|
By David L. Llorito, Research Head
First of three parts
The scheme sounds familiar: A “people’s
organization” cuts a deal with an oil mill for a copra trading
project that would benefit poor coconut farmers. When the business
kicks off, the profits turn up in another private company’s
accounts. The deal brings hundreds of millions to big copra traders
while the poor coconut farmers are clueless as to what crimes have
been committed in their name.
Romeo Royandoyan, executive director of the
Left-leaning Philippine Peasant Institute (PPI), says that’s
exactly what happened when Hili Morandarte, president of the Liga
Magniniyog—an alliance of 400 national, regional and provincial
organizations—signed a “toll crushing agreement” (TCA) with
the Legazpi Oil Co. (Legoil) in Arimbay, Bicol, late last year.
Legoil is one of the coconut oil processing
companies under the Coconut Industry Investment Fund (CIIF),
otherwise known as the controversial coconut levy fund, collected
from farmers during Martial Law. The Presidential Commission on Good
Government (PCGG) sequestered the CIIF group of companies after the
1986 EDSA Revolution.
The TCA called for Morandarte’s group to
broker the delivery of at least 6,500 metric tons of copra a month
to revive Legoil’s coconut processing plant in Arimbay. In return,
Liga would have the right to get cash advances from Legoil and earn
commissions for the delivered and crushed copra.
“They used the misery of small farmers to
enrich the few,” says Royandoyan, explaining that most of the
P7-million profits turned up in another private company owned by
Morandarte and his partner, Al Ignatius G. Lopez, a former
Philippine Coconut Authority (PCA) deputy administrator and former
youth representative in the 8th Congress (1987 to 1992).
Calling the deal “karumal-dumal” (heinous),
Royandoyan is demanding an investigation.
“There should be no cover-up,” he said in an
open letter dated January 21, 2003. “The organization should not
be destroyed just because of the acts of one man [Morandarte].”
“Mr. Royandoyan is . . . a loose cannon,”
counters Morandarte. “Without any verification, he spreads
malicious and baseless accusations . . . to discredit and destroy
Liga, of which he claims to be a founding member.”
“It’s an irregular, unusual and anomalous
transaction,” says Efren M. Villaseñor, president of Pambansang
Koalisyon ng mga Samahan ng Magsasaka at Manggawa sa Niyugan
(National Coalition of Organizations of Coconut Farmers and
Workers), a rival peasant organization.
Simmering conflict
The stakes in this conflict are in the
millions—but are loose change compared to the billions being
contested in the coconut levy controversy. Nonetheless, the case is
equally significant because it has erupted among the militant
farmers organizations and like-minded do-gooders who were comrades
in the long struggle for the recovery of the coconut levy money. The
conflict is simmering throughout the coconut lands, creating
bitterness and recriminations among farmer-leaders and their
members, and threatening the credibility and survival of the entire
“peasant movement” in the Philippines.
Royandoyan and Morandarte used to be friends and
allies. Royandoyan says he raised money to kick off Liga in order to
fund a strong peasant movement that would someday have a say in the
management of the billion-peso coconut levy funds that they expect
would be given back to the coconut farmers any time soon. President
Arroyo appointed the two on February 2, 2002 to represent the
farmers’ interests in the boards of United Coconut Planters Bank
and many other companies financed by CIIF. Now they are bitter
enemies who are exchanging harsh words and threats of lawsuits.
“How could the peasant sector be entrusted
with the billion-peso coconut levy funds when some leaders behave
this way?” Royandoyan says. “We need to clean up the ranks . . .
We are going to file charges against them [Morandarte and some of
his officials] to regain the trust and confidence of farmers.”
Morandarte counters: “The damage has been done
to us. We are going to file damages against them [Royandoyan and
some officials of CIIF]!”
Crushing accusations
Royandoyan, who serves as “national adviser”
of Liga, says that on October 18, 2002, Morandarte signed the MOA on
behalf of the organization with Antonio R. Ng, president of Legoil,
without due consultation with its members or its national council of
leaders that serves as the policy-making body. In the MOA,
Morandarte committed the Liga to supply 6,500 metric tons (MT) of
copra a month to Legoil’s coconut oil processing plant in Arimbay.
In return, copra delivered was to have preferential treatment and be
charged toll fees ranging from P650 for every metric ton to P850 a
metric ton, depending on the volume. Liga will earn commissions from
these toll fees, thus also making money for the farmers.
The copra would come from Liga’s member
cooperatives as well as its accredited suppliers or traders. Crushed
copra produces coconut oil and expeller cake to be purchased by
Legoil or any other buyers at market prices. Farmers or suppliers
are supposed to earn more money because they are now selling higher
value-added products (coconut oil and expeller cake) and not copra,
a cheap raw material. As an incentive, the MOA allows Liga-accredited
suppliers interest-free cash advances from Legoil based on actual
copra deliveries.
Not bad, according to Royandoyan, except that
the implementation of the MOA went against the objectives of the
agreement to the detriment of small coconut farmers. He says the
copra delivered came largely from traders and not farmers’
cooperatives.
Also, he says that the P7.1-million profits
derived from Liga’s commissions from October to December 2002
ended up as earnings of another private company named Coco Invest
Company. When he checked with the Securities and Exchange Commission
(SEC) that company turned out to be a 60-40 percent partnership
between Morandarte and Lopez. Lopez currently acts as the spokesman
of Liga.
Royandoyan says this problem happened because
Morandarte did not consult the Liga members about all the
arrangements.
“Morandarte could not show any resolution from
the Board of Directors of the Council of Leaders to prove that he
was given the power to sign the MOA,” says Royandoyan.
Millions for traders, nothing for farmers
Farmers’ cooperatives that belong to the Liga
are supposed to benefit from the deal. They would if they are able
to supply some of the copra and sell the higher valued-added coconut
oil and copra cake. It turned out that most of those who benefited
are big copra dealers.
Royandoyan explains this is because Liga was
organized on February 2, 2002 and most its member-cooperatives did
not have the capability yet to go into copra trading. Morandarte
must have felt they could not provide the volume. So he accredited
copra traders Nestor Tanzo of Camarines Norte, Gary Cheng of
Camarines Sur and Panfilo Go from Leyte to supply the required
volume.
The MOA allows this arrangement, but it also
means that Liga did not have the incentive to organize its
member-cooperatives since traders could actually supply the required
volume and Morandarte and his group could earn commissions the easy
way. According to Royandoyan, Morandarte’s deals with the copra
traders turned out to be unauthorized by the membership of Liga
also.
On the surface, the system appeared to have
worked because with the three traders as “accredited suppliers,”
Morandarte and his group were able to tap into the traders’
extensive buying network and logistics and get commissions from the
toll fee and some cash advances from Legoil/CIIF.
It also worked favorably for the traders since,
being an “accredited copra supplier” of Liga or Morandarte and
company, they were able to advance cash from Legoil, enabling them
to have stronger financial muscle vis-à-vis their competitors. In
fact, in less than three months, these traders were able to advance
P270.3 million from CIIF. Because of this financial muscle, the
greater margins that they could get from selling coconut oil instead
of copra, Nestor Tanzo was able to force the closure of two private
coconut oil mills—Cosay and Globe oil mills—in Bicol because
copra producers were attracted to his aggressive copra pricing.
Nestor Tanzo and other accredited traders were
so “successful” that they were able to deliver 20,462 MT of
copra to Legoil within just two months. How much the traders earned
from the volume is subject to speculation. But documents show the
traders were able to sell a partial volume of 10,700 MT of oil from
the copra delivered, earning them P261.2 million.
For that volume, Morandarte and company earned
commissions from the toll fees paid by the traders amounting to P7.1
million.
So the big copra traders as well as
Morandarte’s company made a lot of money. The only problem
according to Royandoyan was that the small farmers were left out in
the cold.
For Royandoyan, the deal should have never been
made due to “conflict of interest.” He says Morandarte is
president of Liga while at the same time sits as a director in the
board of CIIF where he also has the power to approve the agreement.
He says Morandarte also represents Legoil to the CIIF board.
The deal’s crushing collapse
The CIIF leadership must have gotten wind of the
controversy. As early as January 13, Lope R. Torres, CIIF legal
consultant, issued a memorandum to Reynaldo T. Blas, CIIF treasurer
and chief financial officer, enumerating Liga’s violations of the
“terms and conditions of the MOA and the Toll Crushing
Agreement.”
Some of the supposed violations include: a)
there was no board resolution on the part of Liga to enter into a
toll crushing agreement; b) the assignment of the rights and
obligations of Liga to traders did not have the conformity of Legoil
and was therefore not binding; and c) Liga in effect is acting as a
broker and not actually delivering copra of small coconut farmers.
On January 23, Edgardo E. Lopez, Mindanao
representative of the Liga from Region 11, wrote Morandarte
inquiring about the MOA or the toll crushing agreement with Legoil.
“This is highly irregular since I do not
recall any resolution passed by Liga Magniniyog Council about any
MOA nor I can recall any resolution passed . . . authorizing you [Morandarte]
to enter into any agreement in behalf of the Liga Magniniyog,”
says Lopez. “I am demanding an immediate explanation and
investigation . . . I demand full accounting of the P7 million that
was reportedly earned owing to the MOA.”
On the same day, Jose A. Barcelon, corporate
secretary of the CIIF Oil Mills Group, wrote Antonio R. Ng,
president of Legoil, informing him of the board decision to suspend
the toll crushing agreement “pending a review of the reported
violations.”
By about the end of January, the ad hoc
committee formed by CIIF to review the agreement decided to
terminate the deal between Legoil and Liga. The committee’s
findings appear to have confirmed all of Royandoyan’s accusations.
Part 2
| Conclusion
|
