Category: Investigative Reports

Senators JV Ejercito & Grace Poe: Foundations in aid of election

mcmangahas Leave a comment

THEY WERE supposedly set up to uplift the lives of those in need. Yet in their first few months of operation, they served a rather different, yet specific, purpose: to promote the candidacy of two legislative aspirants who eventually won and are now occupying seats in the Senate.

Senator Joseph Victor ‘JV’ G. Ejercito of the United Nationalist Alliance (UNA) and Senator Mary Grace Poe-Llamanzares of Team PNoy were each supported during the campaign by organizations formed in their name: JV Para sa Bayan Movement Inc. and the Friends of Grace Poe Foundation Inc., respectively.

These two non-stock associations were registered in the Securities and Exchange Commission (SEC) close to and right at the start of the campaign period — JV Para sa Bayan on Dec. 14, 2012 and Friends of Grace Poe on Feb. 15, 2013. The names of these foundations immediately emerged as major donors of the two candidates, buying ads in bulk in the thick of the campaign.

Read the full story: Foundations for elections

The creation of foundations during an election cycle or even prior to the elections, of course, is no longer surprising to Commissioner Christian Robert S. Lim of the poll body’s Campaign Finance Unit (CFU) and Commissioner Kim S. Jacinto Henares of the Bureau of Internal Revenue (BIR). Henares even notes that historically, many foundations have been set up in the name of politicians such as Friends of Mar for Interior and Local Government Secretary Manuel ‘Mar’ A. Roxas II and the Yellow Ribbon Movement for President Benigno Simeon ‘Noynoy’ C. Aquino III.

Lim says, however, that foundations, just like any other campaign donor, are bound by campaign-finance rules. For instance, he says, a foundation is not allowed to buy airtime for a particular candidate without the candidate’s consent or acceptance. Foundations are also not allowed to receive money from prohibited contributors such as public or private financial institutions, entities that hold government contracts, civil servants, and foreigners and foreign corporations, among others.

Under revenue regulations, a non-stock association or a foundation may enjoy certain tax exemptions if it applies for and is issued a tax exemption certificate by the tax authority. She ticks off two basic requirements a foundation must meet for this: one, it must be registered with the Securities and Exchange Commission (SEC), and two, it must get an accreditation from the BIR to determine its exemption.

Take the case of Friends of Grace Poe Foundation. Its incorporation papers say that it was formed to promote the advocacies of Mary Grace Poe; to help those who are much in need; to undertake medical missions and other projects; and to exercise all powers provided under Section 36 of the Corporation Code. Yet it has emerged as paying for the majority of Poe’s campaign advertisements. The latter was borne out by various advertising contracts and broadcast orders gathered by PCIJ from the Education and Information Department (EID) of the Comelec.

Election laws also require media entities to submit a series of advertising documents to the Comelec at certain deadlines during and after the campaign period. One such set of documents shows that advertiser Friends of Grace Poe, broadcast network ABS-CBN, and agency Mejah Inc. entered into an advertising contract worth P5.11 million on April 22, 2013. This contract is composed of 20 15-second TV ads that were supposed to be aired from April 27, 2013 to May 6, 2013. The advertising contract bears the signature of Grace Poe accepting the donation made by Friends of Grace Poe.

Poe-Llamanzares reported receiving 60 separate donations, 11 of which were made by six companies or non-individuals, in the Statement of Election Contributions and Expenditures (SOCE) she filed with Comelec nearly a month ago. Friends of Grace Poe, however, was not among the donors she listed in her SOCE.

Firms in the red, gov’t contractors top donors of Senate bets, parties

Ed Lingao Leave a comment

IN ELECTIONS PAST, the top contributors to the campaign war chests of most candidates and their parties were big businessmen, captains of industry, and prominent tycoons who clearly had enough money to throw around.

But a curious trend has emerged from the May 2013 midterm elections: The big donors are now corporations with small to moderate capital, with some of them apparently operating at a loss or surviving on a few thousand pesos in profit.

The latest investigative offering of the Philippine Center for Investigative Journalism looks into this curious development of how small businesses with little capitalization and no clear revenue stream are apparently able to afford huge multimillion peso donations to their favorite candidate. It is a development that has piqued the interest of both the Commission on Elections, which is supposed to look into the accuracy of the donor reports submitted by the candidates, as well as the Bureau of Internal Revenue, which now wants to look into how companies that claim not to make enough money have more than enough to bankroll someone’s candidacy.

The first of this two-part report was written by PCIJ Executive Director Malou Mangahas and PCIJ Research Director Karol Ilagan. Read Part 1 here.

Part 2 is now available here.

‘Loaves, fishes, and dirty dishes’: Water woes in 2003 linger still

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IN THE BEGINNING, there was water, a public service.

In 1997, water service came under private control.

S1xteen years hence, are we better off, with good and ample water supply, and service priced at reasonable rates?

Or, with regulators and water firms now fighting over taxes and disallowed expenses, and water rates likely to rise again, are we back to where we started?

Read back:

How it all started: Loaves, fishes, and dirty dishes

Before 1997, this was situation: Low pressure and illegal water siphoning caused contamination in the pipes, waterborne diseases were common, and the Metropolitan Waterworks and Sewerage System (MWSS) was among the most unpopular agencies of government.

In 1995, the MWSS served only about two-thirds of the nearly 11 million people living in Metro Manila and nearby towns. A full 3.6 million did not have running water. The utility lost more than half of its water — and millions of dollars in revenue — to leaks and theft. And service was erratic, often shutting off during the day.

But in 1995, too, there were 480 cases of cholera in Manila, compared with 54 cases in 1991, according to the Department of Health. Reports of severe diarrhea-causing infections peaked in 1997 at 109,483 — more than triple the 1990 number. Coupled with the prospect of water shortages, these disease outbreaks created an atmosphere of crisis that convinced people to accept a private sector role in the operation of the water utility.

In 1997, the Manila Water Corp. and Maynilad Water Services Inc. won concessions to take over Manila’s waterworks, splitting the metropolis into western and eastern water zones. Although water regulators dispute exact figures, within five years the companies had connected about 2 million more people to the network.

(When they won their concession contracts in 1997, Maynilad Water was owned by the Lopez family and Ondeo, a subsidiary of the French water company Suez, and Manila Water, by the Ayala family. Today, the Metro Pacific and Consunji groups own Maynilad, while the Ayala family has remained in Manila Water.)

In 2003, six years after the Maynilad and Manila Water took over, what was touted to have been a “miracle” in the water sector had started to look prosaic, a virtual mirage. Many of the old problems — debts, underfunding, broken pipes and water theft — have resurfaced and even worsened. And the system itself was starting to crumble yet again.

Water losses, the decades-old bane of the MWSS that eventually prompted its privatization, have remained high and even worsened in the western half of the metropolis. This has perpetuated a chronic shortfall in water supply.

The cost of water tripled following a series of rate increases imposed starting in 2001. In January 2003, rates were to jump a further 81 percent in the east zone and 36 percent in the west zone.

Six years ago in 2003, MWSS regulators had started to notice some things truly odd: The private companies increasingly make their own rules. Having privatized the water, government regulators say they are powerless to impose restrictions or demands on the companies who generally do as they please.

Read our latest report:

* Tough love: MWSS, water firms clash over taxes, disallowed expenses

* Sidebar: What is rate rebasing?

In 2003, the International Consortium of Investigative Journalists (ICIJ) launched a global investigative reporting project, “The Water Barons” in half a dozen countries, which have seen “the explosive growth of three private water utility companies in the last 10 years.”

The situation, ICIJ said, “raises fears that mankind may be losing control of its most vital resource to a handful of monopolistic corporations.”

The Philippine report titled “Loaves, fishes, and dirty dishes” was authored by PCIJ Fellow Roel Landingin.

In large measure, the ICIJ reports are prescient in all the fear and concerns they raised. What the reports said 10 years ago had turned into real-life situations and problems.

In Europe and North America, ICIJ wrote in 2003, analysts say that, “within the next 15 years these companies will control 65 percent to 75 percent of what are now public waterworks.”

But because they have worked closely with the World Bank and other international financial institutions “to gain a foothold on every continent,” these companies “aggressively lobby for legislation and trade laws to force cities to privatize their water and set the agenda for debate on solutions to the world’s increasing water scarcity.”

What was the companies’ pitch? “The companies argue they are more efficient and cheaper than public utilities.”

What was the critics’ lament? “Critics say they are predatory capitalists that ultimately plan to control the world’s water resources and drive up prices even as the gap between rich and poor widens.”

What was everyone’s worry? “The fear is that accountability will vanish, and the world will lose control of its source of life.”

The world’s — and the Philippines’ — water woes from 10 years ago linger still.

Tough love? MWSS, water firms clash over taxes, disallowed costs

mcmangahas Leave a comment

WATER IS LIFE, indeed, but it is not cheap, not free.

Water is a story that has hogged the headlines in recent weeks. And that is all because of a new petition to adjust water service fees, amid a new round of rate rebasing talks between the government and the two water firms in Metro Manila, to the vigorous protest of consumer groups.

Water, indeed, is about big money and big players that had been allowed by government to pass on to consumers the big amounts of income taxes due from their operations.

This time, however, the government regulator, the Metropolitan Waterworks and Sewerage System (MWSS), seems poised to do its job — regulate the water firms.

The MWSS has asked for the financial records and documents of the water firms, issued disallowance notices for some of their expenses and donations to charity, and questioned the fat salaries of their executives.

Most important of all, in an apparent show of tough love, the MWSS seems ready to stop the water firms from billing their income taxes as operations costs — billions of pesos that they have been passing on to consumers since 2007.

This report by PCIJ Fellow Roel Landingin comes with two data graphics, and a sidebar about what rate rebasing is.

Read our latest report:

* Tough love: MWSS, water firms clash over taxes, disallowed expenses

* Sidebar: What is rate rebasing?

Manila Water, whose income tax holiday ended in 2006, has effectively been passing on its income taxes to consumers from 2007 to 2012, said water regulators. Its total provision for income taxes during the six-year period was P7.3 billion, according to the company’s annual reports submitted to the Philippine Stock Exchange.

Maynilad, which was losing money for a number of years, enjoys an income tax holiday until 2016. The rates approved for Maynilad, however, included a provision for income taxes as its income tax holiday was approved after the rates were set in 2008. Its provision for income taxes amounted to only P1.7 billion from 2007 to 2011, the latest available filed with the Securities and Exchange Commission.

This month the MWSS is expected to announce water rate adjustments. The new rates are supposed to take effect next month. Consumer groups have asked the Supreme Court to freeze water rates, with a plea for a temporary restraining order, but the tribunal has not acted on their plea.

And while the MWSS resolution on income taxes will cut water rate adjustments, regulators cannot yet say if it is big enough to actually lower prevailing rates or may simply temper tariff increases.

The regulators also have to adjust the applied discount rate (ADR), the guaranteed return that water companies are allowed to earn, to take into account the change in the water firms’ tax status. This could partially offset the rate-lowering effect of disallowing them from passing on income taxes to customers.

Journos, netizens of Luzon: This PCIJ seminar is for you!

mcmangahas Leave a comment

CALLING all journalists, bloggers, and netizens in Luzon:

Are you into investigative reporting?

Do you care enough about human rights, political clans, governance, and how we must keep safe and stay alive, so we may all write another day?

This third is a series of PCIJ seminars is for you.

You may apply to attend it until Wednesday next week, July 10, 2013.

Check out this notice from the PCIJ Training Desk:

Application deadline: July 10, 2013
Seminar schedule: Aug. 22-25, 2013

Who may apply?

Mid-career and senior Filipino journalists, netizens, and bloggers. Researchers, anchors, producers, editors, news managers, freelance reporters, contributors, and stringers of print, TV, radio, and online media may apply. Netizens and bloggers writing about public policy issues are eligible.

Seminar Topics

- Media Killings, Political Violence, and Impunity in the Philippines
- Political Clans: Past and Future Links
- The Government’s Purse: Tracking the State’s Resources
- Ethics and Safety: Field and Newsroom Judgment Calls
- The Fundamentals of Investigative Reporting
- Tracking the Investigative Trails
- The Paper Trail: Understanding, Connecting, and Organizing Documents and Databases
- The People Trail: The Art of the Interview
- Putting the Story Together (for print, broadcast, and multimedia)

Funding
The PCIJ will cover:
- Round-trip transportation from the participant’s place of work or residence, to the seminar venue.
- Board and lodging during the seminar.

The PCIJ will also provide a modest fellowship grant for story proposals that will be approved during or immediately after the seminar.

Application Requirements

1. Completed application form with two references. (download here).
2. One or two samples of work discussing public policy, development, human rights, or governance issues.

For print and online: link to the stories or attach copies of stories in Word or PDF.

For TV and radio: script, story concept/treatment, talking points, or research materials used in the broadcast story. A recording of the broadcast may also be submitted.

Work samples may be submitted via:
a. Mail – enclose the CD or USB flash disk containing the recording of broadcast
b. E-mail – attach the material or send the link.

Selection Process
Applicants will be selected based on the following criteria:
- Track record or experience in covering public policy issues.
- Demonstrated interest in doing in-depth reports on governance, development, and human rights issues.
- Potential for playing a key leadership role within his/her organization or media community.

Successful applicants will be notified within 10 working days after deadline.

The seminar graduates will be accorded priority slots in the subsequent Advanced Investigative Reporting Seminars that PCIJ will conduct in 2014.

Sending your application

By email:
Email address: training@pcij.org
Please state ‘Application to Basic IR Seminar’ on the subject line
Note: We will acknowledge receipt of all submissions. If you do not receive any reply within three working days, please resend your application and move a follow-up email or call (02) 410-4768.

By fax:
Telefax: (02) 410-4768
Please write ‘ATTN: PCIJ Training Desk’ on the fax cover sheet
Note: After sending a fax message, please call (02) 410-4768 to confirm if all the documents had been transmitted successfully.

By mail:
The Training Desk
Philippine Center for Investigative Journalism
3/F Criselda 2 Bldg., 107 Scout de Guia St.
Brgy. Sacred Heart, Quezon City 1104
Note: We will acknowledge receipt of mailed applications via email or text.

Questions?
Please contact the PCIJ Training Desk at (02) 410-4768 or training@pcij.org

More PCIJ Regional Seminars

Mindanao (selection process over)
Seminar schedule: July 25- 29, 2013

NCR (Metro Manila)
Application deadline Aug. 1, 2013
Seminar schedule: Sept. 19-22, 2013

What to expect at the seminar

Through combined onsite and field learning sessions, the seminar aims to enhance the participants’s investigative reporting skills and practice, and offer a framework for analyzing media killings and safety issues in the context of governance, the culture of impunity, and the presence of political clans and private armed groups in many parts of the country. The seminar also seeks to highlight the role of the police and human rights organizations as vital sources of information for journalists.

The seminar will feature lecture-discussions and workshops to identify potential risks and practical safety tips when covering dangerous assignments. A Story Development Workshop will give participants an opportunity to pitch story proposals that the PCIJ may consider for fellowship grants and editorial supervision.

Experts from the academe, national media organizations, the police, human rights agencies and organizations, and data repository agencies will lead the discussions.