The PEACe bond scam

Juan de la Cruz just became P35 billion poorer this week. This was because the 10-year Poverty Eradication and Alleviation Certificates or PEACe Bonds, which benefitted the Caucus of Development NGO Networks, then headed by, or at least under the patronage of, now Department of Social Welfare and Development Secretary Corazon Soliman and Peace Advicer Teresita Deles, matured and had to be paid by the already suffering masses. The Freedom from Debt Coalition, true to its name but normally identified with the same civil society block as CODE-NGO, documented why the bond offering was detrimental to the people and how it was the fruit of patronage politics. Note that the bonds would have not been floated in the manner that it was, had it not been for the cabal then involving Soliman, Delez and then-President Gloria Macapagal-Arroyo.

This cabal though came to end when, following the bond float, Soliman and Deles quickly deserted their patron at the first hint of trouble. Like Dracula, they sucked all they could from their patron and then moved on to their next prey. Today, that prey is of course the reform-minded President Benigno Aquino III. How they’re sucking him dry would be the subject of a later column

What did Soliman, Deles and their cohorts in CODE-NGO do?

Through their then-close ties with Mrs. Arroyo, they floated P10 billion worth of zero-rated treasury bonds. After which, they sold this to the secondary market for a comfortable margin, P1.8 billion to be exact. The fact that this latter sum went to CODE-NGO is undisputed. Where the disagreement lies is whether this sum actually went to poverty alleviation. This, of course, we will never know. Why? Well, since CODE-NGO is allegedly part of civil society, albeit of the profit-making type, it is not a governmental entity subject to audit by the Commission on Audit.

The plunder committed by the likes of Joc-Joc Bolante, Zaldy Ampatuan and his father were discovered through COA audits. Soliman, Deles and their cohorts were not subjected to the same scrutiny. In this planet, some are luckier than others.

FDC’s study said: “It (CODE-NGO) purchased the bonds with money it did not have and sold it to investors affiliated with the very bank that underwrote the deal. For this, it earned a staggering amount of P1.8 billion in gross profits. CODE-NGO then distributed its windfall, paying its financialadvisers and RCBC at least P400 million in fees. Finally, it kept 10 percent of the P1.4 billion, roughly P140 million, for itself, then set up the Peace, Equity, and Access for Community Empowerment Foundation (Peace and Equity Foundation) with a permanent endowment of roughly P1.3 billion.”

In other words, “laway lang ang puhunan.”

As to how CODE-NGO was able to achieve this, FDC noted the absence of a genuine public bidding in granting CODE-NGO this unprecedented privilege: “Other civil society organizations and social movements who may want to participate in the process and work together with eligible government securities dealers (GSEDs) were deprived of the opportunity to engage. The Arroyo government failed to do a road show for the bonds similar to what the deposed Estrada government did when it offered small-denominated bonds.

… The auction was done manually using fax machines to submit bids instead of electronic auction. At best, the auction can be deemed irregular; at worst, it could have been rigged, as manual auctions are more open to manipulations and leakages. “

Interestingly, FDC, by way of conclusion, said: “NGOs and civil society groups’ transaction and engagement with government must be marked by the principles of transparency and accountability. Those who call for clean government must abide by the same standards especially in their transactions with government. Transparency must begin with those who call for it.”

Of course, Soliman has gone even more big time since her CODE-NGO days. The PEACe bonds were only worth P10 billion. Today, she commands at least three times that amount in public funds through the Conditional Cash Transfer program. Next year, she wants even more as she is asking for at least P50 billion to be spent during an election year. Sounds familiar?

But the truth remains that here, the same cabal that financially benefitted from the rule of an illegitimate president to the tune of at least a billion pesos continue to remain in power with further access to public funds. This is what I call staying power.

Last week, Ombudsman Conchita Carpio-Morales vowed to pursue cases against the “big fish.” Here’s hoping that she will catch the deadly piranhas that have plagued both the Arroyo and the Aquino administration. The PEACe Bond scam is a perfect example of a transaction that is grossly disadvantageous to government since the government could have earned the P1.8 billion profit that Arroyo gave to Soliman et al. I see no reason for the Ombudsman to run after the likes of Joc-Joc Bolante and Zaldy Ampatuan but not Soliman and Deles.


7 comments on “The PEACe bond scam

  1. Michael says:

    if this is true, bakit namamayagpag pa din yang mga kupal na yan? both Deles and Soliman are in the official family ni Pnoy. dapat tanggalin at kasuhan!

  2. jo romero says:

    tag-dahop po ba talaga ng makukuhang maitatalaga sa mga posisyon sa gobyerno,Atty.Harry at recycled people na lang fr the past admin ang naririyan?

  3. The government could have earned more than PHP 1.8 billion that went to CODE-NGO. That’s only one side of the equation. You should also look at what RCBC earned by doing the PEACe Bonds deal. After RCBC, as GSED, bought the bonds for CODE-NGO, RCBC Capital bought the bonds back from CODE-NGO, allowing CODE-NGO to make PHP 1.8 billion with no money down. But what did RCBC do with the PEACe Bonds? It sold them, of course! At the time of the Congressional Hearing in 2002, RCBC sold down 10% of the bonds to institutional investors, locking in gross trading profits of PHP 201.32 million to PHP 374.94 million. This transaction established that institutional investors were willing to buy the bonds at much higher prices than what the Treasury received or even what CODE-NGO received. RCBC’s potential gross profits could be as much as PHP 3.749 billion or double that of CODE-NGO’s PHP 1.8 billion. In other words, had the Bureau of Treasury been able to sell the PEACe Bonds directly to the ultimate buyers, institutional investors, it could have gotten an additional PHP 5.75 billion in Treasury Bond proceeds.

    For a more information, visit:

  4. Victoria Segovia says:

    It is not true that the money went to Ging Deles nor to Dinky Soliman. It was used for poverty alleviation projects for the poor beneficiaries of members of CODE – NGO that numbered thousands. CODE-NGO is a coalition of all bona-fide NGOs in the country. Without these genuine NGOS, I do not know what could have happened to our country.

    If the CODE-NGO took opportunity to get funds for charity works (I observe that nobody personally profited from this transaction) it is better than to allow greedy corporations or individuals or other people in power to use it for their own personal interests – which is what had happened. Maybe Atty. Harry Roque, who has my highest esteem, should take a second look and see this without colored lenses. Then he would know that the funds had been put to good use in the hands of people with integrity.

    I know that Dinky Soliman did not enrich herself through this transaction. Her family had remained simple and effecient workers in the NGO world – quietly working daily in low paying jobs. I know because I meet them personally.

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