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Net worth vs. P6.7-B pol ads bill: Top bets in debt, deficit spending?

Last of Three Parts

CAN we trust them with the public purse?

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At the rate they are splurging billions of pesos on political ads, with nothing or little to show in their asset records as their own spending capacity, the candidates for president and vice president in the May 2016 elections are possibly the least smart amongst us when it comes to math and money.

In truth, if they have been dipping into their pockets for pesos for their ads, nearly all of them would now be in grave deficit spending status. Or even in the throes of bankruptcy.

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Altogether, four of the five seeking the presidency, six seeking the vice presidency, 22 aspiring to be senators, and few dozen local and party-list hopefuls have acquired a record P6.69 billion worth of pre-campaign political ads, mostly on television, and some on radio and the newspapers.

Three wannabe presidents – Manuel ‘Mar’ Roxas II of the Liberal Party (LP), Jejomar ‘Jojo’ Binay of the United Nationalist Alliance (UNA), and Grace Poe of the Galing at Puso (GP) slate — had even made it to the Billion-Peso Club of ad spenders ahead of the official 90-day campaign period that started on Feb. 9, 2016.

According to Nielsen Media’s monitoring reports, as of Jan. 31, 2016 and by the rate card of media agencies, the political ads featuring these three as “advertiser” and “product” had reached the billionth mark: P1,050,065,096 for Binay, P1,016,414,123 for Poe; and P969,173,267 for Roxas.

And while he decided to run only in December 2016, a fourth candidate for president, Rodrigo Duterte of the PDP-Laban Party, had also recorded a bill of P146,351,131 for his pre-campaign ads.

Six wannabe vice presidents, meanwhile, have incurred similarly significant expenses for their solo ads:

  • P419,002,456 for Duterte’s official running mate Alan Peter Cayetano;
  • P273,856,544 for LP’s Maria Leonor ‘Leni’ Robredo;
  • P252,503,856 for Ferdinand ‘Bongbong’ Marcos Jr.;
  • P29,673,341 for UNA’s Gregorio ‘Gringo’ Honasan II;
  • P8,953,380 for Antonio Trillanes IV; and
  • P2,776,000 for GP’s Francis ‘Chiz’ Escudero.

Caps in law, net worth

Even then, they are probably poised to splurge millions of pesos more to get elected. Election laws allow a candidate for national office to spend during the official campaign period up to P10 per voter, or a maximum of P540 million for the nation’s 54.3 million registered voters, to cover all his or her allowable expenses.

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But the 2014 statements of assets, liabilities, and net worth (SALN) of the candidates show no evidence that any of them can finance multi-million-peso campaigns, let alone billion-peso ones. Nearly all of them have little to modest net worth and even the more affluent ones would have gone bankrupt by now if they financed their pre-campaign ads on their own.

For the candidates for president, here’s what their 2014 SALN numbers, compared to their pre-campaign ad expenses, reveal:

  • Roxas declared a net worth of P202,080,453 and cash on hand/in bank of P24,833,667. He incurred pre-campaign ad expenses of P969,173,267. If he spent his own money, he would be on deficit spending by P767,092,814.
  • Binay declared a net worth of P60,250,983 and cash on hand/in bank of P38,843,866. He incurred pre-campaign ad expenses of P1,050,065,096. He would be on deficit spending by P989,804,113.
  • Poe declared a net worth of P89,464,819 and cash on hand/in bank of P1,071,406. She incurred pre-campaign ad expenses of P1,016,414,123. She would be on deficit spending by P926,949,304.
  • Duterte declared a net worth of P21,971,733 and cash on hand/in bank of P13,846,733. He incurred pre-campaign ad expenses of P146,351,131. He would be on deficit spending by P124,379,398.

Wannabe vice

Four of the six candidates for vice president declared much less in net worth, and Marcos, a little more. All together though, they all would be on the path to penury, going by their own expensive ad buys:

  • Robredo declared a net worth of P8,032,124 and cash on hand/in bank of P8,049,124. She incurred pre-campaign ad expenses of P273,856,544. She would be on deficit spending by P265,824,420.
  • Honasan declared a net worth of P21,225,616 and cash on hand/in bank of P11,058,816. He incurred pre-campaign ad expenses of P29,673,341. He would be on deficit spending by P8,447,625.
  • Marcos declared a net worth of P200,598,008 and cash on hand/in bank of P8,000,000. He incurred pre-campaign ad expenses of P252,503,856. He would be on deficit spending by P51,905,848.
  • Cayetano declared a net worth of P23,314,540 and cash on hand/in bank of P8,500,000. He incurred pre-campaign ad expenses of P419,002,456. He would be on deficit spending by P395,687,916.
  • Trillanes declared a net worth of P5,549,000 and cash on hand/in bank of P2,300,000. He incurred pre-campaign ad expenses of P8,953,380. He would on deficit spending by P3,404,380.

By these metrics, only two – Escudero and People’s Reform Party candidate for president Miriam Defensor Santiago – remain in surplus-spending status. Escudero had acquired, by Nielsen Media’s data as of Jan. 31, 2016, too few ads; Santiago had not run any pre-campaign ads at all.

Escudero in 2014 declared a net worth of P6,049,082 and cash on hand/in bank of P3,237,947. He incurred pre-campaign ad expenses of P2,776,000. Assuming he used his personal funds, he would be on surplus spending by P3,273,082.

Santiago, meanwhile, declared a net worth of P73,033,539 and cash on hand/in bank of P48,480,291 in her SALN for 2014.

A donor’s story

Of course, many candidates, asked by reporters recently about who financed their political ads, have pointed to donors they will not name as yet as their source of funds.

If they kept their money to themselves and let donors bankroll their election bids, it would be fair to assume that several of these candidates would remain awash in wealth. They would, however, be quite seriously and deeply – and gravely for the nation – awash in political debt.

According to a scion of a family that is among the consistent high-roller donors in Philippine elections, it is the candidate – or the candidate’s camp – that seeks out donations, rather than donors actively selecting someone to support.

In an interview with PCIJ, the donor family member says that it all starts with a gentle, secret pitch by the candidate or his/her emissary, in a visit to the donor.

“Nobody offers you (money) out of the blue,” says the source. “The candidate has to make an effort. You have to sell yourself.”

The source recounts that the pitch starts thus:”’ Boss, mabigat ito, kaya lang, heto gastos. Tatakbo ako pero maraming gastos. Ito ang survey, okay rating ko (Boss, this is serious, but the expenses would be big. I’m going to run but there are a lot of expenses. Here’s the survey, my rating’s okay)’.”

“That is why,” the donor continues, “surveys are so important. Because of the buzz surveys create, donors will start meeting with you, the money will come.”

The deal: Just win!

“Donors usually look to No.1 and No. 2,” says the source. “At some point, you will stop asking, they (donors) will approach you.”

Donor and candidate “talk constantly to each other” in the course of the campaign and between them, the source says, there is usually just one expectation or exchange: “You must win.”

No audit or reports have to be submitted by the candidates at all to high-roller donors. Says the donor: “If you give money as a campaign donor, you give, you lose it, it’s lost to them. You don’t expect reports, not before, not during, not after the campaign.”

The source confirms that all these deals are paperless transactions. Donations typically flow in crisp peso bills, cash. “Actually,” says the source, “you could fit 100 million pesos in the trunk of a car. Kasya ‘yun doon.”

 

Why donate?

Indeed, peso power drives Philippine elections. Candidates get to power with a lot of help from those with a lot of pesos to bankroll their campaigns.

What’s in it for donors? The source tells PCIJ: “It’s status, it’s influence. It’s because people would know you are influential, and most important of all, you know yourself you are influential.”

Not all large donors are as candid or self-absorbed, however. Many, if not most, in fact are hesitant to publicly acknowledge their donations to the candidates’ election campaigns.

In 2010, several major donors who were interviewed by PCIJ had noted the negative perception of the public and their peers that big donations in the tens or hundreds of millions of pesos are attempts to buy future government favors or posts. Said one prominent businessman: “Donations are seen in the same light as bribery.”

And yet the funds continue to pour in, albeit from a surprisingly small pool of donors. Over the last three presidential elections, PCIJ’s database shows, the donors to the candidates for high office make up an exclusive club of those who come from old-elite families, big business entities, big law firms, and even some parties that have secured contracts with the government.

Even fewer still are the repeat donors and families of donors who may be called the frequent spenders or high rollers in national elections since 1998.

In contrast, the number of citizens donating small amounts to the candidates – either out of faith in the politics or policies that the latter espouse, or for benign or self-serving reasons — remains negligible.

In the May 2010 elections that Benigno S. Aquino III won, only a few hundred donors (308 to be exact) contributed to the seven candidates for president and the top three political parties. The number is smaller still – 48 – if only the donors who gave P10 million and above are counted. These four dozen donors accounted for almost 80 percent of total funds of P1.58 billion raised for the campaign of the 2010 presidentiables and the three parties, including the candidates’ own money. At the time, there were 50.7 million registered voters.

In the May 2013 elections, only 2,368 donors — 2,174 persons and 194 corporations — contributed the P1.69 billion that went to the campaign purses of the 12 winning senatorial candidates and their political parties. Of the total, only 421 made up what could be called “The Millionaires Club,” or those who gave P1 million to P4.9 million each. In fact, only 10 individual donors accounted for P315.8 million or 18.6 percent of the total contributions to the 12 candidates who won. There were then 52.75 million registered voters.

Public good, duty

To be sure, donating to candidates in elections is a public good, and a public duty of all voters, according to Commissioner Luie Tito F. Guia of the Commission on Elections, in a previous interview with PCIJ. This is key, he said, to making elections inclusive and accountable. But transparency — who donated how much to which candidates — is yet a third important feature of good elections, Guia added.

Without donor support, elections are a journey to certain debt or financial ruin for the candidates. And it’s money that they may not be able to recover at all – at least by legal means — once they are elected.

That includes the country’s next chief executive whose gross monthly salary will rise to P400,000, or more than twice more than what President Benigno S. Aquino III currently receives, courtesy of a recently passed law on salary standardization in the government service.

Multiplying this amount by 13 months, Aquino’s successor will earn only P5.2 million a year in gross salary. Multiplying this by six years, the next President’s full tenure in office, means a total gross salary of only P31.2 million. A 32-percent tax applies to this salary grade, though, which means that the victor in this veritable game of chance and money called elections will take home just P21,216,000 for a six-year service to the nation.

The numbers do not make sense. A candidate would have to heap a ton of money to get elected but would earn just a lump, by lawful means, if he or she wins.

The next President’s six-year gross earnings won’t even buy many ad placements on TV.

A copy of the “2016 Elections Political Advertisement Rate Grid” of ABS-CBN network that PCIJ obtained from an ad agency puts the value of a 30-second TV ad spot for “Prime A Programs” and “Post-Prime A Programs” at P830,969, and for “Platinum Prime A Programs,” P997,163.

With the president’s total take-home pay in six years, the winner in the upcoming polls could buy just 25 units of 30-second ad spots, or about 13 more minutes of indubitable fame or infamy on national TV, if he or she wishes to. –Malou Mangahas, With research and reporting by Vino Lucero and Earl Parreno, PCIJ, March 2016

READ: What ‘truth in advertising’? Pol ads a free-for-all game

PCIJ 4

SIDEBAR

 Top bets zip it, won’t talk

ONLY THREE candidates responded by email and text message to letters that PCIJ sent to 23 of those running for president, vice president, and senator last week to inquire about who funded their composite P6.7 billion pre-campaign political ad expenses. Several others merely acknowledged receipt of the letters while the rest or 16 of those queried did not in any mode or manner.

PCIJ moved mail to 23 of the candidates for the top national positions to ask about the political ads they had aired or published from March 2015 to January 2016, or before the 90-day official campaign period started on Feb. 9, 2016. PCIJ selected them for querying because each of them had racked up considerable pre-campaign political ad expenses – some reaching hundreds of millions of pesos and even billions of pesos — based on Nielsen Media monitoring reports. All 23 were given up to five days to respond.

The most secretive of the lot were the candidates of the Liberal Party who say they are sworn to continue the “Daang Matuwid” legacy of President Benigno S. Aquino III. The LP bets, except for Senate President Franklin Drilon, did not send a reply at all.

Not one of the three candidates who belong to the Billon-Peso Club of ad spenders — presidentiables Jejomar ‘Jojo’ Binay, Grace Poe, and Manuel ‘Mar’ Roxas II — talked about their secret donors’ identities.

Mum’s the word, too, for four candidates for vice president — Alan Pete Cayetano, Gregorio ‘Gringo’ Honasan II, Ferdinand ‘Bongbong’ Marcos Jr., and Maria Leonor ‘Leni’ Robredo — who had spent handsomely on the ads.

Twelve candidates for senator who are also big ad spenders, including seven from LP, would not talk either.

The PCIJ letters raised the same questions but focused these on the specific amounts, by the rate card of media agencies, that the candidates had separately incurred:

  • The official 90-day campaign period started only on Feb. 9, 2016 but your political ads had started airing months earlier. Why? What was your purpose in running a massive volume of pre-campaign ads?
  • Did you spend your own money to pay for these ads? If yes, how much of your own funds did you use?
  • Did you receive donations from friends, allies, and supporters to pay for these ads? If yes, how much in donations did you receive to pay for these ads? Can you please identify these donors?
  • The National Internal Revenue Code imposes a 30-percent tax on donations from “strangers,” in this instance, yourselves and your donors. Do you know if your donors had remitted to the Bureau of Internal Revenue (BIR) the commensurate taxes on their donations to your campaign?
  • The Anti-Graft and Corrupt Practices Act (Republic Act No. 3019) prohibits elective and appointive public officials from “accepting directly or indirectly a gift from a person other than a member of the public officer’s immediate family, in behalf of himself or of any member of his family or relative within the fourth civil degree, either by consanguinity or affinity, even on the occasion of a family celebration or national festivity like Christmas, if the value of the gift is under the circumstances manifestly excessive.”  Please comment.

Navotas Rep. Tobias ‘Toby’ Tiangco responded on behalf of Vice President Binay, although the PCIJ letter was first coursed through the latter’s daughter, Makati 2nd District Rep. Abigail Binay.

The verbatim reply from Tiangco, one of Binay’s spokespersons, reads: “Hi, Malou. I cannot confirm or deny the figures because the records are not with me. With over P53 Million voters, TV advertisement is the fastest way for a candidate to get his/her message across.  You can be rest assured that this is done in a manner that is in accordance with all existing laws. BR, Toby.”

Interestingly, Senate President Franklin Drilon, who is running for re-election, was the first to respond, although he did not actually receive a letter from PCIJ. It is possible that because he is the chairman of the Liberal Party, Drilon might have seen the letter that PCIJ sent to the LP national headquarters’ email. (The LP headquarters acknowledged receipt of PCIJ’s letter.)

Through both email and text, Drilon wrote: “Dear Malou, For the record, I did not have any political ad before the campaign period started on Feb 9. In fact, I aired my ads on radio and television only on Mar 1, 2016. Warm regards. Sen Frank Drilon”

PCIJ had reported that, according to Nielsen Media’s monitoring reports, Drilon had incurred P39,000 worth of ads, by the rate card of media agencies.

In reply to Drilon, PCIJ wrote:

“Thank you for your quick response. However, the detailed entries of Nielsen Media’s monitoring reports showed that you may have actually incurred pre-campaign ad expenses, but at an amount so small compared to your fellow Liberal Party candidates for senator, president, and vice president.

“By Nielsen Media’s reports, you incurred a total of P39,000 in pre-campaign ads for six 30-second radio spots worth P6,500 each.

“These aired in December 2015 with you as ‘product’ or ‘advertiser,’ under the ‘Social Concerns’ subcategory of ad placements by ‘GOVERNMENT AGENCIES & PUBLIC UTILITIES.’

“The ad spots on DYFM-AM/837 KHZ BOMBO NEWS & VIEWS MORNING EDITION using your ‘ATING MAPAGKAKATIWALAAN/ILONGGO’ ad material.

“Hope this helps. Thanks.”

For a second time, Drilon responded. His verbatim reply: “Hi Malou, I am totally surprised by Neilsen’s attribution of political ads to me. Six 30-seconders in Dec 2015? For P39,000? Does that make sense as a pre-campaign political ad? No, and I deny having made that placement. There must be a mistake. I have NOT produced, or recorded, or aired, a 30 seconder in December 2015. Since it is on radio, I wonder if Neilsen can send me the alleged recorded pre campaign political ad. I reiterate that I started airing my political ads on March 1, as the cost is prohibitive. Thanks. Frank.”

PCIJ stands by its story. Nielsen Media monitored the radio ad that Drilon aired in December 2015 on Bombo Radio-Iloilo. Here is the audio clip of Drilon’s ad.

Meantime, Sen. Antonio Trillanes, who is running for vice president, and Bayan Muna Party-List Rep. Neri Colmenares, who is running for senator, seem to have gotten rather confused about their election and tax laws, based on their separate replies to PCIJ.

PCIJ had focused its queries on the candidates’ pre-campaign ads. The two gave replies founded on election laws applicable to spending during the campaign period.

Trillanes wrote that “before the campaign period kicked off on 9 February 2016, we placed radio advertisements in select local radio stations nationwide as part of our efforts to raise consciousness among the Filipinos about my advocacies. It’s definitely not a massive volume compared to the other candidates.”

Yet while he said, “I did not pay for these ads,” Trillanes did not identify who donated the money to pay for them. Instead, he said that “donations, if any, would be duly reported to COMELEC (Commission on Elections) as required by law.”

On the matter of the National Internal Revenue Code’s clause that a 30-percent donor’s tax must be paid from donations of strangers, Trillanes said: “We have paid the withholding tax required by the same Code for the pre-campaign ads.” He did not, he added, violate any provisions of the Anti-Graft and Corrupt Practices Act.

Colmenares, a lawyer by profession, responded the longest to the PCIJ’s letter.

On the first question, he wrote: “First, I need to clarify that I did not spend P22 Million on TV/radio ads as reported by Nielsen. This was probably based on TV/radio rate card for the infomercials aired before the election period. If it is possible I would like to request for a copy of the same as I am also interested when and how many times these supposed ads were aired.

“What was actually spent is way below that because of huge discounts concerned media establishment have given. The amount spent can in no way be considered massive spending if compared to the hundreds of millions of pesos that presidential, vice presidential, and other senatorial candidates have spent for their ads.

“We went on radio and TV to discuss our campaign for P2,000 SSS pension hike, reduction of high power rates and abolition of pork barrel. When the bill was transmitted to Pres. Benigno Aquino for approval we called on pensioners and the people through radio and TV to press the President to sign the P2,000 SSS pension bill passed by the Congress.

“These infomercials were aired to make the people aware of the issues relevant to my advocacies.”

On the question whether he used his own money or donations to pay for his ads, Colmenares replied: “Most of the funds for these infomercials came from friends and other advocates. My contribution to the same was very minimal amounting to only a few thousand pesos.”

Wrote Colmenares: “The bulk of the money we paid for the infomercials came from those who want to support the advocacy campaigns such as my relatives, colleagues in Congress, colleagues and supporters from the legal profession, friends, former classmates, supporters and friends from other professions, and from three fund-raising events we have held.”

He continued: “I will definitely and officially report the donors required by our Election laws to be reported and during the period set by the Comelec. The election laws provide for the proper time within which to disclose to the government and to make available to the public these information, and that is after election date. The wisdom behind the law, and I strongly agree with this, is to protect the supporters and donors of the candidate from any political backlash or harassment pending the determination of the winner. Either they will be harassed for supporting me or other candidates will harass them for donations. Rest assured that I will report all that is required by law to be reported during the period set by the Comelec and that any amount we receive for electoral campaign purposes will be used strictly for election purposes and not for my personal account.”

BIR Commissioner Kim Jacinto-Henares in an interview told PCIJ that the 30 percent donor’s tax applies to the donations that candidates received before the official campaign period, but Colmenares wrote that “donations for the purposes of elections are tax-exempt. (See Section 13, RA 7166; Section 99 C of NIRC). There is no need to pay tax. In any case, we will eventually report all donations to the Comelec and pay whatever fees and taxes that may be required by law.”

The chief of staff of LP candidate for senator Risa Hontiveros also emailed PCIJ in response to its queries. The reply, however, seemed to have been aborted midway, reading: “Dear Ms. Mangahas, This is Elvira Escoto, ES of Ms. Risa Hontiveros. We would like to acknowledge receipt of your email and at the…. Best, Viray.”

‘Viray’ is the nickname of Escoto. PCIJ has asked Escoto if she could please complete her response letter, but she has yet to do so as of this writing.

Another LP senatorial bet, Francis ‘Kiko’ Pangilinan, acknowledged receipt of PCIJ’s queries. The House administration did the same on behalf of Leyte 1st District Rep. Ferdinand Martin Romualdez and Valenzuela City Rep. Sherwin ‘Win’ Gatchalian. Not one of the three sent further replies.

In the case of two more candidates for president — Grace Poe and Rodrigo Duterte– and LP candidate for vice president Maria Leonor Robredo, PCIJ received quick assurances via text and email from their respective chiefs of staff that they would reply to the letters.

Duterte’s camp actually acknowledged receipt of the queries thrice. Duterte’s lawyer told PCIJ: “Good evening, Ma’am Malou. I sent you text msg this afternoon saying we acknowledge receipt of your email. Received niyo po? Salamat po. Team Duterte.”

A second deputy, Edwin Espejo, who works with Duterte’s Media Team, also wrote: “Got it. Forward it to the group that produced and placed them (ads).”

Duterte’s chief of staff Bong Go replied as well: “Good am po. Will have it checked.”

Poe’s senior staff, Judith Sto.Domingo, meanwhile sent this response: “Copy po mam. thanks.”

For Robredo, a staff personnel responded to PCIJ: “Good morning mam. this is marisa. i am currently with Cong Leni here in Cebu. She will look into it mam. I will remind her po. thank you.”

Up to now, Duterte, Poe, and Robredo have yet to reply to PCIJ’s queries. In an interview conducted weeks earlier, however, Robredo had told PCIJ that LP leaders had assured her that they would take care of campaign funds. She had told the party’s officials, she said, that she had not wanted to run because she had no money. So when it came to funds, “hindi ko alam ‘yan, sila in charge (I know nothing about that, they’re the ones in charge),” Robredo said.

Apparently, though, most other candidates for the highest positions of leadership in the country are not quite ready to reveal the secrets of who bankrolled their mammoth pre-campaign political ads that, Nielsen Media’s monitoring reports showed had reached P6.7 billion from March 2015 to Jan. 31, 2016.

Those who received letters but did not respond to the queries are:

From the Liberal Party:

  • Manuel ‘Mar’ Roxas II
  • Maria Leonor ‘Leni’ Robredo
  • Leila de Lima
  • Teofisto ‘TG’ Guingona III
  • Panfilo ‘Ping’ Lacson
  • Francis ‘Kiko’ Pangilinan
  • Jericho Petilla
  • Ralph Recto
  • Joel Villanueva

From the other political parties:

  • Grace Poe
  • Rodrigo Duterte
  • Ferdinand ‘Bongbong’ Marcos Jr.
  • Alan Peter Cayetano
  • Gregorio ‘Gringo’ Honasan
  • Sherwin ‘Win’ Gatchalian
  • Francisco ‘Isko Moreno’ Domogoso
  • Sergio ‘Serge’ Osmena III
  • Ferdinand Martin Romualdez
  • Francis Tolentino

So who paid for the billions they had all together spent on pre-campaign ads? To these candidates, the answer to that seems to be something they would not grant voters the right to know. — PCIJ, March 2016

READ:  Pre-campaign ads hit P6.7B: Bribery, tax evasion, impunity?

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