Ex-PNCC official: Dominguez was cleared in Radstock deal; so should we

Philippine National Construction Corp. official logo

MANILA — Why should officials of the state-run Philippine National Construction Corp. be charged for an anomalous P6.1-billion debt settlement, when the executives of the private creditor—including current Finance Secretary Carlos Dominguez III—were cleared?

Former PNCC chief operating officer Arthur Aguilar raised this argument, as he asked the Sandiganbayan First Division on Dec. 2 to set aside the Office of the Ombudsman’s indictment of the state firm’s officials for graft.

Dominguez was one of the directors of the British lending firm Radstock Securities, Ltd., which in 2001 bought out the rights of Marubeni Corp. to the Marcos-era debt owed by the PNCC, and then proceeded to sue the state firm.

After a series of legal setbacks, the PNCC entered into a compromise agreement with Radstock in August 2006 that allegedly contained concessions that were “contrary to law” and disadvantageous to the government. That agreement was voided by the Supreme Court in 2009.

State prosecutors in late November charged Aguilar and 17 other PNCC officials, as well as then Government Corporate Counsel Agnes Devanadera, with graft for entering into a debt settlement that allegedly caused injury to the government and gave unwarranted benefits to a private party.

But, Aguilar, in his 39-page motion for judicial determination of probable cause, told the Sandiganbayan that since the Ombudsman did not press charges against Radstock’s officials, there would be no conspiracy to speak of.

Conspiracy is an “essential element” under Section 3(e) of the Republic Act No. 3019, or the Anti-Graft and Corrupt Practices Act, according to Aguilar.

“Since the case against Dominguez was dismissed as there was no showing that Accused Aguilar and [the board of directors] conspired with the former… therefore, where did the OMB base its findings on the alleged violation of Section 3(e) against the accused?” the motion read.

Aguilar said that under the principle of equity and fairness, the PNCC officials “must likewise be exonerated on the basis of the same principles applied to Dominguez and other private respondents.”

He noted that since the Ombudsman did not issue a finding of impartiality in favor of Dominguez’s group, the dismissal of the case against the private individuals should also be applicable to the PNCC officials.

“It is highly absurd that the private individual alone, be absolved from all charges, without recognizing that there was no undue injury created and/or unwarranted benefits given by the accused,” the motion stated.

Aguilar also questioned why the PNCC officials were charged with violating Section 3(e) of the anti-graft law, even as the Ombudsman dismissed the complaint for Section 3(g) of the anti-graft law.

The provision prohibits government officials from entering into a disadvantageous transaction, but the Ombudsman no longer indicted the PNCC officials based on this provision because of the Supreme Court’s nullification of the contract in 2009.

Aguilar said that no injury could have caused to the government because “the Proposed Compromise Agreement self-destructed,” and no payment or consideration ended up being given to Radstock.

“Thus, the OMB itself impliedly admitted in its pronouncement, that there was no undue injury inflicted against PNCC and the government that could be translated into actual damage, which is a critical element of Section 3(e) of R.A. 3019,” the motion read.

Aguilar also said the Ombudsman should not have disregarded the Supreme Court’s finding that an earlier PNCC board, which acknowledged the liability in 2000 and triggered Radstock’s collection suit, was the one that actually caused undue injury to the government.

He also defended the compromise agreement as a means to put an end to litigation. He said that had the PNCC not settled Radstock’s claim, the creditor could have “totally wiped out PNCC’s assets” and the officials at the time could have been blamed instead for gross negligence and dereliction of duty.

The compromise agreement signed on Aug. 17, 2006 was meant to settle the collection suit pending before the Court of Appeals at the time. The PNCC agreed to recognize its liability of P6.185 billion, and to settle this, it gave Radstock 19 government-owned real properties worth P3.188 billion.

The PNCC also assigned shares to Radstock worth P713 million, equivalent to 20% of the state firm’s capital stock. The company also signed away half of the its 6% share in the gross toll revenue of the Manila North Tollways Corp., from 2008 to 2035, approximately valued at P1.287 billion.

Prosecutors claimed the PNCC’s assignment of “substantially all of its assets” in order to pay its obligations to Radstock was prejudicial to its other creditors, including the national government.

Besides Aguilar and Devanadera, also charged with graft were former PNCC president and chief executive officer Ma. Theresa Defensor, former PNCC board chairman Renato Valdecantos, former president and CEO Rolando Macasaet, and former board members Braulio Balbas Jr., Romulo Coronado, Basilio Cruz Jr., Victor Pineda, Erwin Tanunliong, Hermogenes Concepcion Jr., Raymundo Francisco, Ottomama Benito, Enrique Cuejilo Jr., Roy Eduardo Lucero, Fermin Lusung Sr., Jeremy Parulan, Marvin Paule and Antonio Villar.  SFM