Aguirre orders review of Duterte financier’s banana lease contract

Justice Secretary Vitaliano Aguirre II. EDWIN BACASMAS/INQUIRER FILE PHOTO

The Department of Justice (DOJ) is planning to “revisit” the lease-property contract between the government and a Davao banana exporter owned by the biggest campaign financier of President Duterte for being unfavorable to the government.

Justice Secretary Vitaliano Aguirre II has ordered a review of the 25-year lease contract between the Bureau of Corrections (BuCor) and Tagum Agricultural Development Inc. (Tadeco) after receiving complaints that the firm’s annual payments—both lease and profit sharing—were  only a fraction of the prevailing market rate.

“We’re planning to revisit the agreement. I’ve received some complaints on how the deal was grossly disadvantageous to the government,” Aguirre told the Inquirer.

Aguirre, who declined to reveal where the complaints were coming from, admitted it would be difficult to renegotiate the terms at this point, considering that there was still 12 years remaining in the contract.

“It will be difficult but we will try our best,” said Aguirre, who noted that the contract was renewable for another 25 years.

He said the purpose of the review was to maximize the government’s resources to generate funds for President Duterte’s social and infrastructure programs.

Based on the contract between the BuCor and Tadeco, the government would get a guaranteed payment of P26.542 million per year for using the Davao Penal Colony’s 5,308 hectares of land, or P5,000 per hectare.

The rent is based on the  “guaranteed production share” of the BuCor based on its annual average export volume 3,692 boxes (13 kilograms each) of bananas produced per hectare. The contract mandated a 10-percent automatic increase every five years.

Tadeco also agreed to give the BuCor a share of the profits from 4.04 centavos to 40.54 centavos per box on annual export volumes of 1.399 million boxes to 6.993 million boxes a year.

An Inquirer source, who knew about the deal but was not authorized to speak for the DOJ, said that Tadeco’s rent was just a fifth of the prevailing P25,000 per hectare rent, which meant that the government should be getting at least P130 million a year. The source also noted that bananas were sold at $12 (P600) per box to China, the Middle East and Japan.

Aguirre said that the review would cover the profit sharing and export volumes declared by the firm.

Joint venture

But Alex Valoria, the president of Anflo Management and Investment Corp.—Tadeco’s parent company—declined to answer specifically the questions raised by the Inquirer “as this is a live contract between two parties.”

“I can say however that the relationship between Tadeco and the Bureau of Corrections is a joint venture with the purpose of re-education and rehabilitation of inmates to ready them for eventual release to society together and in conjunction with the development of the (penal colony) lands covered in the joint venture agreement (JVA),” he said.

“One must look at the entire JVA and not pick and choose specific provisions,” he added.

Valoria said under the JVA, Tadeco paid the BuCor “many times more than the amount stated in the article below.”

Tadeco is owned by Davao del Norte Rep. Antonio “Tonyboy” Floirendo Jr., who contributed P75 million for Mr. Duterte’s campaign last year, the biggest donor based on the President’s report to the Commission on Elections.

Tadeco’s deal dates back to the Marcos administration when the first joint venture agreement was signed in July 1969 and consolidated into a fresh 25-year contract in September 1979.

A year before its expiry, the deal was renewed in May 1, 2003 between Floirendo’s father, Antonio O. Floirendo Sr. and the BuCor chief Ramon J. Liwag with then Justice Secretary Simeon Datumanong as witness. The elder Floirendo died in 2012.

Under the deal, Tadeco committed to use inmates from the Davao Prison and Penal Farm (DPFF) and pay them “minimum daily wages to the Bucor and providing them with the necessary emergency medical measures.”  Tadeco also agreed to pay “honoraria” to DPFF officials and employees engaged in the joint venture.

The BuCor committed to give Tadeco “free and uninterrupted use of the land,” prevent the entry of squatters and maintain peaceful operating conditions.

In case of a  dispute between the parties, a monitoring committee was mandated to “exhaust all efforts” and solve the problem amicably.  The deal barred both parties from instituting legal action without going first through the monitoring committee. —WITH A REPORT FROM ALLAN NAWAL, INQUIRER MINDANAO