SOURCE: Press and Public Affairs Bureau
House Speaker Pantaleon D. Alvarez led lawmakers in questioning the nature of projects being undertaken by the National Economic Development Authority (NEDA), including their lack of income benefit to the government.
The Speaker and members of the committee on banks and financial intermediaries chaired by Rep. Ben P. Evardone (Lone District, Eastern Samar) questioned the NEDA projects during a briefing Tuesday by Philippine Deposit Insurance Corporation (PDIC) and Development Bank of the Philippines (DBP) officials on the Asian Infrastructure Investment Bank (AIIB), a new Asian-based lending institution where the country is a member.
PDIC President Robert Tan said the AIIB is a collaborative effort among 57 member-countries from Asia and around the globe, and a brainchild of Chinese President Xi Jinping and Premiere Li Keqiang.
But as Tan discussed the National Economic and Development Authority (NEDA)-approved projects that are currently in the pipeline, such as Phase 1 of the Metro Manila flood management and the proposed bus rapid transit (BRT) projects, lawmakers noted that the: 1) projects for funding have no direct income benefit to the government; 2) projects seem concentrated only in Metro Manila; and 3) Congress is notified only after the consummation of the projects.
“The projects mentioned are the ones where we cannot get direct income benefit. Walang dams to provide irrigation which will address the shortage of rice. We’ve been importing rice every year and yet, the government is not investing in infrastructure so we can produce rice for ourselves” Alvarez said.
The Speaker asked the bank officials to reconsider what projects should be supported for funding. “These should include projects where we have direct benefit. Yung puwede natin i-recover yung expenses ng gobyerno,” the Speaker said.
Alvarez urged the concerned House committees to also require the NEDA to submit the list of proposed projects of all agencies to Congress prior to its approval since the annual national budget emanates from the House.
“May I request the committee on banks as well as the committee on appropriations to require the NEDA to submit the list of projects for approval because if they approve (these projects) without the concurrence of the appropriate committees, every year these will be liabilities of the Republic of the Philippines,” Alvarez stressed.
The Speaker said the budget comes from the House of Representatives, so it is just proper that lawmakers are informed about what projects the NEDA will approve for funding. “This will enable us to examine if these projects are worthy of being funded,” said the Speaker.
In support to the Speaker’s manifestation, committee vice chairman Rep. Henry S. Oaminal (2nd District, Misamis Occidental) proposed that congressional consent must first be secured before government projects are evaluated and approved by the NEDA, and included in the National Expenditure Program (NEP).
“In my observation, the NEDA only informs Congress of loan obligations when the projects are already consummated,” Oaminal said.
Evardone asked why the proposed projects presented during the PDIC briefing are concentrated in Metro Manila when the present administration’s thrust is to develop the countryside.
“One of the priority visions of President Rodrigo Duterte is to develop the countryside. I think the regional projects, including in the Visayas and Mindanao, are now also being considered seriously for proposals. We will follow up with the NEDA and find out what are the possible projects that will be for Visayas and Mindanao,” Evardone said.
The committee requested for a list of projects submitted or for submission to the AIIB.
Rep. Jose I. Tejada (3rd District, North Cotabato) questioned how can the lawmakers promote economic activities in the regions if infrastructure projects are lacking in the provinces. “Everything should be on a national basis.” said Tejada.
Meanwhile, during the DBP briefing, Alvarez directed the bank officials, headed by its Chairman former Senator Atty. Alberto Romulo, and President and CEO Cecilia Borromeo to identify, study and submit all documents pertaining to a 2015 Commission on Audit (COA) finding that three clients of the bank were supposedly granted a total of P5.6 billion in loans.
Alvarez detailed the board resolutions that were issued to grant said loans. He said the board resolutions contain so many exceptions, exemptions and deviations from existing credit policies given to the borrowers, which may have been detrimental to the government and caused eventual loss in government funds.
One borrower from the energy sector was given P2.1 billion on September 30, 2015, under Board Resolution (BR) No. 0325, to partially finance a 50-megawatt solar project in Northern Luzon. The borrower was given an interest rating of six at the time of approval, with 16 deviations from the bank’s credit policy, according to the Speaker.
Alvarez said another board resolution (BR No. 0019) dated January 28, 2015 approved the bank’s participation of up to P2 billion for a power company. He said the loan proceeds were used to redeem the power company’s outstanding preferred shares and fund its other general operating purposes.
On June 10, 2015, Alvarez said the bank approved the loan of a holding company under BR No. 0207, with 11 exceptions/deviations. “The holding company is the largest mass housing developer in the Philippines in terms of units, from years 2011 to 2013, as reported by the Housing and Land Use Regulatory Board,” said Alvarez.
Then on July 16, 2015, Alvarez said the bank purchased P1.5 billion of the P9-billion fixed rate bonds of the holding company, exercising an over-subscription option of up to P4 billion from the original offering size of P5 billion. The bond issuance was intended to refinance an existing debt obligation of the borrower and its subsidiaries, and convert short-term debts into long-term liabilities.
The COA report stated that the “foregoing loan facilities which were granted and allowed maximum exceptions and deviations from existing credit policies may result in a higher credit risk and eventual loss in government funds if the bank will not be able to collect from the borrowers.”
“We are not worried of small borrowers, the bank assuming credit risks. What we are worried is one or two persons, given this huge amount of money, enjoying all the exceptions and adjustments that would expose the capital of the bank to high credit risks,” Alvarez said. He then requested the bank to submit the names of the borrowers and necessary documents to determine if there is a need to investigate the previous board of directors for violations they may have committed.
The DBP officials assured the committee that while could not give the details during said hearing, they will comply with the committee’s request, consult with the COA representative in the DBP, and bring the necessary documents in the next hearing. / CM