‘Bawang’ gang same favored group in onion scam

MANILA, Philippines—The same groups and officials accused of being behind the garlic price rises last year, also allegedly connived to manipulate the country’s onion supply using the same modus operandi to influence the market value of another Filipino kitchen staple, according to a Department of Justice (DOJ) report.

“We find that the same personalities, using similar modus operandi to corner the import permits of the BPI (Bureau of Plant Industry) of the DA (Department of Agriculture), can manipulate the onion supply and affect its prices,” said Justice Secretary Leila de Lima in a statement yesterday.

“The government will not allow economic justice to be blatantly violated,” she said.

In a comprehensive report on the Philippine onion industry, dated Dec. 22 but released only yesterday, the DOJ rebuked the DA for failing to watch over the country’s onion stock and to properly determine when imports should be allowed.

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The report pointed to the alleged collusion of some BPI officials with traders for the selective issuance of import permits despite standing guidelines aimed at protecting fair competition.

It recommended that the DA’s National Onion Action Team (NOAT), an agency that is supposed to protect the domestic onion industry, be abolished as “it only served the interests of a few.”

Alcala implicated

The government earlier filed in the Office of the Ombudsman charges against 127 people for the garlic price manipulation, among them former and current officials of the BPI and traders.

A whistle-blower had implicated Agriculture Secretary Proceso Alcala in the garlic racket, but De Lima earlier said there was “still insufficient evidence” to charge her colleague in the Cabinet.

Report to Aquino

Shortly after BPI Director Clarito Barron was fired from office in July last year, Alcala appointed him as a technical assistant. The DA source said that Barron was a relative of the wife of Alcala.

Barron was booted out of office due to public outcry against the spike in garlic prices after the supply was manipulated by a cartel allegedly condoned and endorsed by Alcala as claimed by whistle-blower LilybethValenzuela.

According to the DA Office of the Secretary, Barron remains BPI director (agency chief) but was appointed as “special technical assistant for field operations service” effective July 9, 2014.

As was announced in July, Paz Benavidez II, assistant secretary for regulations, is officer in charge of the BPI “until Barron’s special assignment is recalled.”

Barron “is given a special assignment to spearhead efforts on the research, development and production of superior seeds, and planting materials of garlic, in line with Republic Act 7308 or the Seed Industry Development Act of 1992.”

The field operations service chief is Undersecretary Emerson U. Palad, who is also DA spokesperson.

The 24-page report, which is expected to be submitted to President Aquino, looked into the price of onion—the red creole and yellow granex (commonly known as white onion) varieties—from January to September last year, which flucuated between P99.9 per kilo in the opening months, to a low of P78.87 around midyear.

The country depends mostly on locally produced onions but imports yellow granex from China, India and the Netherlands during the months when there is a shortage, the report said.

The price of these onion imports has been on an uptrend, the report said, influenced by a system where the supply has been “cartelized.”

In the report, the DOJ’s Office for Competition (OFC) said the same groups behind the garlic price manipulation also controlled the importation of onion, “cornering” import permits “allegedly in collusion with some BPI officials.”

Same favored groups

“The importation of onion in the country is controlled by the very same groups involved in the garlic cartel,” the report said, in reference to groups and firms operating behind farmers’ cooperatives and associations.

“The findings and conclusion are the same [as in the garlic cartel investigation]: There is no real competition in the onion industry particularly in the importation side. Free competition is stifled among the legitimate and accredited onion importers owing to the allocative mechanism employed,” it said.

DA’s failure

The OFC cited the “selective issuance of [import permits] to a favored group of importers, the use of dummies, and the revalidation of [import permits] despite very clear guidelines against this.”

It said the DA had “failed to accurately monitor stock inventory and determine when imports should be allowed, despite full knowledge that the country’s onion supply is insufficient to cover demand.”

The DOJ office said the agriculture department should abolish a 60-40 scheme in the allocation of import permits, saying this system had enabled “particular groups… to corner the grant of import permits” and resulted in “the perversion of markets.”

It said the NOAT should be abolished, saying conflict of interest within the unit had failed to “ensure a balanced representation from both government and private sectors.”

The OFC further noted that the garlic and onion industry investigations “proved that the commodity sector is vulnerable to anti-competitive market behavior.”

It recommended the implementation of competition reforms to prevent abuse. The OFC has drafted an administrative order for the President’s consideration, but this was not released to the media.

“The President may consider directing all heads of departments, bureaus, commissions, agencies and offices engaged in sector regulation, particularly those involved in regulating basic necessities and prime commodities, to conduct a market assessment review to determine possible competition reforms,” said the report. With reports from Gil C. Cabacungan and Ronnel Domingo

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Garlic cartel also cooked up onion racket—DOJ report