SC, Ombudsman clear PNOC head Cailao of plunder

MANILA, Philippines—The Supreme Court has upheld a ruling by the Office of the Ombudsman clearing Philippine National Oil Co. (PNOC) President and CEO Antonio M. Cailao and top executives of the PNOC Exploration Corp. (PNOC-EC) of graft and plunder charges.

The complaint against Cailao and PNOC-EC executives was filed before the Ombudsman by Crismel Verano, a former director of PNOC-EC. He claimed that Cailao, in conspiracy with PNOC-EC executives and some private parties, violated government’s procurement act for not conducting public bidding on a 2009 importation of 65,000 metric tons of Indonesian coal.

Verano also charged them for more than P123 million in alleged losses from said importation.

In March 2014, however, Ombudsman Conchita Carpio-Morales dismissed, for lack of basis, the plunder and graft charges. Verano elevated the case to the Supreme Court, citing grave abuse of discretion by the Ombudsman. In a resolution dated Aug. 18, but only released to the media recently, the Supreme Court dismissed Verano’s petition as baseless and without merit.

The coal was originally intended for the National Power Corp.’s Pagbilao Power Plant, but the latter refused to accept delivery pending negotiations for a trial burn. Thus, PNOC-EC incurred additional costs totaling P123.7 million for the diversion, transfer and unloading of the shipment to the Asian Terminals warehouse in Batangas.

All transactions documented

All transactions and delivery charges were fully documented and covered by official receipts. Later, PNOC-EC successfully sold the same coal stock to Top Coal Trading Corp. for the Sual Coal Fired Thermal Plant in Pangasinan, not at a loss as alleged by Verano, but with a profit of P2.7 million.

This was confirmed by a final report of PNOC-EC’s Internal Audit Department and verified by the Commission on Audit to the Ombudsman.

In clearing Cailao and others of alleged violation of the Government Procurement Reform Act, the Ombudsman relied on the opinion of the Office of the Government Corporate Counsel which said that coal trading is PNOC-EC’s regular and main business.

“The coal purchased by PNOC-EC is not intended for PNOC-EC’s consumption but for resale to other parties. Thus, the buying and selling of coal is not subject to the requirements of procurement under RA 9184, and does not need to undergo the process of bidding,” it stressed.

As to the allegation of plunder, the Ombudsman said Verano failed to show what specific acts committed by Cailao and the PNOC-EC executives constituted plunder under RA 7080.

“In fine, there is no showing that public respondents committed plunder and/or violation of the Anti-Graft and Corrupt Practices Act, hence they may not be faulted criminally. Neither may they, under the same facts and circumstances, be faulted administratively,” Ombudsman Carpio-Morales said in her March 11 joint resolution.

Cailao, a 30-year international multi-awarded banker and first Asian recipient of Citibank’s prestigious Chairman’s Club Award before joining PNOC as president and CEO in 2007, welcomed the twin rulings. “I never doubted I will be cleared of these malicious accusations against me,” he stressed.