08 October 2011
Debt & Public Finance
Early this week, we were informed that the House Committee on Good Government and Public Accountability was about to formalize its Report on its Inquiry into the controversial Poverty Eradication and Alleviation Certificates or PEACe Bonds. A copy of this Report now being circulated among Committee members for signing shows that the House Committee will come out with two findings – that the issuance of the PEACe Bonds was regular and conformed to prescribed procedures, and that the Philippine Government obtained a fair and reasonable value from the proceeds of the sale of the PEACe Bonds.
The House Committee Report on the PEACe Bonds is expected to be released any day next week, days before 16 October 2011 – the maturity date of this bond. The Philippine Government will pay a whopping amount of P35 billion inclusive of principal and interest for the P10-billion, 10–year treasury zero coupon notes awarded in October 2001 by the Arroyo government to the Rizal Commercial Banking Corporation in behalf of an NGO consortium, the CODE-NGO and re-sold by this NGO to RCBC Capital.
This transaction, when it became public then, immediately raised a storm of controversy in civil society and government circles and even some financial quarters.
The Freedom from Debt Coalition was the first to call public attention to the PEACe bonds and raised issues of public interest. There are two issues:
1. the processes relating to the inception, bidding, issuance and sale of these bonds tended to show irregularity, and,
2. being a debt-creating mechanism, there was nothing definite and certain as to how this debt would be used for poverty eradication and alleviation, except the endowment fund coming from the P1.34 billion out of the P1.49 billion net gain of CODE-NGO that would allegedly go to supporting anti-poverty projects.
Since then, the controversy has remained. New questions have even come out. On 23 August 2010, the House of Representatives adopted House Resolution No. 58, which was sponsored by Representatives Rufus B. Rodriguez and Maximo B. Rodriguez Jr., directing the House Committee on Good Government and Public Accountability to conduct an inquiry into the PEACe bonds.
Unfortunately, despite the seriousness of the issues raised against the PEACe bonds, the huge debt burden the bonds imposed on our people and the wide public attention and participation it generated, the House Committee inquiry conducted was devoid of transparency and all-sidedness and seriously wanting in thoroughness.
First, only two public hearings were conducted, one in 24 November 2010 and the other in 16 March 2011. The Committee deliberation was terminated on the latter date.
Second, known oppositors to the PEACe Bonds like Freedom from Debt Coalition were not informed and were not invited to these hearings. Only those who have every reason to defend the bonds like CODE-NGO, RCBC Capital and Peace and Equity Foundation, apart from resource persons from Government, namely the Department of Finance (DOF), Commission on Audit (COA) and the Bureau of Treasury (BTr) were asked to come to the hearings.
And third, the House Committee inquiry failed to go into how the funds created from the proceeds of the PEACe Bonds were spent, although this is mandated by House Resolution No. 58.
This House Committee inquiry smacks of “lutong makaw.” The so-called public hearings became secret proceedings in effect.
The Freedom from Debt Coalition demands that the House Committee Report be suspended, that the hearings be extended to allow others, especially those who are critical or who oppose the PEACe bonds, to make their presentations, that the hearings be made public, and that the investigations include an audit of how the funds raised by the PEACe Bonds were spent.
We owe this to the people, to all of us who find ourselves obliged to pay P35 billion this coming 16 October 2011.The Executive CommitteeFreedom from Debt Coalition