MANILA, Philippines–A nephew of former Sen. Joker Arroyo is the latest to be dragged into the ever widening Senate subcommittee investigation of the alleged financial impropriety and corruption of Vice President Jejomar Binay and his family.
Dr. Jack Arroyo, an ophthalmologist, was accused Tuesday of being a dummy for Binay after it was revealed that Arroyo owned a 20-percent share in a joint venture between the University of Makati (UMak) and Systems Technology Institute (STI) to operate a nursing school in the city university.
Lawyer Renato Bondal made the allegations against Arroyo at the resumption of the hearings of the Senate blue ribbon subcommittee looking into allegations of official corruption against Binay when he was mayor of Makati City.
Private corporation
Arroyo, with Binay, was among the incorporators of the Philippine Health Educators Inc., (PHEI) which was established on Dec. 17, 2003, by UMak and STI as the “corporate vehicle to manage the College of Nursing” of UMak, according to Bondal.
The other incorporators of PHEI are Tomas Lopez, Eusebio Tangco, Monico Jacob, Yolanda Bautista, Ernesto Santos and Alfredo Alex Cruz, he said.
Bondal said the stockholders earned cash dividends totaling P106 million from 2004 to 2014 based on records from the Securities and Exchange Commission (SEC).
“The students’ performance is not improving but their earnings every year continue,” he said, adding that in last year’s nursing board examinations UMak ranked 92 among the schools with board passers. UMak had a passing rate of 67.21 percent last year, he said.
Binay resigned?
The Binay camp immediately dismissed as a “dud” the latest allegations against the Vice President. It said neither Binay nor any other Makati official got any dividends or shares of profits from the joint venture at any time.
“The Vice President merely represented the City of Makati in the joint venture project as evidenced by the City Council resolutions and ordinances. He never held any business interests therein in his own capacity,” said Binay’s political spokesman, Rico Quicho.
In his Twitter account, Quicho posted on Tuesday a letter purportedly showing that Binay had resigned as the chair and director of PHEI in 2010.
“Now that I am no longer the mayor of Makati City, I have the honor to convey my resignation as chairman and director of PHEI. I believe this would allow the Makati City Council to nominate its new representative at the PHEI board,” Binay said in the letter dated July 5, 2010.
No divestment
At the hearing, Bondal said Binay did not divest his interest in the joint venture because based on the 2014 general information sheet, he remains listed there along with Lopez and Tangco.
“Did the Vice President indicate in his statement of assets, liabilities and net worth that he has a stake in the company?” Bondal asked.
Arroyo’s part
Bondal said UMak and STI have 4,999.997 shares each of PHEI and Arroyo, 2,500 shares.
“Who is Jack Arroyo? He is an ophthalmologist and has no connection with any nursing school,” yet still got 20 percent shares in the company.
Bondal said Arroyo is the nephew of the former senator who has defended Binay’s son, Makati Mayor Jejomar Erwin “Junjun” Binay Jr., in the Senate subcommittee hearings.
“That is a question that only has one answer. Why was he (Arroyo) included in the PHEI when he has nothing to do with UMak, STI, Makati or any nursing school? The answer Mr. Jack Arroyo is a nominee/dummy of Vice President Binay in PHEI. That is the logical answer why Mr. Jack Arroyo has 20 percent,” Bondal said.
Arroyo is not part of UMak or STI, “but out of nowhere he becomes a 20-percent stockholder of that company. What is the logic?” he said.
No public bidding
Bondal questioned the joint-venture agreement between UMak and STI, saying that STI’s “competence was on IT and not nursing and medical services.” Likewise, he said no public bidding was conducted for the joint venture.
Bondal also said UMak is the only public university that has a joint venture agreement with a private company. He said other public universities like the Pamantasan ng Lungsod ng Maynila are run by the local government.
The discussion about the latest allegations against Binay was deferred for the next hearing on May 11, with Sen. Aquilino Pimentel III telling Bondal to “substantiate your allegations.”
‘No evidence’
Sen. Antonio Trillanes IV asked the subcommittee to invite Arroyo to the next subcommittee hearing. He also asked the Commission on Audit to conduct a special audit of the transactions of the joint venture.
In his statement, Binay’s spokesman Quicho said Bondal has no evidence to prove his allegations against Arroyo.
“Bondal, former Vice Mayor Ernesto Mercado, and their cohorts have been given a license by Senator Trillanes and his companions to malign the names of private individuals without so much as offering a shred of evidence to prove their allegations,” Quicho said.
The Binay camp released a timeline/fact sheet on the establishment of UMak’s College of Nursing that covered resolutions and ordinances of Makati City.
According to the fact sheet from the Binay camp, the Makati government on May 21, 2003, issued a resolution authorizing Binay to enter into a joint venture with STI for the setting up of an Institute of Nursing at UMak in 2003 and 2004. The joint venture company would offer a bachelor’s degree in nursing, a master’s degree in nursing, informatics and healthcare degrees.
Lawyer Renato Bondal, right, attends the Senate blue ribbon subcommittee hearing on Tuesday. With him are former Makati City Vice Mayor Ernesto Mercado (left) and Engineer Mario Hechanova, former head of the General Services Department, Makati. INQUIRER PHOTO / NIÑO JESUS ORBETA
The PHEI was incorporated and registered with the SEC on March 19, 2004. The UMak and STI were to own 40 percent of the company, it said.
“The balance of 20 percent supposed to be owned by STI was instead taken up by Dr. Jack Arroyo, at that time the president of American Eye Clinic, so that the UMak nursing graduates will have a chance to do their RLE and OJT stints in a modern, cutting-edge healthcare institution,” the fact sheet stated.
Based on the PHEI corporate structure, the STI/Doctors Group was to have a 60-percent share and equity of P7.5 million for the building of the nursing school, while Makati’s UMak share of 40 percent from rentals of existing facilities was to be converted into equity, until the 40-percent share was paid up.
Quicho said the funds due to the city of Makati were all accounted for and that the joint-venture project has generated P262 million worth of financial benefits to the city.
“Makati has benefited immensely from the joint venture. It has earned P42 million in dividends and around P70 million in rental, utilities and general education faculty fees,” he said.
No Makati funds used
Disputing the statements made by Trillanes on Monday, UMak president Tomas Lopez on Tuesday said Makati government funds were never used to subsidize the PHEI joint venture’s nursing school.
Lopez added that Makati residents are given full tuition and scholarships. He said the total value of scholarships granted to Makati residents from 2004 have already amounted to P140 million.
“Contrary to the claim of Senator Trillanes, the city does not pay any subsidy to the joint venture for the scholarships of the Makati students. On the contrary, the joint venture, to date, has paid the city P42 million in dividends and over P70 million in rental, utility fees, and the provision of general education faculty services to the nursing students,” Lopez said.
He added the nursing school charges fees of about P27,000 to non-Makati residents only.
On Monday, Trillanes claimed that Binay owned shares in the UMak College of Nursing and that he earned from it. The senator said Binay’s name was in the SEC documents. He said Binay was involved in a conflict-of-interest situation, graft and tax evasion because of this.
He claimed that Binay earned from the scholarships that were funded and paid for by city funds which he said goes straight to the Vice President’s pockets as he is a part owner of the school.
Not a stockholder
Lopez said Binay was not a stockholder in the joint venture which manages the nursing school.
“Vice President Binay ceased to be an officer and director of PHEI after his term as mayor ended in 2010. He received no financial benefits whatsoever while he was chair and director of PHEI,” the UMak president added.
As founding chair and incorporator, Binay represented the 40-percent shareholdings owned by the city while the remaining 60 percent were held by STI, Lopez explained.
“The city government of Makati did not infuse cash for its equity in the joint venture. Instead, rental payments were not charged to the joint venture until the city’s 40-percent equity, amounting to P5 million, had been covered,” he added.
Lopez said the university was proud of the joint venture as one of their initiatives in promoting public-private sector partnerships and which has generated at least P262 million in financial benefits to the city of Makati and its beneficiaries.
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