‘Midnight fever’ hits risk-taking investors
MIDNIGHT FEVER: Some people seem to think that anything about to be done these days by the government involving a big amount of public funds is “midnight’ and therefore should be stopped for being illegal.
A funny example of this “midnight” fever is this case filed against Vice President Noli de Castro, National Housing Authority general manager Federico Laxa, Home Guaranty Corp. president Gonzalo Bongolan, Finance Secretary Gary Teves and R-II Builders chief Reghis Romero II.
The gentlemen were charged with graft before the Ombudsman for supposedly entering into a “midnight deal” to secure P4.4 billion from government coffers to pay for the Smokey Mountain project that R-II built 11 years ago and for which he has not been paid.
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ADMIN PARADE: The conversion of that stinking mountain of garbage in Tondo into a model housing project for the poor was actually conceived way back in 1992 during the watch of then President Cory Aquino.
Since the government did not have the money, initially estimated at P1.8 billion, to convert Smokey Mountain from a monumental embarrassment into a showcase project, the administration cobbled a joint venture that included private parties.
The project was overtaken by President Fidel Ramos, who continued it. After him, President Erap Estrada took over and gave some of the completed dwellings to scavenger families.
The project was finally completed in 2002 under President Gloria Arroyo. She distributed to deserving beneficiaries the rest of the more than 2,500 dwellings.
With the parade of four administrations since 1992, and with the Supreme Court upholding the legality of the joint venture in 2007, the Smokey Mountain project is a “midnight” deal?
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ASSET POOL: Some details have to be clarified to further explain why the graft complaint must be dumped.
The payments in question are to be made to the Smokey Mountain Asset Pool (SMAP), not to R-II Builders. The pool holds the money put in by the Social Security System, the Overseas Workers Welfare Administration, the NHA, HGC, and other agencies.
These agencies will be paid from the proceeds of the P4,469,584,578.24 that De Castro sought in his memorandum to President Arroyo dated May 25, 2010.
It can be gleaned from his memo that the SMAP is worth much higher at P7,092,522,901.76, based on the valuation made by the HGC-board negotiation committee with the National Economic and Development Authority and the Housing and Urban Development Coordinating Council as members.
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UPHELD BY S.C.: R-II Builders clarified that it is not the sole or first beneficiary of the P4.4 billion. The private company will collect only after the various government agencies have gotten their respective shares.
Incidentally, the Supreme Court ruled in a unanimous decision on Aug. 15, 2007, that the 1993 joint venture agreement between NHA and R-II Builders was valid and constitutional, along with other subsequent agreements like the SMAP.
The SMAP covers the 21.2-hectare Smokey Mountain, the 79-hectare Manila Bay foreshore property, the security certificates issued to the participating agencies, the disposable assets due to R-II Builders, including a 2.3-hectare commercial site in the Smokey Mountain area and the 2,992 housing units to be built by R-II on the Vitas property of NHA.
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ADVANCES VALIDATED: The HGC acted as the guarantor for the security certificates to be paid from the proceeds of the P4.4 billion.
All the advances made by R-II for the projects have been verified by the Inter-Agency Technical Committee and approved by the Executive Committee for the Smokey Mountain Development and Reclamation Project on Feb. 19, 1998.
As technical controller, the NHA verified the advances on June 7, 2002. On Dec. 10, 2003, the Department of Public Works and Highways also validated the physical accomplishments.
De Castro’s memorandum showed that the proposed settlement would lead to the conveyance to the NHA of the site still being held by HGC. The NHA can then issue the titles to the condominiums to the 2,520 families residing there.
The proceeds would settle the claim of the SSS for P1.2 billion of the participation certificates it holds. With the settlement, the cases between HGC and R-II will be dismissed and both can then satisfy their exposure to the project.
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RISK-TAKER: R-II Builders worked on the project from 1994 to 1999. In fairness, it should be paid for its contribution to a project that many parties said could not be undertaken. It has yet to be paid by NHA 11 years after it did its part.
The company said it took the risk and infused P4.1 billion into the asset pool, making it possible to construct 33 temporary and 21 permanent buildings, and reclaiming 79 hectares of land, with 2,532 family-beneficiaries occupying the permanent buildings as early as 2002.
The HGC, which inherited the project, will get P3 billion. R-II Builders will only get the residual amount, if any is left, under the joint venture agreement.
R-II Builders said it would be the last among the members of the Asset Pool (NHA, HGC and R-II Builders) to receive the share of whatever is left.
The firm said it should not be made a scapegoat for any irregularities in HGC or other agencies, noting the graft complaints filed against HGC officials for selling a 2.8-hectare government property at the Manila Harbour Centre at an alleged loss of more than P300 million.