Senator Joker Arroyo
Senator Joker Arroyo on Wednesday called for the immediate cash distribution to coconut farmers of assets now estimated at more than P100 billion acquired using a coconut levy collected from them during the martial law years.
Arroyo’s call in a statement to the Philippine Daily Inquirer came amid moves by Aquino administration officials and lawmakers to set up a trust fund for coconut farmers out of the proceeds of the assets, principally sequestered shares of stocks in San Miguel Corp. (SMC) awaiting final resolution of an appeal in the Supreme Court on ownership issues.
The mechanics of the trust fund are being discussed separately in a multi-agency task force created by President Benigno Aquino III and in bills before the House of Representatives and the Senate, all essentially aimed at reviving the ailing coconut industry and easing the lives of some 20 million impoverished Filipinos dependent on it.
“While no one can question the need to revive the coconut industry, the recent government policy is questionable in relation to the original farmers who were mandatorily levied during the martial law years to contribute to the coco levy fund,” Arroyo said.
Incidental beneficiaries
“There is no pronouncement from the government that the farmers would be cash recipients of the court decision. They would be incidental beneficiaries when the coconut industry is revived,” he said.
“The farmers parted with hard-earned cash, but they would not be given cash in return; they would be given benefits in kind, tools, seedlings, credit facilities, etc. The irony of it all is that the principal beneficiaries, the government and the industry, had not contributed to the coco levy fund.
“Why then were the farmers made to wait for 25 years, since Edsa, if they would be made to work all over again? They have grown old since they started during martial law paying the levy 35 years ago,” Arroyo said.
“After 25 years of waiting, will the coconut farmers ever regain the monies mandatorily levied on them for the levy fund during martial law?” he asked. “The prospects are obscure and their wait will remain.”
Questionable record
In a phone interview, Arroyo expressed doubts on the government’s ability to pursue a rehabilitation program for the farmers, citing its record in the sale of Fort Bonifacio and Villamor Air Base. He said that proceeds of the sale—some P52 billion— were supposed to benefit soldiers. “Others benefited from the sale of the military camps, not our soldiers,” he said.
Arroyo quoted the January 24 decision of the Supreme Court that the contested 24 percent of San Miguel shares “are declared owned by the government to be used only for the benefit of all coconut farmers and for the development of the coconut industry,” which is wracked by falling harvests as a result of aging trees and the impact of climate change.
“The government will thereby hold in trust P80 billion or thereabout, the calculated proceeds therefrom, ‘to be used only 1) for the benefit of all coconut farmers and 2) for the development of the coconut industry.’ In short, it cannot be used for any other purpose,” he said.
“The government’s reaction is to declare that it would rehabilitate the coconut industry, the second-mentioned beneficiary under the high court’s ruling; but silent in respect to the benefits for the farmers, the first-mentioned beneficiary,” he said.
He said that the mandatory levies collected by the Ferdinand Marcos regime from the farmers between 1973 and 1982 were the original monies that led to the creation of the United Coconut Planters Bank (UCPB), the Coconut Industry Investment Fund (CIIF), and resulted finally in the acquisition of 47 percent of shares of stocks in San Miguel.
Arroyo said the levy cases were originally pursued by the Presidential Commission on Good Government (PCGG), “because of its ill-gotten character.”
Biggest scam ever
PCGG has said that it had so far recovered some P95 billion in ill-gotten wealth since the ouster of Marcos in 1986 during the People Power Revolution.
The SMC shares were acquired in 1983 for P2 billion in a convoluted scheme, away from the glare of the controlled press under martial law. It was hatched by lawyers of businessman Eduardo “Danding” Cojuangco in Accra, then staffed by some legal eagles who would later be elected senators, and used funds deposited in UCPB from the levy—described by reform activists as nothing more than a “racket” and the biggest “scam” ever to be foisted on the nation. Cojuangco, President Aquino’s uncle and a major contributor to his presidential campaign in 2010, was then president of UCPB.
The shares were sequestered after the ouster of Marcos while the PCGG pursued investigations on allegations that they were part of the illegally acquired assets of the dictator and his cronies.
In April last year, the Supreme Court ruled that 20 percent of the SMC stocks—494.8 million common shares valued at P58 billion at P117.40 each—belonged to Cojuangco, dismissing claims that he used money deposited in UCPB to purchase the bloc in violation of his fiduciary trust. A dissenting justice described the decision as the “joke of the century.”
The Philippine Coconut Producers Federation, or Cocofed, has appealed the court’s Jan. 24 ruling on the 24-percent SMC shares acquired under the CIIF program in the complex scheme involving 14 holding companies. Cocofed is claiming the bloc on behalf of 1 million unnamed farmers. Originally 27 percent, the portfolio was whittled down by San Miguel’s expansion with the entry of the Japanese brewer Kirin.
The 24-percent portfolio consists of more than 700 million shares. This package was converted from common to preferred shares at P75 per share—in a deal approved by the Supreme Court in 2009 at a great loss to the farmers, given that at some point an SMC share fetched as high as P180. Dividends on this package had yielded P8.8 billion as of last January.
Another 4 percent bloc of SMC shares owned by former SMC boss Andres Soriano—127.8 million common shares worth P15 billion at P117.40 per share and including stock dividends—has been converted into treasury warrants and is likewise under sequestration.
Fears of fund raids
Militant farmers groups have demanded that Mr. Aquino issue an executive order directing the PCGG to release levy fund assets deposited in UCPB, but Malacañang officials said that the money, held in escrow, could not be freed until the court issues a final ruling on the Cocofed appeal.
Farmers groups have expressed fears that the levy funds would be used to fund the faltering Comprehensive Agrarian Reform Program, particularly an asking price of P10 billion as “just compensation” for the distribution of Hacienda Luisita. On Nov. 22, the Supreme Court unanimously decided to distribute the sugar plantation owned by the family of President Aquino.
However, Agrarian Reform Secretary Gil de los Reyes dismissed the claim. “To use the fund for purposes other than its intended objective is to deprive thousands of coconut farmers, from whom this fund was derived, of their rightful shares,” he said in a statement Wednesday.
Senate President Juan Ponce Enrile, in a hearing last December, expressed fears that unless Congress moves to pass urgently a bill setting up the trust fund for the farmers, the assets would be dissipated. The UCPB has been criticized for issuing questionable loans to San Miguel. The bank is now under a P30-billion government rehabilitation program. With a report from TJ Burgonio