Next, Please

“Train To Busan” is an entertaining Korean film about zombies on a train who eat human brains. The passengers do not know who is normal and who is not. In the ensuing panic they do anything to survive.

Sounds like the Senate and House hearings on extra-judicial killings and drugs.

The Senate proceedings on EJK has a new chair in Dick Gordon vice De Lima. When last seen, Alan Cayetano was frantically escaping the tentacles of De Lima and Trillanes as he vainly tried to interrogate one Edgar Matobato, the Grade I (or is it Grade III?) self-confessed Davao Death Squad killer. Edgar reportedly witnessed then Davao Mayor Rodrigo Duterte expel 200 rounds of Uzi on a dying “agent” who had parked his car in the wrong place. With Dick in charge, Cayetano is now free to intellectually unload his Ateneo law degree on the illiterate Matobato.

The House proceedings have been festive but staid as a parade of low-lifers testified how they paid millions to then DOJ Sec. De Lima to allow them to live in peace and prosperity in their beloved Bilibid. Committee Chair Rey Umali has done a good job at restraining his members many of whom were chomping at the bit to hang the lady on national TV. Lynch mobs can be so much fun.

DOJ Sec. Vitaliano Aguirre who conducted the House examination has been sober and efficient. He believes he has enough to charge De Lima with abetting the drug trade in exchange for campaign contributions. He also dropped the bombshell that a Government official “higher than De Lima” and a Liberal Party Senator were recipients of millions in drug money. Talk about a teaser.

Sen. De Lima denied the accusations. She also claims the only person higher than her was ex-President Noy to whom she directly reported and who would never do such a thing. She is probably correct. PNoy was not running for re-election, is independently wealthy and lives a simple life. If he wished there were easier and more honorable ways to enrich himself in his six years in office. He was never tainted.

But Leila is wrong in claiming there was nobody between her and the President.

Looking at the organizational chart, there are two persons higher than a Cabinet Secretary. There is the Vice-President and there is the Executive Secretary. The former is constitutionally above a Cabinet officer even though organizationally he may not be. He cannot order a Cabinet Secretary to do his bidding.

The Executive Secretary is universally accepted as the “primus inter pares”, the first among equals in the Cabinet. Figuratively if not literally he could be said “to be higher” than the DOJ Secretary.

So, assuming it is not PNoy, which of the two Jojos is Sec. Aguirre referring to, VP Jojo Binay or Exec. Sec. Jojo Ochoa? A couple of hints: Who of the two would have the administrative power to help out the drug lords?  Who has a new lifestyle like say a supposedly newly acquired home in a plush Makati village?

As for the mystery LP Senator that Aguirre alluded to let us do the math. Barring further defections, the LP presently has 5 Senators: Bam Aquino, Frank Drilon, Leila de Lima, Kiko Pangilinan and Ralph Recto. Leila has already been accused so that leaves four. Bam has not wielded any extraordinary power, was relatively new, was not up for re-election in 2016 and therefore did not need the money; so that arguably leaves three. Pangilinan was not a Senator so had limited influence in the last three years. That, speculatively, leaves two, Drilon and Recto. Who between the latter would the current Administration have an ax to grind? That, arithmetically, leaves one.

One can sense the lines have been drawn between the power players in the country, between the new dispensation and the old, between those running over and those being run over. Central to the fight is -or has been- drug money but it is  just one of the grounds in which the battle will be fought. At stake are businesses, political lives, judicial reach and the future of the nation. We are just seeing the start of the engagement. There may be little room for compromise.

As for Sec. Aguirre’s riddle, I think I know the answers. I could reveal them but that would deprive you of the fun. Go figure it out for yourselves.

Quo Vadis?

Sen. Leila de Lima was unceremoniously and without precedent knocked out as Chair of the Senate Committee on Justice (Her Vice-Chair, fellow party mate Francis Pangilinan, was similarly booted) upon motion of 8-time world boxing champion Manny Pacquiao. The vote was 16-4-2 with Bam Aquino, Pangilinan, Drilon and Hontiveros voting against; Trillanes and Recto (head of Senate Minority) abstaining; and everybody else for. The latter included LP Senator Sonny Angara, independent Grace Poe and former PNoy TESDA head Joel Villanueva. It is interesting that Trillanes abstained. He was De Lima’s side-kick in the EJK hearings.

I imagine the President was annoyed Senate President Koko Pimentel had appointed De Lima Chairperson of the Justice Committee, in essence handing her the sword to stab him. Perhaps Koko wanted to reward her for supporting his candidacy against Alan Cayetano for the Senate Presidency. De Lima was also Koko’s counsel in his successful electoral protest against Sen. Zubiri in 2007. Well, after last week’s EJK hearings, Koko must have gotten the Presidential message pronto and has made amends. To quote Lord Palmerston, in politics there are no permanent friends, only permanent interests.

Pimentel and Majority Floor Leader Sotto said Malacanang had nothing to do with it. Presidential Legal Counsel and often-times Presidential spokesperson Salvador Panelo confirmed this: “The President does not interfere with the affairs of a co-equal branch of Government. Such intrusion is anathema to the President’s character”. Got it.

Sen. Dick Gordon has replaced De Lima as Chair of the Committee on Justice and Human Rights. Dick has advocated the President be given more extraordinary powers than requested by Duterte  himself including the suspension of the writ of habeas corpus for certain crimes. Got it.

Coincidentally, the House opened its own probe into drugs in the New Bilibid Prison (NBP).   The inquiry was directed by DOJ Sec. Vitaliano Aguirre. House leaders said the proceedings have nothing to do with either Sen. De Lima or Malacanang. Got it.

The House hearings are not a judicial investigation, they are an inquiry ostensibly “in aid of legislation”. Here is my take: One, Rep. Umali has chaired the proceedings with sobriety and authority. The Committee members, most of whom live in glass houses, have refrained from casting stones. They smell blood but are trying to keep cool. Many of the witnesses are convicts serving double life sentences so just take their testimonies from there.

Two, it is more fun in Bilibid. More particularly it is more fun in the NBP’s Maximum Security Prison (otherwise known as Little Las Vegas) than the Medium Security one. The druglords pay a premium to the heads of the Bureau of Corrections to be transferred and to remain in the five-star “Maximum”. The food must be better.

Three, there is in Bilibid a world the nation knows nothing about with its own economy, governance, judiciary, enforcement and reach to the highest levels of Government. This underworld is the apex of the country’s drug menace, the control booth from whence drugs are imported, distributed and financed.

Four, if the witnesses are to be believed Sen. De Lima is a bad person. They uniformly testified how they regularly paid de Lima’s supposed bagmen “a quota”to keep their residence status in “Maximum” and to ply their business. The President has publicly admitted there is yet no conclusive evidence Leila received the money.

Five, mobile telephony is the backbone of the drug industry. The good news is that while the rest of the country suffers, the cell signal in the 14 hectare NBP compound is excellent. Cell phones reportedly go for P1 million. Apparently you could  eradicate 90% of the drug trade by simply shutting down the facility’s cell signal. Globe and Smart have not said if they will contest such a move in court. The Government is considering installing jammers.

The President’s War On Drugs has expanded the national consciousness. He rattled the cage and the cockroaches came out. The War has enlightened us on the extent of the menace and introduced us to an underworld that unbeknownst has existed for years at the heart of our community. The War has its collateral damage -the EJKs and other unintended consequences- but that happens when there is a paradigm shift, when there is quantum change.

What is next for Leila? The DOJ must decide whether to charge the lady with the Ombudsman. However, under Sec. 11, Art. VI of the Constitution, as Senator Leila is “privileged from arrest for crimes punishable by not more than 6 years of imprisonment”. The DOJ could opt for plunder, a crime involving more than P50 million and non-bailable. De Lima would still remain Senator even if convicted as happened to Trillanes.

Alternatively the Senate could under Sec. 16(3) Art. VI “discipline, suspend or expel a Member by a vote of 2/3 of all its members”. De Lima was ousted as Chairman of the Committee of Justice by 16 Senators representing  2/3 of the members but expulsion would presumably be a harder sell.

Now for the bigger question: Do the crimes for which De Lima is accused go higher up the previous Administration? Will the Duterte Administration embark on a witch hunt? I do not even want to go there but it could come to that.The fall-out is too scary to imagine.

 

Senate Hearings Part II: The Empire Strikes Back

The new season of the Senate Committee hearings on extra judicial killings has not disappointed with much drama and even more comedy. The hearings are supposedly “in aid of legislation” but nobody is bothering to explain that to us.

In Episode I a group of young, frightened, masked women testified on police killings. This time the story is about how one Edgar Matobato, a Grade I Davao Death Squad (DDS) member, killed or witnessed the killing of drug addicts, rapists, cheating girl friends and dance instructors; upon instruction of the then Davao Mayor Rody Duterte and his son Paolo. In one case, Edgar testified, the President personally unloaded some 200 Uzi rounds on a wounded man gunned down by 30 DDS members. I personally thought 200 rounds was a bit much. It is also unclear how 30 DDS skilled “tiradors” failed to finish him off or why Matobato was only Grade I when high school is compulsory.

Chairing the proceedings is Leila Norma Eulalia Josefa Magistrado de Lima, 57, the feisty, self-aware, Cougaresque Senator with the New England social registry accent natural to all San Bedans from Irigan City, Camarines Sur. Leila plays the part with the proper balance of drama and preening. During the hearings she was often seen putting her dainty hands to her well-coiffed hair and remarking how the witness’ testimony was so unsettling her. Some may find her annoying but she does keep the Administration on its toes.

Defending the President is Alan Peter Cayetano, 45. Alan is actually not a member of the Justice Committee but happened to be in the neighborhood so he just dropped in. He had two messages for the nation: One, that not all tapes are created equal, there is duct tape, masking tape, scotch tape and others. The witness Matobato was visibly unimpressed: In his Grade I mind, they are all just “masking tape”.

Two, Alan announced the existence of Plan B, a plot by the Liberal Party to unseat the President. Plan A was to get Mar Roxas elected President but that did not quite work out. A couple of comments: First, Plan B should now be termed Plan A since the original is history. Second, Plan B is hardly a controversy nor a revelation. The job of political parties is to unseat the Opposition, that is what political parties do. The U.S. Republicans have a Plan B to dethrone the Democrats and vice-versa. Incidentally, Plan B, in that case a supposed Communist plot to overthrow the Government, was Marcos’ excuse to declare martial law.

Alan sees himself as Lancelot to Duterte’s King Arthur. He is bright and articulate but he can have a penchant for being overly cute which is not endearing. He cannot help display his intelligence. Alan did not make it as Vice-President nor as Senate President but he is not giving up, at least not on the latter. Koko Pimentel was elected Senate leader with the help of Administration members but possibly not for long. The President is apoplectic that Koko handed De Lima, Rody’s arch-enemy, the Chairmanship of the Committee on Justice and Human Rights, the one subject where he is most sensitive and vulnerable. If that was not enough, Francis Pangilinan, another LP stalwart, is Vice-Chair. What was Koko thinking? Leila was counsel for Pimentel in his 2007 election protest against Zubiri; so maybe that explains it. He has tried to redeem himself by refusing Senate protective custody for Matobato but that may not be enough. Alan cannot wait to be green-lighted.

If De Lima is the LP’s point person, Antonio Trillanes is her side-kick, his Sancho Panza to  her Don Quijote in their fight against windmills. Trillanes relishes this role of maverick gunslinger. Unfortunately while he  is long on accusations he is often shorter on evidence. He came up flat on his claims of Duterte’s bank accounts. When last seen, Trillanes was badgering Cayetano on national TV. Boys, take your business outside.

The Committee outcome rests on the credibility of Matobato and the other witnesses to follow. Edgar has many of his dates and locations wrong. ABS-CBN has discovered he actually graduated from high school. Why downplay his academic credentials, does the notion of an uneducated killer spin better than a modestly educated one? It is all a little fuzzy but his elaborate testimony of events and names suggests there is some truth to it.

The Committee leadership want us to conclude the President is a killer. We already know that, Rody has admitted to killing drug dealers often enough. So what is the objective of De Lima & Co.? Is it to discredit the President internationally, to discourage investments and to tank the economy?

The Yellows should have undermined Duterte when they controlled Malacanang, the House and the Senate but their focus then was Binay who was the primary threat. They did not foresee the Duterte phenomenon. The LP  now has a zero probability of impeaching a President with a 91% trust rating and near total control of Congress. Perhaps it needs a Plan C. Leni Robredo says her Party is fully supportive of the President.

The House will soon start its own enquiry into De Lima’s alleged drug coddling. That should raise the level of intensity. Malacanang will not stop until it proves the lady is a tramp.

The Senate hearings resume on Sept. 20. Stay tuned.

A Failure To Communicate

It has been a rough fortnight for the President’s Men what with having to catch up and, occasionally, clean up after their boss. There was the Obama expletive, the Ban Ki-moon insult, the ASEAN snafus, the Veloso misread, and now the U.S.- military- get- out-of-Mindanao order.

The Obama expletive was clarified as a loss in translation. Even if he thought it, our President did not quite call Obama a son of a bitch. DFA Sec. Yasay attested that, although he was not present, he “personally” witnessed both leaders “warmly” shake hands. That does not actually qualify as a first hand account but never mind. The U.S. State Department has still to issue its statement on the matter.

Malacanang announced a private ASEAN meeting between Duterte and Obama was cancelled by “mutual” consent. Earlier the DFA said the Philippines had not given up on the meeting.

In Karen Davila’s Headstart, Yasay clarified the President did not attend the ASEAN Plus One with the American President because he was ill. Yet the day prior, on national television, Duterte admitted he “purposely” disrespected Obama. Yasay said he had not heard the Presidential statement and would ask the President “what he means”. Webster defines “purposely” as “with clear intention”. Yasay should look it up.

Yasay said Duterte did meet with his Russian and Chinese counterparts. It was, presumably, just a conversation between comrades.

Duterte called UN Sec. General Ban a “fool”. Labor Sec. Bello did not add that Ban, whose term expires this year, is a lame duck.

Presidential spokesperson Martin Andanar excitedly announced Duterte would be seated between Obama and Ban at the Summit dinner. Rody ended up sitting between Indonesian President Widodo and Russian Premier Medvedev.

The President flew to Indonesia ostensibly to plea for the life of Mary Ann Veloso, a convicted Filipina drug mule. Indonesian President Widodo said Duterte acquiesced to her execution. Malacanang clarified the President simply said that Indonesia follow its law.

Duterte highlighted to ASEAN leaders American atrocities in the Filipino-American war. He ordered all U.S. military to leave Mindanao. He thanked China for offering to fund our rehab program. He knows this annoys the U.S. every time he does this.

Filipinos are confused.

Some ask why our country is catering to a country which has annexed our territory despite an international ruling in our favor; yet is disparaging an ally who has supported our cause diplomatically, financially and militarily. Yasay said the brazen invasion of our country is only “a small part” of our relations with the Mainland. China is loving it.

Some ask why our country is unearthing century-old sins of Americans on Filipinos; while not condemning say Japanese atrocities in WW II or the human rights violations under martial law. The President has chosen Japan as his first State visit. The Administration is pushing for Marcos’ burial in Libingan.

The seeming animosity of the President towards America reportedly dates back to the time when he believed U.S operatives whisked away an American gun-for-hire who was wanted in Davao. Obama’s statements on human rights confirm Duterte’s view the U.S. is meddling with our internal affairs.

The President’s Men are scrambling to form a coherent and consistent message to the world as to who we are. So far what we have is “an independent foreign policy” based on non-interference. Their job is complicated by a President who speaks emotionally about matters that are important to him like corruption, drugs and nationalism. He takes any adverse commentary as personal and reacts in kind. He has called Mar “bakla”, Leila de Lima an adulteress, U.N. Sec. Gen. a fool, the U.S. Ambassador “gay”, and President Obama not quite an SOB. These are his terms of reference. He has little time for the nuances of institutions, ideology, diplomacy or  argumentation. If he cannot intimidate you, he will shame and ridicule your persona. It is a leadership style.

It does not help that not only are there mixed messages, there are mixed messengers. Many claim to speak for the President. The outcome is a cacophony at times bordering on the trivial. One spokesperson said the President’s ASEAN debut was an unqualified success based on the number of selfie requests from foreign leaders. I guess you go with what you have.

For their part foreign entities have not done enough to understand the person of the President. They jumped to the wrong conclusion on the Duterte Obama expletive but coming as it did after the President’s insult of the U.S. Ambassador, that might be understandable. There is a failure of communication between erstwhile allies.

The Duterte Presidency has so far been more than what was advertised. It has been good for the most part but there are signs of unease. There is creeping concern about the loss of freedoms and privacy. The Administration’s seeming tilt away from the U.S. and towards China is affecting investor sentiment. Even the military must be puzzled. Why is the President taking on a nation which has provided the military with weapons, aid, technology, training and intelligence over the years? For the record Duterte said Americans get out of Mindanao, not get out of the Philippines.

The peso has noticeably weakened from mid 46’s early last week to P47.57 as of this writing and the stock market continues to drop. These are signs the country’s risk premium (the risk associated with investing in the Philippines) has risen. It is interesting the peso was unaffected by the Sept. 1 Davao bombing but has since. This tells us investors are not overly concerned by  EJK killings or the occasional bomb but worry about issues like how national decisions are made and who are our friends and who are our enemies. The average Filipino must be asking the same questions.

Lost In Translation

The row over our President’s remarks on Obama has been resolved. Something was just lost in translation.

But damage was done and not for the reasons ascribed. What riled Barack and the U.S. State Department was not the personal affront but that Duterte stole Obama’s thunder in an important forum. That was not Rody’s intention but it was the unfortunate consequence.

The Laos summit was Barack’s swan song, his Asian despedida party before stepping down in January. President Obama is big on his legacy. He loves the region. He grew up in Indonesia. He wants to be known as the first Asia-Pacific American President. The pivot to Asia was a cornerstone of his foreign policy. He wanted to revive his baby, the Transpacific Trade Partnership. Yet all this was drowned in the international media by a three word Tagalog expletive from a two-month-in-office former mayor of a provincial city in the Philippines. That is how much words matter.

And that is not all. If Donald Trump wins in November it may be due albeit in a small way to Duterte’s comment. Trump has taken the latter to say Obama -and by extension the Democratic Party and Hillary Clinton- has so weakened the U.S.’ international stature it can be disparaged by the neophyte leader of a Pacific island state. The biggest power in the world is no longer respected even by one of its strongest allies in the region.

The issue is probably academic. Hillary most likely will be the next American President. She is no wilting flower and Digong is unlikely to term her a son of a bitch. For one that would be the wrong gender. Two, he is with one exception a gentleman. In a crunch Hillary would dispatch Bill to Davao and the two men would hit it off. They could exchange notes on their escapades.

The good news is the Philippines has drawn worldwide attention even if for the wrong reason. The President’s macho image will not go unnoticed in China and Russia where strong leaders are respected. The Chinese will still not return the Spratleys but will do everything else to exploit any rift between the Philippines and the U.S. Already they have volunteered to fund our drug rehab program.

Talking about how words matter brings us to the subject of how this Administration speaks to the world. At best it can be described as, well, scattered. A reason for this is a President who is unpredictable as to what he says, how he says it and when he says it. In a gathering of Filipinos in Indonesia, he called the sovereign state of Laos a “Chinese satellite” which is the diplomatic definition for a puppet. This was the country that had just hosted him. The man is candid to a fault which makes him endearing yet can complicate things. It challenges those who have to clean up after him.

Another reason is the President does not care for the outside world. He has only one audience and that is the Filipino people. He believes, rightly or wrongly, the nation wants us to go it alone. Hopefully we will never have a major environmental or national security crisis that will require us to eat our words.

It does not help that some of the President’s subalterns have taken to speaking for him out of turn, occasionally with a foot in their mouth. Labor Secretary Bello said it was ok for his boss to disparage Obama because he was on his way out. He forgot the first rule of kissing ass: When you do make sure you leave nothing on your face.

Martin Andanar, Secretary of the Presidential Communications Office, is Duterte’s official spokesperson -after Cayetano, Pamelo, Bello, atbp. Martin is the most handsome but the least weighty of the group. He does not have the gravitas to tell his elders to muzzle it. When last seen he was preoccupied with the Presidential seating arrangements at the Summit.

The President was in Indonesia partly to request for the commutation of Mary Ann Veloso’s, an alleged Filipina drug mule’s, judicial death sentence. Victims of local extra-judicial killings wish the President would similarly plead their case. Maybe one of his spokespersons wants to weigh in on this.

These are early days and it is understandable that the President’s Men should stumble. But some basic rules may be in order: One, speak with one voice and one message. The Labor Secretary should not be speaking on foreign relations. The NEDA Secretary should not comment on extra-judicial killings. The directive should come from the President but since he himself is one to stray, that task rests with Executive Secretary Medialdea. As “primus inter paris” the Executive Secretary is responsible for the overall image and workings of the Presidency.

Two, think before you speak. Every voice from Malacanang is amplified. When in doubt take a deep breath.

The Asean Summit was the President’s introduction to the world stage. The debut was not pretty but never mind. Duterte hopefully took some lessons from it not least of which there is a world out there and the world matters. That alone will have made the occasion worthwhile.

 

Words Matter

“Words matter” is the U.S. State Department’s reaction to the controversial statements made by Pres. Duterte on President Obama. Malacanang announced the meeting between the two was cancelled by “mutual” consent. Earlier, the DFA said the Philippines was still pushing for the talks. Whatever.

In a press conference (hopefully not called for that purpose), Labor Sec. Silvestre Bello said Obama was a lame-duck anyway. Seriously? You are an experienced peace panel negotiator and you said that? Well, Hillary Clinton supports the U.S. move and she is probably the next American President. So good luck, buddy.

The incident comes at a difficult time for the country. The Davao bombing on Sept. 1 signifies a new phase in our nation’s life. Bombings are not new but its location, context and audacity suggests this time it could be different.

Davao was not chosen at random. It is the President’s and PNP Chief Bato’s proud backyard. It is a message the conflict is being brought to the heart of this Administration.

The attack was in a dense public place and was designed to sow panic in the populace. The perpetrators were not some hooded goons but women and companions in the clear of night. It tells us we can no longer profile the protagonists, they could be the very ones sitting next to you. If they can do it in the President’s hometown, they can do it in a crowded MRT station in Manila. Imagine that.

The style suggests the bombing was the work of Muslim dissidents but there could be more. The President is running over many bad people all of whom have a vital interest in discrediting his Presidency. The enemy of your enemy is your friend. A combination of drug money, inside information and reach of corrupt police and politicians, and the fearlessness and military capabilities of terrorists would be a force to reckon with.

The good news is the Davao incident hardly created a ripple in financial markets. The peso even strengthened the business day after and the stock market dipped but then it had been dipping for a week prior. The moneyed folk must see it as an isolated incident in a remote location be it the de facto capital of the country. But that could be temporary and that could be a mistake.

The country needs all the help it can muster locally and abroad. Despite the apology, the comments on Obama are not helpful in this regard. They talk not only to his person and his family but to all Americans and the international community. Nobody likes to have their leader dissed, not tourists, not foreign executives making investment decisions, not corporates deciding where to locate their next BPO center. It follows similar comments against foreign human rights bodies, the United Nations and the U.S. Ambassador (for his gender preference). Our President has refused to meet with U.N. Sec. General Moon.

It is interesting the President will talk with Joma Sison with whom we are at war but not to those who have been our friends for years. The President believes they will lecture him as they would to a colonial lackey. He feels disrespected. But why not engage with them, convince them of his point of view, show them he is not some “colorful personality” out of control; but a sober leader with a national crisis to solve? Why not agree to disagree in a civil and composed manner? He can do that, he has convinced 16 million Filipinos of it. Duterte should understand that like him, foreign leaders have their own audiences to play to. The U.S. criticizes China on human rights all the time yet Obama and Xi can still exchange pleasantries together. It is what mature politicians do. Mr. President, it is not personal to you. You can be the adult in the room.

Duterte has refused foreign assistance in identifying the Davao culprits. The fact is we need U.S. aid, weaponry and technical and intelligence capabilities to examine the evidence, track the perpetrators, follow their money and destroy them. The U.S. has the experience and labs from years in the Middle East to detect the provenance of the explosives. Are we so proud or so capable we can refuse help against those killing our people? The war on terrorism is a global effort. Why throw that all out just because Obama says we should “respect human rights”? There is a bigger picture involved.

The President’s War On Drugs is hugely important but it is not the only issue we face as a nation. There are the Spratleys, terrorism, the economy and others. The Davao bombing should remind us of that. Yet the War has come to dominate our thinking, determine our identity in the world community, and mar our relations with long-time allies. Have we become a one-dimensional nation, just a country with a drug problem?

Duterte says he bows only to the Filipino people. It is why we love him. But ours is a global community where what happens elsewhere in trade, climate change, terrorism and even human rights happens to us. We cannot be an island. Foreign entities will speak their mind. Their words matter to them but do not have to matter to us. We are not their audience. So let’s not sweat the small stuff. Let us just respectfully correct their misinformation and prove them wrong.

What A Mess!

PLDT and Globe’s (the telcos) purchase of  SMC’s telecom assets just got messy. The price was P70 billion (P53 billion for the frequencies and P17 billion for “hard” assets).

The Philippine Competition Commission, the independent anti-trust body, ruled the transaction was anti-competitive and would be harmful to consumers. It cited collusion in the cherry picking and allocation of the frequencies between PLDT and Globe (50/50). The arrangement would not leave enough bandwidth for new entrants.

PLDT got the Court of Appeals to restrain the PCC from further investigating the transaction. It argued the deal had been approved by the (Aquino) Government and beat the PCC deadline (by a few days) for the latter’s review. The PCC will appeal the decision. It contends a mere technicality should not prevent it from examining a multi-billion transaction that is of vital national interest.

The telcos are in a pickle. They have a PR problem: The public believes the telcos and SMC conspired to fast-break a midnight deal  that has been declared bad for Filipinos. They are now hiding behind the courts to protect themselves. Telco insiders privately admit the arrangement was dubious but they had little choice if they were to get the frequencies they have been pining for years.

The telcos face a protracted court battle with the PCC and time is not on their side.They paid SMC a P35 billion downpayment with another P17.5 billion due each on Dec. 31 2016 and  June 2017. The  installments are backed by bank stand-by letters of credit so the telcos cannot withhold payment during the court proceedings.

The Duterte Government is curious whether SMC was entitled to “sell” frequencies which were largely unused and should have been returned to the nation. The Government could have then auctioned these frequencies to fund the country’s priority programs.

The telcos are being hounded by the minority shareholders of Liberty Telecom, a listed company which the telcos bought as part of the deal. These shareholders claim they were dispossessed when certain valuable frequencies held by the company were transferred without disclosure and proper consideration to other SMC-controlled companies. The telcos say they were unaware of this, it was done by the previous SMC management but the minorities, the Philippine Stock Exchange and the SEC are not buying. SMC is keeping mum.

Consumers continue to bewail the poor telecom service. Malacanang has given the telcos one year to get their act together or else. The telcos are on the clock.

The telcos have shelled and continue to shell out cash without a clear resolution of the issues. They are lighter by P70 billion to SMC. They are spending on the infra roll-out. If the Liberty minorities prevail, the telcos are in the hole for another P250-500 million for a company with a negative accounting book value.

It is fascinating to watch: SMC approached the telcos with the deal yet the latter are now doing all the legal heavy lifting while SMC is laughing all the way to the bank. There is some finger pointing between the telcos: Globe apparently wanted a more complete due diligence before the closing but was persuaded by the legal luminaries in PLDT to fast-track the process before the PCC rules were to kick in and the new Administration to sit. The owners of SMC were big supporters of Grace Poe. The telcos allowed the lawyers to run the deal.

Do the telcos have a way out of the morass? Here is a thought: Rather than contest the PCC why not the telcos embrace its findings namely that the transaction is flawed?  This will be their basis to unwind the agreement. SMC will, of course, simply smile.

The telcos will have a friendly ear in the Government which is desperate for funds. In a negotiated deal the Government will agree to allocating additional frequencies to the telcos in exchange approximately for what they are paying SMC.

As for SMC, the President could have a P70 billion conversation with its owners which goes somewhat like this: “Sirs, please do not get mad. I am about to ask you something not for myself but for the nation. Please rescind the telco deal and return the country’s frequencies so we can sell these to PLDT and Globe. We urgently need the money. I am certain the telcos will not object.

I realize you have friends in high places and you could tie this up in court. This will be bad for everybody. The telcos will not be able to improve their service. The nation will be deprived of vital funds. Please save us the troubles.

I will not say whether your deal is morally or even legally wrong but kindly  consider this. You have many businesses a number of which –power, roads, ports, etc.- require us to work closely together. Your bankers and the stock market would not want you to go the way of Bobby.

Minority shareholders question why under your watch Liberty transferred its frequencies to your other companies without the proper protocols. There is seemingly conflict of interest, self-dealing and perhaps more. And let’s not talk about taxes.

The public would be upset if you were to insist on something that has been deemed bad for the country. I may not be able to control my many passionate supporters if they were to malign you and boycott your many businesses.

This is not personal. I realize you backed Grace but no problem. Did I not invite you to my inaugural?

Thanks in advance for your support.”

Under the new dispensation, the telcos will get many if not all the frequencies they want at approximately the price they agreed to pay SMC. The PCC will be appeased. The legal uncertainty will be lifted. The Liberty problem will disappear. Consumers will get the service they deserve. Government will get the money it needs. SMC will be unhappy but it might work some other goodies in return. The Duterte Presidency, now embattled with the Davao bombing, can claim a significant victory for the people. It will send a message to Big Business that you don’t mess with this Administration.

The Canary In The Mine

“The honeymoon is over for Philippine shares” – Bloomberg Business news.

Following the election of Duterte the Philippine stock market rose by 33% from its January low to a 15 month high on July 21. However, since July 1 the market has erased all its gains as foreign funds withdrew $248 million from the country. In August Philippine stocks were the worst performers in South East Asia.

There are many reasons why markets fall e.g. the prospect of higher interest rates in the U.S. or a flight to safety. The question is why did the Philippines fare worst than its neighbors in August?

It may have been investors taking profits in an expensive market. It could be political, that foreign investors are viewing the country and not liking what they see. Internationally the country is getting bad press on the so-called extra-judicial killings.

Listening to foreign commentators like Cristiane Amanour on CNN, the Administration is doing a poor job at communicating its War On Drugs. The impression is the Government is encouraging summary killings on mainly lowly drug users. It is promoting a culture of violence and disregarding the rule of law. Announcements of door-to-door visits by policemen however polite are reminders of Stalin’s Great Purge, Nazi Germany and Mao’s Cultural Revolution.

International misimpression has been fuelled by, literally, incendiary statements from the top. One can almost understand why PNP Chief de la Rosa advocates the burning down of druglords’ homes (for which he has apologized) but when NEDA Secretary Pernia, a seemingly mild-mannered man, announces in an economic briefing that “killings are sometimes necessary”, you know the bravadaccio has spread. Witness the vitriol in social media. There is no kindness. It is not about who talks the sanest but who talks the loudest and most hateful.

The passion of the Dutertistas is the result of decades of pent-up injustice against the Filipinos by the elitists, corrupt politicians and business oligarchs who object to the Government now looking into their playgrounds. However we must not allow unbridled emotions to drown out constructive criticism and civilized discourse. Unchecked adrenalin should not degenerate into real or social media lynch mobs similar to Mao’s Cultural Revolution when students turned on teachers, children on parents, the young on the old, the masses on the intelligentsia.

Passion is good, the challenge is how to channel it to productive use. Why not netcitizens outraged with the system assist rural communities, build homes for the poor and help rehabilitate the junkies? A Philippine Peace Corps movement might be a start.

But let’s get back to stocks. The market is not a measure of the state of a nation. It is “hot” money that creates no jobs, has no social value, is agnostic and interested only in what profits can be made shuffling paper. But it is a yardstick of confidence and fear so we should listen.

And this may be what the stock market is saying. That after the excitement of the first 60 days, it may be time to look at what we do, how we do it and how we say it. The President has warned we have a national security drug crisis and he is right. He and his lieutenants have spoken sometimes in hyperboles to drive the point. We get it, we should continually be reminded of it but it may now also be time to dial down the din and broaden the pulpit. The quieter tone will help us separate the signal from the noise. In a crisis calm is good.

It may be time to:

Stop managing by headlines and teasers (“Who is next? Tune in to the next episode”)- If there is evidence against a wrong doer, just drop the bomb. Do not drag it out and revel in their twisting in the wind. Do not get addicted to the ratings and the applause. Speak softly but carry a big stick.

Widen the communiqué- On the War on Drugs, talk about the efforts to rehabilitate the junkies, give the program a compassionate face. Address other issues like income inequality and social progress. Show this Administration is not a one-trick pony.

Correct the message- The EKJ killings are mainly criminals inside and outside of Government assassinating witnesses. It is not the authorities summarily taking down druggies. Talk soberly about getting to the rogues in the police, the army, the judiciary, and the politicians.

Be consistent – Investors abhor uncertainty. They get confused and deterred when the President jokingly or not threatens to impose martial law, withdraw from the UN and Paris Climate Change agreement. Is the Government against gambling or just irresponsible gambling, will it take down oligarchs but not those “too big to fail”?

Broaden the coalition- Take in the other branches of Government, the NGOs and people of good will to expand the reach. Welcome outside opinions that are educated and well meaning. Like a wounded tiger in its last throes, the forces of darkness being destroyed will retaliate as we have seen in yesterday’s Davao blast. When that happens –and it will intensify- the nation will need all the help it can get. The notion of a Lone Ranger has a nice, romantic ring to it but Duterte cannot do it on his own.

The last 60 days have been a roller-coaster, fun but scary. The stock market enjoyed the former but now may be feeling the latter. The market is no measure of the state of our nation but sometimes it has something to say. Like the canary in the mine, it could be a signal of whether we are starting to run out of oxygen.