent power producers) review committee recommended looking into the possibility of taking legal action against Impsa.

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