[asia-apec 1505] PCIJ Article on Estrada's Wealth

[BAYAN]

Dear comrades and friends, 

This is a two-part series on the Estrada wealth. Unfortunately, the bigger
papers in Manila didn't run the story, so we are circulating it on the Net.
For
more details of the story, visit the PCIJ Website at
<http://www.pcij.org>http://www.pcij.org or
<http://www.pcij.org.ph>http://www.pcij.org.ph.

Public Information Department
Bagong Alyansang Makabayan
(BAYAN, New Patriotic Alliance)



The State of the President's Finances
CAN ESTRADA EXPLAIN HIS WEALTH?

by Yvonne T. Chua, Sheila S. Coronel and Vinia M. Datinguinoo
Philippine Center for Investigative Journalism
 

(First of Two Parts)

PRESIDENT ESTRADA says his life is an open book. He does not deny the
complications of his private life that he has several mistresses, and that he
has sired children by them.

The President, however, has not exactly been forthright about the financial
aspects of his private life and the complex ethical issues such as
conflicts of
interest posed by the many and varied business involvements of his various
families.

In his statements of assets, for example, Estrada does not declare his
participation in about a dozen companies in which he and his wife are major
investors and board members. Neither do his asset declarations give an idea of
the magnitude of the business interests that he and his families are engaged
in. 

In the course of several months, we obtained and examined 66 corporate records
in which Estrada, his wives and his children are listed as incorporators or
board members. Altogether, these companies 31 of which were set up during
Estrada s vice-presidential term and 11 since he assumed the presidency had an
authorized capital of P893.4 million when they were registered. The President
and his family members had shares of P121.5 million and paid up P58.6 million
of these when the companies were formed. 

 It is difficult to estimate how much these businesses are now worth
because of
incomplete data at the Securities and Exchange Commission (SEC). But based on
available 1998 and 1999 financial statements, 14 of the 66 companies alone
have
assets of over P600 million.

 It is not clear from the President s official asset declarations over the
last
12 years where the funds to invest in so many corporations come from.
Moreover,
neither the President nor his immediate family members acknowledge that
many of
their businesses involve the government, either in the acquisition of permits
and clearances or in the award of contracts. 

Today, as the President gives an accounting of the state of the nation, he
should also be making an accounting of the state, and the source, of his and
his families finances.

This becomes an urgent issue because of the lavish lifestyles of the President
s various households. Two of Estrada s women companions Laarni Enriquez and
Joy
Melendrez live in posh quarters in Wack-Wack, Mandaluyong City and Green
Meadows, Quezon City. According to land records, none of these residences are
registered in their names or the President s.

Estrada's wives and children have also been seen riding a fleet of imported
expensive vehicles, including a Jaguar, a Range Rover and several Mercedes
Benzes each of which costs millions of pesos. But neither the President s
statement of assets nor his most recent income tax declaration can explain
where he got the wherewithal to support the extravagance of his loved ones. In
1999, Estrada declared in his statement of assets a net worth of P35.8 million
and in his income tax return, a net income of P2.3 million. 

In Wack-Wack, for example, land values are currently at P40,000 per square
meter. Enriquez s residence since the mid-1990s is at 771 Harvard Street;
it is
on property that covers more than 1,000 square meters and is listed under the
name of Jacinto Ng Sr., one of the President s closest friends. The land alone
is worth over P40 million.  Rentals for a typical Wack-Wack house would easily
run to more than P100,000 a month or P1.2 million a year, about half of
Estrada
s declared net income in 1999. 

A recent visit to Wack-Wack revealed that the Enriquez house was being
renovated. Earlier this year, Enriquez was reported to be building another
Wack-Wack mansion at 796 Harvard Street, on a 5,000-square meter property
registered, according to land records, under KB Space Holdings, a company
owned
by Ng. 

It is obvious from this example that official declarations as contained in
Estrada s statement of assets and income tax return do not provide an accurate
picture of the magnitude of the President s and his families wealth. 

At the same time, what Estrada declares are in themselves problematic. R.A.
6713 mandates that all public officials file every year the acquisition cost
and the assessed and fair market values of their real property. In addition,
they should also list other personal property as well as their investments,
the
cash they have on hand or in banks, their financial liabilities, and their
business interests and financial connections.

Since his election to the Senate in 1987, Estrada has consistently declared
interests in only four corporations: JELP Real Estate Development Corp., J. E.
Inc., Feluisa Development Corp. and Felt Food Inc. The first three are real
estate companies, with JELP appearing to be the biggest.  

In a 1998 financial statement submitted to the Securities and Exchange
Commission (SEC), JELP declared assets worth P194.2 million, mostly buildings
and real estate valued at P147.2 million, or more than double its 1997 real
estate assets of P58.8 million. 

None of these assets, however, are listed in Estrada s declaration, even if he
and his wife jointly own 70 percent of JELP s shares. Moreover, none of JELP s
liabilities of P188 million are declared in Estrada s statements. Presumably,
some of this money went to the acquisition of nearly P90 million worth of real
property in 1998 alone. It would interest Filipinos which banks, institutions
or individuals lent Estrada so much money in the year of his election.

Incorporated on November 18, 1992, a few months after he was elected vice
president, JELP began operating with a paid-up capital of P14.4 million, only
P3 million of which was in cash. It is difficult to determine how the company
built up its asset base and how it funded its real estate purchases from 1993
to 1996 because it has not complied with SEC requirements to file annual
financial statements.  

It was only in 1997, a year before Estrada was to run for the presidency, that
JELP suddenly filed its financial statements.  By then, it reported assets of
P116.3 million, of which P58.8 million was real property. In 1998, the year
Estrada became president, JELP reported assets of P194.2 million, an increase
of nearly P78 million despite the Asian crisis and the slump in real estate
prices.  Of these assets, P147.2 million was real property.

Estrada also did not include in any of his statements of assets since 1987 his
and his wife s shareholdings in 11 companies. A check with the SEC shows
Estrada or his wife Luisa Pimentel were incorporators or shareholders of,
among
others, Millennium Cinema Inc., JE Films and Video One Corp., and JOI s Food
Corp., none of which were listed in the President s asset declarations in the
last 12 years. 

Yet, when we queried Malacañang about these issues in late April this year,
Press Secretary Ricardo Puno told us to wait until the President s accountants
and lawyers were available to provide answers. Subsequent follow-ups since
then
did not yield any answers. Puno also declined to say who these lawyers and
accountants were.

The problem with R.A. 6713, which requires government officials to declare
their assets every year, is that it asks these officials to make public the
assets only of their spouses and children under 18. Framers of the law
apparently never foresaw a president like Estrada who would openly acknowledge
relationships with other women and children out of wedlock. The problem
becomes
even bigger when several of these extramarital liaisons yield mistresses and
children who are actively involved in business.

Yet, other laws like the Anti-Graft and Corrupt Practices Act recognize the
potential of people with family or otherwise close personal relation with any
public official to take advantage of such a relation by directly or indirectly
requesting or receiving any present, gift or material or pecuniary advantage
from any other person having some business, transaction, application, request
or contract with the government, in which such public official has to
intervene. 

The law includes such relationships as close personal, social and fraternal
connections, and professional employment all giving rise to intimacy which
assures free access to a public official. Presumably, mistresses and
illegitimate children fall under this category.

The law on unlawfully acquired property, on the other hand, raises the
possibility that ownership of property can be concealed by recording it in the
name of, or held by, a public official s spouse, crony or relatives.

These laws become pertinent particularly in the light of the multi-faceted
business involvements particularly of Guia Gomez, with whom President Estrada
has acknowledged having a long-term relationship, and her 31-year old son Jose
Victor JV Ejercito.

Gomez, who admits to her entrepreneurial inclinations in newspaper interviews,
appears to be the most business-minded among the President s women companions.
A check with the SEC shows that Gomez is listed as having shareholdings in 33
companies involved in real estate, food, office machinery, trading and
semiconductors. Her son is a shareholder in 11 of these companies, although on
his own, he is an incorporator and stockholder of eight other firms. 

Also listed as shareholder in two of the Gomez companies is Joel O. Ejercito;
his sister, Ma. Theresa O. Ejercito, is stockholder in five. Both are the
President s children with Peachy Osorio, a movie director s daughter with whom
he had a relationship before his marriage to the First Lady. 

>From the records, it appears that Gomez s core businesses are real estate and
trading. She owns at least seven real estate companies, with a combined
authorized capitalization of over P200 million. It is, however, difficult to
determine from SEC figures the real assets, including land and other property,
of these corporations. 

For example, EG Properties alone, formed on November 23, 1998, shortly after
Estrada was elected president, has an authorized capital of P100 million, P25
million of which has been paid up, half by Gomez and the rest by JV, Joel and
Ma. Theresa Ejercito, and one Joey G. Estrada. 

Another real estate company, Meiji Inc., is developing a housing estate in
Cavite. It  has an authorized capital of P100 million, P7 million of which was
paid up when it was established on June 24, 1992, the year Estrada became vice
president. Gomez holds the biggest number of shares and had paid up P4 million
of her P16-million subscribed capital when the firm was registered.  Son JV is
the next biggest shareholder after his mother.

Other real estate companies listed in Gomez s name are Grandmeadows Properties
Inc., El Pueblo Builders Inc., Apex Land Inc., All Time Realty Consultants and
Managers Inc., and JV&G Inc.

There is, of course, no law that prevents presidential mistresses from
engaging
in business. What is worrisome is when these businesses engage in transactions
that involve the government. For example, housing projects have to comply with
zoning and environmental regulations. Real estate firms can also avail
themselves of loans from government financial institutions. 

In defense of his and his mother s business practices, JV Ejercito has
said, We
are businesspeople and we have been in the past 10 years. We never dealt with
any government projects since my father is a public official, and we will
continue avoiding deals with the government. 

This becomes a tricky statement considering that JV is the biggest shareholder
in the now-inactive Best World Construction Corp., an affiliate of the
controversial BW Resources Corp., which is currently involved in an insider
trading scandal. 

JV s core business is real estate development. His Buildworth Development
Corp.
constructs houses and condominiums. As anyone who has done even minor
construction work knows, construction involves obtaining a slew of government
clearances and permits. JV also has a lending company, Foremost Credit
Resources, in which he, too, is the biggest shareholder.

Gomez is also into trading of various products, including food, biological
products, office equipment, semiconductor materials, machinery and chemicals. 
Her dozen trading companies include Xytox Corp., Bioconcepts International
Inc., Personal Shopper Inc., Poongsan Precision Phils. Inc., Gazelle
Distribution System Inc., Stallion Intertrades Center Inc., Paisa
International
Inc., Micro-Biomass International Inc., Rainbowman International (Manila)
Inc.,
and Trumpet Marketing International.

Gomez is active in the labor recruitment business as well, having formed four
job placement companies Monde Quality Services Inc., Job Employment Staffing
Assistance and Allied Services Inc., Powerhouse Staffbuilders International
Inc., and Gomez-Orozco Recruitment Agency Co.

Like the First Lady, Gomez has her share of restaurants that operate under
GTWJ
Food Corp., Paisa Champagne Bar Inc. and Gomez-Antonio Enterprises Inc.

Meanwhile, the President s other woman companion, Laarni Enriquez, has six
companies to her name, some of which include her brothers as incorporators.
Star J Management Corp., which she formed in 1996 with the President s brother
Jesus, sister Pilarica and presidential buddy Jaime Dichaves, operates the
Star
J Plaza, a mall in Malabon whose ownership, according to a document displayed
in the lobby of the mall, is under the name of Jacinto Ng.  Enriquez also owns
Star J Bingo and Star J Games, which operate the bingo parlor and bowling
alley
at the Malabon mall.

 On the other hand, the First Lady and her children are mainly into real
estate,
restaurants and entertainment. Apart from JELP, Estrada, the First Lady and
their children formed the Feluisa Development Corp. They have restaurants
listed under five food companies: Felt Food Services, JOI s Food Corp., 24K
International Food Inc., ADE Food Inc. and All Hot Soup Inc.

 In the entertainment business, the Estradas invested in Millennium Cinema
Inc., formed in 1999, and which is reported to be the fastest-rising film
production company these days, and JE Films and Video One Inc.

 (To be continued)

 

The State of the President s Finances

Estrada s Entrepreneurial Families 

 

 

by Yvonne T. Chua, Sheila S. Coronel and Vinia M. Datinguinoo

Philippine Center for Investigative Journalism

 Conclusion

IN 1998, Jose Victor JV Ejercito, then 29 years old, became the biggest
shareholder of the newly formed Best World Construction Corp., an affiliate of
BW Resources Corp., the gaming company now in the dock for stock manipulation
and insider trading.

Apart from Ejercito, the other incorporators of the construction firm were
businessman Dante Tan, a key figure in the BW scandal; Tan s lawyer Jose
Salvador M. Rivera Jr.; Francis Ablan, who was named BW chairman early this
year;  and Malaysian businessman Kenneth Eswaran, Tan s business associate who
is a major shareholder of another BW affiliate, Best World Gaming &
Entertainment Corp.

Corporate records show that the other shareholders of Best World Gaming
include
Tan, and lawyer Rivera both of them JV Ejercito s business partners in Best
World Construction. In December 1998, the Philippine Amusement and Gaming
Corp.
(Pagcor), the government s casino company, gave Best World Gaming the sole
authority to conduct nationwide computerized online bingo gaming for 10
years. 

In a congressional hearing in March 1999, Pagcor chairperson Alice Reyes
admitted that Best World Gaming got the bingo license because it had the
endorsement of the Office of the President. In addition, Best World Gaming s
affiliate, BW Resources, signed a memorandum with Pagcor on June 30, 1999, in
which Pagcor agreed to be the anchor tenant at the Sheraton Marina, a casino,
shopping and tourism complex BW is building in Malate, Manila.

In 1999, BW and Best World Gaming became co-borrowers of a P600-million loan
obtained from the Philippine National Bank, in which the government was then
the major shareholder.

These interlocking relationships illustrate the ethical problems posed by the
involvement of presidential relatives in business. In an interview, Ejercito
explained that he was drawn into Best World Construction by Tan and his
partners. Since they were family friends, they told me they were going to put
up a development corporation and since I was in real estate and
construction, I
thought okay, that s in line with my business. 

But Ejercito said that he pulled out of the partnership when BW shifted from
real estate development to gaming in late 1998. I told them I can t help
you, I
wouldn t be an asset to you, it wouldn t be good for me and for my father.
It s
not nice manipulating stock prices, I even told them that. In the end, nothing
ever came out of Best World Construction, Ejercito said. 

Even if that were so, the incident illustrates the apparently close business
and personal relationships between members of the Estrada family and
individuals who have obtained government loans, contracts and franchises. Such
relationships are bound to raise thorny issues of conflicts of interest.

There was nothing illegal about Ejercito s short-lived partnership with BW.
But
the fact that the President s favorite son was once involved with businessmen
alleged to have received preferential treatment from government entities and
now currently undergoing government investigation reveals the fuzziness of the
line that separates business from politics.

    Earlier this year, former Securities and Exchange Commission (SEC)
chairman
Perfecto Yasay Jr. had already accused the President of undue interference in
the SEC s investigation of BW and Dante Tan who, apart from having been JV
Ejercito s business partner, is also widely known to be Estrada s friend.

 Ejercito, however, insisted that his family has not taken advantage of
Estrada
s presidency to further their business interests. I don t want shortcuts, he
said. I see to it that everything is done legally. Even my bank loans are
obtained not because of who I am, I want them to lend me because of the
projects I am doing. I don t want them to see me as a political client. It s
actually hard to be the president s son you can t go into this, you can t go
into that because you re partly a political figure. I just can t wait for the
President s term to finish. 

 Despite these supposed difficulties, the businesses of Estrada s various
families appear to be doing well. In fact, our search of corporate records
showed that the President s wives and children have engaged in a rash of
company formation, establishing at least 11 new corporations since June
1998, a
month after Estrada s election. Most of these firms are in real estate and
entertainment.

 In a country where the fortunes of businesses are often determined by
political connections, the entrepreneurial activities of Estrada s various
families, while not illegal, tread on fragile ethical ground. 

 JV s mother, Guia Gomez, for example, has a long list of business
partnerships
with individuals who are now in government. Her business activities are those
of a politically well-connected entrepreneur whose interests have expanded
with
Estrada s rise to power.

 All but one of the 33 companies in which Gomez is listed as an incorporator
were formed since 1987, when Estrada was first elected to the Senate. Of
these,
13 were set up while he was senator, 15 during his vice presidency, and
four in
the first two years of his presidential term. 

 Gomez operates a range of businesses involved in real estate, trading, and
even environmental impact assessments. All of these businesses would require
government clearances and permits and some of them involve transactions with
government entities.

 Gomez finds herself in sticky situations as several of her business partners
have been appointed to government posts since Estrada became President.

 For example, SEC records show that Gomez and Julius Topacio, assistant
secretary of the Department of Interior and Local Government, are partners in
five companies. Topacio is the president s chief accountant and is listed as
such in Estrada s 1987 statement of assets. In 1998, Topacio was appointed the
government representative to the board of Legaspi Oil Co., a sequestered
company.

 He and Gomez are partners in Meiji Inc., a company formed in 1992 and
currently developing a subdivision and housing project in Cavite, which
presumably needed to obtain local government permits and clearances. In
addition, Topacio and Gomez are shareholders in Paisa Champagne Bar Inc.,
operating restaurants that again need all sorts of local government permits.

 They are also partners in Paisa International Inc., a trading company; two
project management firms, WT Partnership Philippines Inc and., Wegtec
International Corp.; JV& G Inc., a real estate company; and Powerhouse
Staffbuilders International Inc., a labor recruitment firm.

 Another shareholder of that recruitment firm is Rosario G. Yu, formerly
tobacco tycoon Lucio Tan s secretary. Yu was named presidential assistant in
1998, and is frequently seen in Malacañang.

 An even more controversial business associate of Gomez s is Cecilia
Ejercito de
Castro, who is known as the President s cousin. De Castro was appointed
presidential assistant in 1998. In 1999, she figured in a P200-million
textbook
scandal in which Education Secretary Andrew Gonzalez said she approached him
for the speedy release of textbook funds.

 De Castro is Gomez s business partner in the real estate firm, Meiji Inc.,
and
Xytox Corp., a trading firm.

 Another Gomez partner is Talreja Mangharam Shivandas, the Indian businessman
who runs the restaurants and VIP lounges at the Ninoy Aquino International
Airport and who was responsible for the ill-fated construction of a restaurant
on the Malacañang grounds. Gomez and Shivandas are partners in Paisa
International Inc., a trading company.

 Gomez s network of business associations include presidential brother in-law,
academic Raul P. de Guzman, who was appointed to the San Miguel Board and
named
presidential adviser on development administration in the first few months of
Estrada s term. In 1989, De Guzman and Gomez were both incorporators of
Environmental Primemovers of Asia, Inc., a company that conducts environmental
impact studies for firms seeking environmental clearances from the government.

 In 1996, Environmental Primemovers was bought by Woodward-Clyde Philippines,
although the original incorporators retained their investments in the new
company.

 These included De Guzman s son, Raul Roberto, who was appointed presidential
assistant for environment and water in 1998, even while he was still involved
with the environmental firm.

 Raul Roberto is also in partnership with Gomez in three other companies,
including Poongsan Precision Phil., Paisa International, and Risktrack Inc. as
well as Environmental Primemovers. 

 The involvement of Gomez and Raul Roberto de Guzman  with Poongsan
Philippines, a  wholly owned subsidiary of the Korean firm Poongsan Precision
Corp., is nominal but still raises questions. Poongsan manufactures
semiconductors and is located in the Clark Special Economic Zone, and
therefore
leases government property and receives government incentives.

 Yet another business associate is Jose Fernando B. Camus, Gomez s partner in
WT Partnership Philippines Inc., a management and engineering company, and in
Meiji Inc. He was named to the board of the Bases Conversion Development
Authority also in 1998.

 Meanwhile, Rolando Macasaet, who currently heads the Philippine National
Construction Corp., the government corporation that operates the country s
toll
roads, is JV Ejercito s business partner in Foremost Credit Resources Inc., a
lending company formed in 1995. 

 The first two years of the Estrada presidency was a period that saw a
burst of
entrepreneurial energies among Estrada s wives and children. The busiest
appear
to be  Gomez and her son JV. Gomez formed four real estate firms in 1998 and
1999: El Pueblo Builders, Grandmeadows, Inc., EG Properties and Apex Land Inc.
Her son is a partner in three of these firms while Estrada s other
illegitimate
children Joel Eduardo and Ma. Theresa Ejercito hold shares in EG Properties.

 JV, on his own, formed three new companies since his father s election:
Aeromax Aircraft Services, Inc., a carrier of mail and merchandise; Vegas Food
Inc., a restaurant and catering firm; and International Maximum Entertainment,
Inc., which is involved in movie, TV and musical productions.

 In addition, the assets of JV s construction firm, Buildworth, grew from P14
million in 1997 to P83.3 million in 1998, according to financial statements
submitted to the SEC. Meanwhile, his Ang Bayang Makulay Production Inc., a
foundation formed last January 3, is producing the Philippine version of the
Broadway hit, Miss Saigon. 

 Often referred to as the family s black sheep, Jude Estrada, the President s
second son with the First Lady, did not show much entrepreneurial inclinations
before his father s election. But in 1999 alone, Jude and his associates
formed
three new companies: Primeval Commodities, Inc., which is engaged in the
trading of petroleum and food products; Paragon Security Management and
Investigation Services, Inc., which provides security services; and Reach
Management Corp., which is into personnel and management consultancy.

 In addition, Jude with his two other siblings, Jinggoy and Jacqueline, his
mother Luisa and uncle Jesus Ejercito, formed Millennium Cinema in 1999.
Barely
two years old, Millennium hopes to rival the big film companies, Regal and
Viva, in the movie production business.  


For more details of Estrada's and his families' financial interests, including
statements of assets and corporate holdings, visit PCIJ's web site:
<http://www.pcij.org/>http://www.pcij.org or <http://www.pcij.org.ph) 
/>http://www.pcij.org.ph




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	 Bagong Alyansang Makabayan or New Patriotic Alliance
	 No. 23 Maamo Street, Sikatuna Village
	 Quezon City, PHILIPPINES							      	
	 Telephone: (63-2) 435-9151       Telefax: (63-2) 922-5211
	 Email:   <bayan at iname.com>
	 Webpage: http://www.bigfoot.com/~bayan-phils 	      	
	 Webpage: http://www.bigfoot.com/~bayan-phils 	      	

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