Poe’s position on coconut levy stirs up hornet’s nest

A FARMER dehusks coconuts for copra at a coconut farm in Sibulan, Davao del Sur. INQUIRER PHOTO

(Last of two parts)

WHOEVER is elected President on May 9 will preside over the disposition—for better or for worse—of billions of pesos worth of assets illegally acquired using a martial law tax on copra that coconut farmers have been struggling to recover over the past 40 years.

On a campaign sortie in Lucena City last month, Sen. Grace Poe touched a raw nerve when she said that businessman Eduardo “Danding” Cojuangco had nothing more to do with the assets sequestered after the ouster of the Ferdinand Marcos regime for allegedly being part of the ill-gotten wealth of the dictator and his close associates.

“The shares are now with the government,” the presidential aspirant said, “but the government has its own idea on how to use it instead of giving it directly to the coco farmers.”

“Wow! Grace is really showing she does not understand the issue,” said Joey Faustino, executive director of the Coconut Industry Reform Movement (COIR), which is at the forefront of prolonged court battles to secure the assets. “Grace saying that there needs to be a survey of beneficiaries is again mouthing Danding. She fails to understand that it is for all coconut farmers as a class.”

Derisively called “Poejuangco” by her critics, Poe was specifically referring to 24 percent of the shares in San Miguel Corp. (SMC), redeemed two years ago by the beer-making giant for P71 billion, after the Supreme Court ruled in September 2012 that the securities belonged to the government.

The portfolio was part of the controlling  51 percent of SMC shares acquired in 1983 for P2 billion in negotiations conducted by Cojuangco using the coco levy funds in an elaborate scheme drawn up in the Accra law office, “The Firm” of that era.

The Accra lawyers—some of whom would later become senators, one a presidential aspirant and still another secretary of defense—had created 14 holding companies that were then used to buy into businesses, using the levy, on the pretext these would be for the development of the coconut industry.

Since beer-making had nothing to do with coconuts, the holding companies were used as cover for the acquisition of the SMC shares, according to court records and interviews with lawyers and activists.

In fact, the 24-percent SMC portfolio was designated CIIF-OMG in the court case because funding came from the Coconut Industry Investment Fund and the Oil Mill Group administered by the holding companies that were set up in the acquisition programs engineered by Cojuangco while he was president of United Coconut Planters’ Bank (UCPB).

UCPB was previously known as First United Bank (FUB), owned by the grandfather of President Aquino. Cojuangco held the option to purchase FUB. He put up the nearly P200 million needed for the acquisition. The money came from Maria Clara Lobregat of the powerful Philippine Coconut Producers Federation, or Cocofed, which had a cut in the levy collection.

Lobregat had justified the investment in the bank on behalf of 1 million unnamed farmers supposedly as part of Cocofed’s publicly avowed objective to provide farmers a steady source of agriculture credit.

‘Deception’

Half a dozen coconut oil mills and trading companies were also procured by the holding companies, along with the shares of SMC, one of the nation’s biggest conglomerates that has since diversified.

During the martial law regime, farmers selling copra received receipts, which they then exchanged for stock certificates in UCPB and the other companies.

After the ouster of Marcos in 1986, the Supreme Court ruled on Dec. 14, 2001, that there could be no private ownership of properties secured with government funds, such as the coco levy. Still, the farmers kept the stock certificates in their wooden chests in thatched huts. One woman in Lopez, Quezon province, said the papers, gnawed by termites at the edges, were “souvenirs of deception” from the Marcos years.

There are at least eight civil cases in connection with coco levy assets, one of which was the SMC case and which was split into two cases—one covering the 24-percent CIIF-OMG shares and the other the 20-percent bloc held by Cojuangco.

Some of the SMC shares, in the name of holding companies with voting rights for Cojuangco, were found in a safe—the combination pasted on its door—in Marcos’ room in Malacañang after he was ousted in the 1986 Edsa People Power Revolution.

Cocofed has opposed the recovery efforts, claiming the assets for its unnamed  1 million members. Cocofed’s clones continue the opposition to this day.

The CIIF-OMG shares originally comprised 31 percent of the 51-percent SMC acquisition—27 percent went to the holding companies (subsequently diluted and became 24 percent because of investments in the Japanese beer-maker Kirin) and another 4 percent, assigned to then SMC president Andres Soriano and his employees, that has been converted into treasury warrants, estimated to be worth P20 billion, now with SMC and subject to court litigation.

In an earlier separate ruling, on April 12, 2011, the Supreme Court held that the other 20-percent bloc of shares, worth P80 billion and designated as the Cojuangco case, belonged to the businessman. But activist farmers groups insist the court decision was flawed and planned to reopen the case.

Farmers angered

Because the SMC case is only one of the assets with an estimated value of more than P200 billion that the government is seeking to recover, the statement of Poe and her running mate, Sen. Francis Escudero, clearing Cojuangco has angered leaders of Kilus Magniniyog, the umbrella organization for various militant coconut farmers’ organizations.

“The unrecovered portion is still well within the control of Danding Cojuangco,” said COIR’s Joey Faustino. “Whoever becomes the next President, therefore will have the capacity to define steps on how the recovered funds may be utilized and what to do with the unrecovered portion.”

The Poe-Escudero tandem in the upcoming elections has been endorsed by Cojuangco’s Nationalist People’s Coalition—the country’s second largest political party that served as the vehicle the wily 80-year-old businessman used in his unsuccessful run for the presidency in 1992. Poe also has received logistical support from SMC.

The next President will appoint 10 new justices of the Supreme Court to fill the vacancies of those retiring in the next six years—a fact not lost on people with stakes in the unresolved coco levy cases of ill-gotten wealth gathering dusts in various civil courts.

Supertyphoon

In the meantime, the coconut industry has been hit by a series of disasters, requiring urgent infusion of aid. Supertyphoon “Yolanda” (international name: Haiyan) in November 2013 destroyed 30 million of the nation’s 300 million coconut trees. Crop infestation has hit vast tracts of coconut farms. Aging trees have become almost barren, requiring a massive replanting initiative.

And coconut farmers continue to live in crushing poverty, living on an income of P50 a day.

In March last year, President Aquino issued Executive Order No. 179 calling for the inventory and privatization of the levy assets and Executive Order No. 180 for the “reconveyance” of the assets and their utilization.

The Confederation of Coconut Farmers of the Philippines, a Cocofed clone, went to the Supreme Court to stop implementation of the Aquino directives.

Trust fund

Lawmakers have also introduced bills in the House of Representatives and the Senate seeking the establishment of a “coconut farmers and industry trust fund and providing for its management and utilization.”

Upon certification by President Aquino, the House approved the bill, but its Senate version remained pending.

The bills call for the setting up of a trust fund committee attached to the Office of the President that will exercise a wide range of powers. It will be composed of the secretary of agriculture as chair, the secretary of finance, the director general of the National Economic and Development Authority, the administrator of the Philippine Coconut Authority and five representatives (the House version has seven) from the coconut farmers’ sector. The President is empowered to appoint the farmer representatives.

The coconut farmers and industry development plan envisioned in the legislation also is subject to the approval of the President.

Kilus Magniniyog supports the moves in Congress—the preservation of the principal amount and the utilization of the annual interest earnings for projects that would directly benefit the small coconut farmers.

Leaders of the reformist coconut farmers’ movement say that there is still time in the remaining two months of the Aquino administration to pass the legislation.

High vs low risk

Sen. Cynthia Villar, chair of the Senate agriculture committee, is cautiously sanguine. When Congress opens in May, she told the Inquirer, the bill will be reopened for review and urgent approval.

“Considering that coconut farmers have waited for the funds for decades, we want to ensure that we will come up with a legislation that will benefit the coconut farmers and their families over the long term, not only in the immediate future,” Villar said.

She said there were differing positions on the following points:

How the cash assets will be invested (high-risk with high returns vs low-risk with low returns). “The funds should be protected at all costs, even from the risks associated with high-yielding investments,” she said.

How the remaining noncash assets worth approximately P30 billion will be sold with transparency.

What is the role of the Philippine Coconut Authority (PCA) in the process? There should be a clear distinction between the budget of the PCA from the national government and the funds from the coco levy assets.

Social justice

Marco Antonio Luisito Sardillo, a young volunteer lawyer in the farmers’ reform movement, said:

“The issue cannot be appreciated without viewing it from the perspective of social justice and distributive justice. While a finance perspective might say that it would be best to maintain the coco oil mills and UCPB, it is, ultimately, up to the coconut farmers to decide—because there is a context to this that is uniquely theirs. It is important to ask them what they want, because what they feel matters: If the bank that has never served them, and was used only to perpetrate this injustice upon them, who are we to say that it should be kept so. Just because it may be a ‘financially sound’ option doesn’t make it morally so.

“If we are to avoid repeating the mistakes of the past—where the coconut industry was lorded over and chomped up like the video game character Pac-Man—then it is important that the next President should declare himself or herself independent of those individuals and interests that seek to monopolize the coconut industry, and, instead, be someone whom the coconut farmers could really depend on.

“Put more bluntly, if the next President is going to be beholden to Mr. Cojuangco and captured by his interests, given the prerogatives and powers of the President over the utilization of the coco levies, then all these efforts—the decades-long legal battle—would have all been for naught. If it happens this way, then it would be the end of the beginning.”