This investigation was supported by Journalismfund Europe’s Modern Slavery Unveiled grant programme.

*Names of the workers have been changed to protect their identities

READ: Part 1 | How Filipinos landed in Belgium’s biggest trafficking scandal

ANTWERP, Belgium – The discovery of trafficked laborers, including 65 Filipinos, at the Borealis plant in Antwerp led the Belgian government to grant them temporary residence. The next challenge for them was finding a job, making the most of their stay while the state prosecutor considers their case. 

Among the 65 workers, Henry, the Batangueño pipe fitter, couldn’t stand working for Flemish manpower agency Job Talent. He endured four months of unemployment in the latter half of 2022, and then he and many others found Job Talent, which they thought would be their refuge.

The agency sent him to live in the city of Zaventem while going to Antwerp as a pipe fitter, around an hour away. Every morning he’d wake up at four just to arrive on time at 6 am. He tired during the long train rides home late in the evening after his integration classes.

Henry joined four other Batangueños at the house in Zaventem, leased by the landlord to Job Talent with regulations that seemed unnecessarily expensive and punitive. During a birthday celebration, the workers were scolded by the agency for singing karaoke past 9 pm on a weekend. 

“Even our neighbors were invited, but they told us to stop,” moaned Henry.

The interim agency never provided the tenants a copy of the contract, only a list of fines if certain rules were violated:

• Damage to the building – minimum €300 (P18,266)
• Locking the apartment before a planned inspection – €150 (P9,133)
• Not cleaning the apartment – minimum €300 (P18,266)
• Clogging of pipes – minimum €150 (P9,133)
• Damage to the premises – minimum €150 (P9,133)

Job Talent workers are docked around €85 (P5,175) to €105 (P6,393) a week for housing costs. Henry and his four other housemates had to give up €95 (P5,784) a week, bringing down his take-home pay.

“Biktima na nga, nabiktima pa ulit. Ang pangako nga sa amin, €500 ang take-home ko, hindi €300 (P18,266),” he grumbled. (Victims already, then victimized again. We were promised €500 take home pay, not €300.)

It means they were paying close to €2000 (P121,778) a month for a two-bedroom townhouse. They wondered why the house next door, which was the same as theirs with the same owner, only cost their neighbor €700 (P42,622) a month.

The long hours, low pay, arbitrary and unfair housing arrangements were exactly the things he hoped to avoid after what he’d gone through at the Antwerp port.

Henry left Job Talent two months after. The agency still employs about two dozen other Filipinos from the Borealis plant while continuing to recruit more Filipinos even domestically.

Job Talent refused to be interviewed. They only emailed a response saying, “We are indeed the leading organization in the employment of Filipino technical workers. We work 100% in compliance with Belgian labor laws and are accredited in the Philippines.” 

Manpower Resources of Asia (MRA) Inc., accredited by the Philippine Overseas Employment Administration, is listed as Job Talent’s Philippine partner in numerous job listings.

Job Talent’s terms are legal. However, the rental situation is “ridiculous,” because the agency “treats the workers like small children,” said Mieke Van Laer, lawyer to the Bangladeshi and Turkish workers.

She surmised there’s a big chance Job Talent is profiting from the rental arrangements and taking advantage of Filipinos who are unaware they can rent their own homes without manpower agencies as an intermediary.

Job Talent was among the companies to participate in a job fair in late 2022 organized by Payoke, an NGO tasked by the state to shelter trafficked workers in Flanders, and the Belgian labor department, with help from the Philippine embassy and the honorary consul.

Van Dyck said that employer-arranged housing is becoming more common to accommodate the stream of migrant labor.

Despite an overworked staff, Payoke does its best to screen labor and housing contracts for everyone under its care but attested that it has yet to find any red flags.

Keeping afloat

Payoke handles the monthly stipend of from €806.42 (P48,518.60) to €1214.13 (P73,048.65) given by the Public Centre for Social Welfare (OCMW) to each Filipino worker.

It seeks out donors who can provide free accommodations, but most of the time it needs to rent out apartments. 

From the monthly stipend, Payoke subtracts €750 (P45,666) for shelter (unless a donor provides one for free) and €50 (P3,044) for transportation. Workers are then handed €10 (P601) a day for general expenses, including food. 

Van Dyck said that whatever is left from each month, a little over €100 (P6,088) is added to the allowances paid out in one go at the end of a worker’s stay with the shelter.

Support from the OCMW to a worker stops when he gets a new job. When Rappler spoke to the workers in March 2023, none of them received anything more beyond the €10 pocket money.

“We make it work. We’d pool our €10 (P608) together for buying groceries, simple food. The cut for shelter at Payoke was really big. But now my rent in the apartment is just €450 (P27,400),” said Ricky.

Patrick* is approaching his senior years and is one of the oldest Filipinos from the Borealis plant. His peers are in their 30s and 40s. He’s worked around Africa and the Middle East since 1991, having never managed to find a job in his home country.

Right now, he has yet to find a new job, still surviving on €10 (P608) a day. 

Before Belgium, he worked in Hungary for €3.3 (P200) an hour during 10-hour shifts. In Antwerp, his pay wasn’t much higher, just €5.9 (P359) an hour for the same amount of work.

Patrick never wanted to be rescued. In his eyes, he was better off at the port of Antwerp – despite the anomalous arrangement – than having no job at all. His three children now have families of their own, and they still look to Patrick for support.

Undocumented Filipinos are usually reluctant to be rescued. “They don’t want to complain even if there are anomalies. They’re afraid of deportation or a bad record,” said UPB’s Aguila. 

“I’m still looking for a job now. It’s hard because of my age,” said Patrick.

The last few months have left him deflated. He sank to the bottom of his chair as he recounted his predicament to Rappler. He isn’t getting any younger, and operating cranes isn’t getting any easier with his waning dexterity. He mused about one day operating a forklift, but he’s had no luck yet.

When asked how much he wants to stay in Belgium, he motioned to his empty pockets wishing there was more in it. He shrugged, “all of the ayuda (assistance) I got, I’ve sent back to the Philippines.” 

Lawyers wanted

Among all the nationalities involved in the Borealis case, Filipinos are the only ones currently without a lawyer.

Migrante said the lack of legal representation is cause for concern. Navigating the legal wilderness of a foreign country is challenging on its own. Moreover, prospective employers think twice about giving jobs to those whose stay in the country hinges on the outcome of an investigation.

“The problem is we don’t know the status of our case or what the chances are,” said Ricky.

Van Laer and lawyer Jan Buelens of the Progress Lawyers Network, a coalition of law firms committed to social justice causes, initially volunteered to represent the Filipinos. But the embassy had already arranged for different representation. 

When the Borealis scandal broke, lawyers flocked to the embassy to volunteer their services. They took all the initial statements and filed the necessary accounts with the public prosecutor.  

The Filipinos have received no news about their case since then. 

According to Payoke and the embassy, the Filipino workers still do not have any current representation as of May 2023. 

“What’s important is that they have gainful employment here,” said Consul General Mendoza.

Olavare hit back saying, “Our government must address the legal concerns of the Filipinos. It’s nearly been a year, and still our compatriots don’t know who to consult for their case.”

Corporate culprits

Van Laer reckoned it could take a couple of years before the prosecutor reaches a decision as it determines “if there are enough signs of human trafficking.”

The prosecutor denied the Turkish workers recognition without providing any reason. No two nationalities at the Borealis plant traveled the same route and experienced the same conditions – a source of hope but also of uncertainty. 

Van Laer believes the prosecutor didn’t find any irregularities done to the Turkish workers.

Because Belgian definitions of human trafficking are very broad, Van Laer said any decision will subjectively depend on the prosecutor’s biases.

If the decision goes against the workers, it’s likely “they just become undocumented migrants in Belgium. The problem doesn’t go away,” she said.

Buelens, however, asserted that the Borealis workers were indeed trafficked.

He explained that “economic exploitation falls under human trafficking,” which includes not paying the correct wages, deception, and other anomalous working conditions.

IREM, seen as the principal employer, is publicly accused of human trafficking and labor exploitation. 

In a May 2023 statement, IREM said it remains “committed to fully cooperate with the Belgian authorities and to provide all available evidence to allow the authorities to ascertain the correctness of the conduct of the company.” It also pointed out that almost a year since, it has yet to contend with official charges. 

IREM will likely face formal charges when the prosecutor finishes the inquiry. 

However, Buelens and Van Laer, representing trade unions and trafficked workers, hope to enlarge the case to indict Borealis of these crimes.

Borealis maintained its innocence, implying in a statement that culpability lies with IREM as they had no knowledge of any illegal activity.

Last January, Borealis said they have “zero tolerance for any malpractice and puts stringent measures in place to mitigate related risks.” They also committed to setting up a crisis management team among other preventive mechanisms.

Buelens cited the account of the labor inspectorate which says Borealis knew about irregularities in the employment early on and did nothing.  

“Borealis wants to look like the victim. Certain abusers will act like this, and we must be quite naïve to think that they didn’t know anything,” said Buelens. 

After an initial suspension, both Borealis and IREM have resumed operations as early as October 2022.

The Belgian Workers Party (PVDA) decried the lack of urgency in the Belgian government’s actions, taking no concrete steps inside parliament on the case.

Last February, PVDA parliamentary representative Peter Mertens filed a proposition of law. It sought to pin the primary accountability of labor exploitation on “main contractors” like Borealis. 

“We want them to be afraid,” said PVDA veteran Coenegrachts, if not, “companies will continue this practice because they’ve got nothing to lose.”

Living with uncertainty

Three evenings a week, Peter, Henry, Ricky, Patrick, and all of the others see each other for Dutch language classes. Their hope is that the prosecutor favors their stay. Then they’d actually get a chance to speak the Dutch they’re learning. 

After class, they have routine cigarettes on street corners, rubbing their arms and waiting for everyone to finish before filing back into a tram. They take a few stops and reach a Lebanese eatery, the only affordable restaurant food in sight. They say the shawarmas are much better than in Manila. 

They pool together their €10 and feast well into the evening, knowing only each other in the emergent European melting pot they’ve sought out for their family’s futures.

They don’t know how long this current job will last, when they’ll hear an update on the case, get to visit their families, take a holiday, speak to a lawyer, or when the Philippine and Belgian governments will take a greater interest in their cases. Or even whether Payoke will still be able to arrange for shelter once the next big trafficking scandal inevitably hits.

They live within the profound uncertainty of migration. They take comfort only in the collective dream of staying put and having available work. – Rappler.com

This investigation was supported by Journalismfund Europe’s Modern Slavery Unveiled grant programme. 

*Names of the workers have been changed to protect their identities

ANTWERP, Belgium – In July 2022, Belgian police discovered 174 illegally employed workers at a factory owned by Borealis, an Austrian multinational and chemical manufacturer. Most of the workers were Turkish and Bangladeshi, 65 were Filipino. They arrived to work at the port of Antwerp between February and May 2022.

Employed as pipe fitters and crane operators, the Filipinos were severely underpaid, earning €8.50 (P512) an hour, about three times less than the standard of around €24 (P1,443) an hour.

Borealis is a big player in the European market for base chemicals and fertilizers. The company denies any wrongdoing and blames the Italian manpower agency and subcontractor IREM group. When news of the trafficked workers emerged, Borealis suspended then terminated relations with IREM. 

Previously employed in Eastern Europe, the Filipinos were recruited to work in Belgium by IREM and another subcontractor, Raj Bhar Engineering. They’d been promised proper minimum wages and all the necessary permits.

They learned that they’d been deceived only when police and immigration officials arrived to accost them and temporarily halt the plant’s operations.

A Belgian public prosecutor, appointed by the state per region, is currently investigating the case to determine if the Filipinos were indeed trafficked. 

Meanwhile, the Belgian state has granted each of the workers an “Orange Card,” a type of residency permit valid for three to six months. Periodically, they have to renew their residency for as long as their case is under inquiry. 

If the prosecutor decides against the Filipinos, they will all be sent back to the Philippines. 

Very little attention has been paid to the Filipinos at the heart of Belgium’s biggest-ever trafficking scandal. The workers, owed months of back-pay for the legally-mandated wages of around €8500 (P517,556), are at risk of being forgotten and could go home with nothing.

Nearly a year since their rescue, the Filipino workers live in uncertain and precarious conditions, a plight that their homeland is apparently not aware of.

Flemish destination

In January, trudging against unfamiliar winter chills, the Filipino workers shuffled into a packed tram across Antwerp Central station. The passengers, the city’s workforce, filled the vehicle with the conversation of what seemed like a dozen languages: Filipino, Turkish, Arabic, Chinese, Korean, Bahasa Indonesia, among others. Nobody uttered a word of Dutch or French – Belgium’s main languages.

They were headed to night classes about integrating into Belgian society at a nearby state-sponsored learning institute, a requirement of their now-temporary residence.

Happy to be reunited after working shifts at various warehouses and construction sites, they crowded at a street corner as they waited for the others before proceeding to class. They smoked cigarettes to stave off the cold of evening winds and huddled to swap stories.

“Working student na tayo,” joked Peter* as the workers entered a local kebab shop. The likable Visayan crane operator often treated his workmates to after-class meals. 

“I don’t have a wife and kids like them, just siblings to support anyway,” he said, before jumping in line to order dinner for a dozen people. 

All of them are beginning to learn about Belgian society, their rights as residents and the labor standards that treat them as equals of the domestic labor force.

At the plant, nobody questioned the working conditions. They quietly went along with earning way below the standard because it was also the biggest paycheck they’d ever had.

Livable employment opportunities are scarce in the Philippines. By the end of 2022, the Social Weather Stations surveys revealed that 21.6% of Filipinos were jobless. 

Despite being underpaid, the Borealis workers earned 620% more than what they would have gotten in Metro Manila. 

Foreign and local workers in Belgium have the same rights. The lowest pay in Belgium is €11 (P670) an hour, 29% higher than what the Filipinos received. Pipe fitters and crane operators usually make  €18 (P1,096) up to €24 (P1,443) an hour.

Undocumented labor in the port area has been growing for quite some time now, according to Belgian Workers Party (PVDA) regional leader Ward Coenegrachts. Smaller cases of labor trafficking have been discovered all over the city in recent years, he told Rappler. 

Coenegrachts estimated that among the workforce handled by labor subcontractors “not even 5% are Belgian. They’ve come from all over the world then handed bad or fake contracts. Tens of thousands of people are in very bad working conditions all over Antwerp and you never hear about them.”

The Borealis case didn’t set a precedent. It was a tipping point, revealing the sheer scale of problems in the labor market.  

Antwerp, Belgium’s second largest city, is fast becoming one of the biggest multicultural urban centers in the world with over half a million people divided into 174 nationalities. The port area is a hub for industrial powerhouses, with labor in high demand.

Myria, an organization appointed by the government to act as independent national rapporteur on trafficking, has documented the influx of labor entering Antwerp. They noted significant growth in the employment of non-EU nationals, from 9% in 2017 to 27% by the end of 2021. 

Alexandra Buchler, the group’s migration expert, estimates that the city could now have around 150,000 undocumented workers, over a fifth of the population.

To complete the projects at the port area, Payoke, an NGO tasked by the state to shelter trafficked workers in Flanders, believes around 10,000 more migrant workers will be needed.

According to the Philippine embassy in Belgium, there are 18,000 individuals born in the Philippines and now legally staying in Belgium. Most are employed as domestic helpers or in the service industry where they earn €16 (P977) an hour on average.

Up until the Borealis case, Myria said that Filipinos were rarely seen in the construction industry, which the group has labeled a “risk sector” for labor violations.

The Borealis case “exposed the limits of the Belgian system” to handle the gravity of people involved, said Buchler.

‘Jumping’ into Belgium

Before coming to Belgium, the workers were employed legally in either Poland or Hungary in 2021.

The soft-spoken Batangas native Henry* kept his hands inside his front pockets for warmth while sharing his story about entry into Belgium. He still wore the thin jacket provided by his bosses in Poland. He had barely enough to afford the necessary layers to cope with the Belgian winter when he met up with Rappler in February. 

When asked who his previous employers were, he pointed to the printed logo on the jacket – it said Daeshin Construction plant, a Korean machinery manufacturer. 

A mere US$2.7 (P149) an hour on 10-hour shifts was not the income he hoped for, especially after paying an P80,000 placement fee to recruitment agency VFG International. He needed to put two kids through school and support his extended family in Batangas.

When he learned of recruiters looking for new hands with triple their salary at the time, Henry recalled, “We were convinced we had to jump. If we knew it was illegal, we wouldn’t have.” 

The workers alleged that a network of manpower agencies and subcontractors recruited cheap labor from Eastern Europe into Western Europe.

Many of the workers were recruited through Raj Bhar Engineering, which has offices in Bangladesh, Portugal, and Croatia. On its website, the company lists IREM SPA and two other IREM group subsidiaries as partners.

The Filipino and Bangladeshi workers point to the IREM group as the main culprit. It provided the contracts, paid the substandard wages, and promised the work permits that never arrived.

Peter, the Filipino crane operator, had worked with IREM before in three other countries, developing a level of mutual trust with its personnel. He had a natural charm and was well-liked. Besides his habit of treating his co-workers to meals, he handed out cigarettes during breaks to his supervisors. 

In hindsight, he said, maybe it was his rapport with the staff that blinded him to irregularities earlier.

Attending the Sunday service at Antwerp’s Church of Saint Boniface, Peter led several workers in a sort of confession: he should have noticed something was awry before he reached Belgium. 

IREM arranged for Peter’s ticket on a tourist visa to Eindhoven in the Netherlands, close to the Belgian border. When Dutch immigration asked if he had any intention to work there, he answered, “No, I am just passing through,” repeating what IREM told him to say. Technically, he wasn’t lying.

An IREM employee picked him up at the airport and drove him straight to Antwerp. Peter said they have a vast network of recruiters who can get bonuses of about €100 for each worker they can get on site.

He likened the network of agencies to a family tree.

“IREM is the mother, then Raj Bhar and the others, they’re like nieces and nephews. But IREM is the one dictating their moves,” he said.

The day the police came Peter said the “company tried to hide me. They like me, they didn’t want me to get caught.”

Days before, he recalled seeing IREM staff pacing and arguing onsite, looking worried. They badgered him to marry a Belgian immediately so that he could stay.

Among the workers, outspoken Batangas-born Ricky* is regarded by his peers as a leader.

Hours following the raid at the plant, IREM tried to convince him and many others to cross another border into Greece and work at another plant. They were shown flight tickets to leave that very evening.

“Kuha na namin diskarte nila: ibang planta, wala pa ring papel. Sabi namin ayaw na namin. Alanganin na,” said Ricky, wincing. (We understood their methods already: different plant, still no papers. We rejected the offer. Too much uncertainty.)

First responders

For the next three months after the raid, the workers were jobless, then hungry. They relied on donations from the Filipino community that rationed supplies regularly.

Ador Olavare of the Belgium chapter of Migrante, a grassroots organization for migrant welfare, described the post-rescue period as “troubling,” because of the constant need to gather resources for dozens of people. 

“Worse, they had nothing to send to their families,” he added. 

Jon Aguila is the chairperson of the Ugnayan ng Pilipino sa Belgium (Association of Filipinos in Belgium) or UPB. He got a call last year from the Philippine embassy in Belgium asking him to mobilize the Filipino community to feed the rescued workers. It would take weeks before Philippine officials were able to afford any material support.

“They said they were still requesting funding from Manila. We’re here to help. But our officials must also be prepared,” Aguila said.

The workers were scattered, staying and crowding inside the homes of other Filipinos or friends of UPB and other concerned groups and individuals across Belgium. Some had to sleep in tents put up in backyards, while the entire Filipino community in the country scrambled for donations. 

The embassy had requested for the $5,000 (P276,745) Assistance to Nationals Fund (ATN) from the Philippine government.

“We’d rather give in-kind, food and everything. Every week, we’d give them until the fund ran out,” said Consul General Pablito Mendoza.

Mendoza disclosed that should a similar crisis happen again, they could lose direct access to the ATN as it will come under the discretion of the newly-formed Department of Migrant Workers (DMW) in the Philippines.

Apart from the ATN, DMW Secretary Susan Ople arrived as part of President Ferdinand Marcos Jr.’s entourage last December and she distributed cash assistance. Alongside the embassy, Ople handed out €195 (P11,873) for 26 of the Borealis workers. 

They left out the 39 because “they told us that those with jobs wouldn’t receive ayuda (assistance),” said Ricky.

It was only through persistent appeals that the rest of the workers received their share of emergency assistance. It was released in early February, seven months after the rescue.

“Too little, too late. They’ve already been through so much,” Olavare said.

Migrante called on the Marcos administration to up its vigilance on human trafficking and recognition of the workers’ troubles.

“Our government should look at the recruiting agencies and review their track records to spare our kababayan (fellow Filipinos),” said Olavare.

One after another

According to Payoke, 25 Filipino workers are living in apartments arranged by new employers. Meanwhile, 33 are still without a job, as of March 2023.

Ricky shares a modest studio apartment with another worker in the outskirts of Antwerp.

On many nights, he receives calls from other Filipinos, new arrivals in Belgium from Eastern Europe. “Anong gagawin namin, wala pala kaming mga papel. (What will we do, we thought we had the right papers),” said one worker over the phone, crying in desperation.

Braving hunger and fear, some of them escaped from abusive employers, others arrived under false pretenses. Ricky tells them to stay calm, consider going home, or tell the authorities exactly what happened.

A month after the Borealis scandal, on August 17, 2022, police discovered 58 Filipino workers illegally employed by German chemical producer BASF at Antwerp port. Nine of the BASF workers had come from the Borealis factory. All of them were previously working in Eastern Europe.

Olavare noted that more and more workers from developing nations are coming into the continent via Eastern countries then transferring west for better pay.

“It’s difficult to enter Belgium so they come through eastern countries. The Philippines should do a better job scrutinizing the agencies involved,” he said.

Payoke director Anton Van Dyck told Rappler that they normally handle about four trafficking cases a month. Following the Borealis incident, “it became closer to a hundred.”

Their offices were swamped and their operations have been periodically crippled. Payoke needed to double the number of staff in a matter of weeks to care for the unexpected number of trafficked workers in the Flemish region. By their own estimates, they’ve gone €300,000 (P18.2 million) over budget.

“We can’t do it again,” admitted Van Dyck, “should another case arise in the near future.” (To be concluded) – Rappler.com

NEXT: Part 2 | Forgotten Filipinos struggle to remain in Belgium

MANILA, Philippines – In the 2022 national elections, Senator Joel Villanueva reported receiving P20 million in campaign donations from a corporation holding an active government contract, based on government documents. 

The Omnibus Election Code prohibits candidates from receiving donations from “natural or juridical persons who hold contracts or subcontracts to supply the government or any of its divisions, subdivisions or instrumentalities, with goods or services or to perform construction or other works.”

Senators Joseph Victor “JV” Ejercito and Robinhood “Robin’’ Padilla, along with losing candidate Richard Gordon, also reported receiving corporate donations that exceeded limits set in Comelec Resolution No. 10772 and the Corporation Code of the Philippines.

The 2022 elections saw the first implementation of the revised Corporation Code of the Philippines, setting clear guidelines on corporate donations. Based on the Comelec resolution that was issued based on the new law, the donation should not exceed 5% of the corporate donor’s taxable income the year before the elections.

New San Jose Builders has project with NHA

In 2021, New San Jose Builders Incorporated (NSJBI) was awarded a P2.147-billion contract to build a 19-story office of the National Housing Authority (NHA) in Quezon City, according to data from the Philippine Government Electronic Procurement System (Philgeps). 

The following year, it raised P20 million for Villanueva – the single biggest corporate donation to a senatorial candidate – according to the statements of contributions and expenditures (SOCEs) that the senator submitted to the Commission on Elections (Comelec).

The company supported only Villanueva among the senatorial candidates. The reelectionist senator won a fresh term in the 19th Congress.

NSJBI’s contract with NHA is effective from 2021 to 2025, according to Philgeps data. So when the company donated to Villanueva’s campaign purse last year, the contract was in effect. It continues to be so.

Whether or not Villanueva and NSJBI are liable under the election code is up to the Comelec to investigate, former elections commissioner Luie Guia told the Philippine Center for Investigative Journalism (PCIJ).

“Assuming that to be facts, the [Omnibus Election Code] is very clear: anyone that holds contract or subcontract with the government, or with any of its instrumentalities ay prohibited sa pag-donate sa isang candidate,” Guia said.  

“In this case, this is a criminal offense and Comelec is duty-bound to hold those who might have committed violations of the election laws to account,” he added. 

Guia said both the corporate donor and the recipient, in this case, Senator Villanueva, should be held liable for the breach. PCIJ sought confirmation from Comelec if it has investigated the matter. It has yet to respond. 

PCIJ also reached out to Senator Villanueva but he and his office have yet to respond. NSJBI has yet to respond to PCIJ’s e-mailed questions as of this posting. 

The NHA is an agency under the Department of Human Settlements and Urban Development  (DHSUD), which oversees the regulation and policymaking for all housing, human settlement, and urban development concerns in the country.

A year after NSJBI won the NHA contract, Jose “Jerry” Acuzar was appointed DHSUD secretary by President Ferdinand “Bongbong’’ Marcos Jr. He took his oath in July 2022.

Acuzar is better known as the owner of the famous heritage destination Las Casas Filipinas de Acuzar in Bataan, which is owned by NSJBI. Acuzar is also the chairman of the firm, according to NSJBI’s website.  He is the brother-in-law of Paquito “Jojo” Ochoa Jr., who served as executive secretary of then-president Benigno Aquino Jr. from 2010 to 2016.  

His construction company, which is also a real estate developer with interests in condominium development and tourism, has had brushes with controversy. 

In 2014, the Government Service Insurance System (GSIS) acquired one of NSJBI’s condominium properties after it defaulted on a bank loan. Tenants of the property filed a case against the company in the Supreme Court, arguing that the firm failed to inform them that the property was used as collateral. 

The firm’s projects included the P7.65-billion Iglesia ni Cristo-owned Philippine Arena in Bulacan, touted as the “world’s largest indoor arena’’ that can seat 55,000. In 2017, the Bureau of Customs called out NSJBI for failing to pay P1 billion in customs duties for the materials it imported for the construction of the arena.

3 other corporations exceed donation limit

PCIJ’s analysis of the senatorial candidates’ SOCEs also shows that three other corporations that donated to Ejercito and Padilla, along with losing candidate Richard Gordon, exceeded limits set in Comelec Resolution No. 10772.

Comelec Resolution No. 10772 issued in March 2022 allows domestic companies to make “reasonable donations’’ to candidates not exceeding 5% of its taxable income in the taxable year preceding the elections. 

It was based on the Corporation Code of the Philippines, a law enacted in the middle of the campaign period for the midterm elections in 2019 and whose impact was expected to be felt in 2022. 

Creative Pacific Corporation made the largest in-kind corporate donation to Richard Gordon by paying for P9 million worth of the reelectionist senator’s flights during the 90-day grueling senatorial campaign. The amount exceeded the company’s reasonable donation pegged at P1.5 million.

The company was reported to be a partner of the pharmaceutical firm IP Biotech Group in the construction of emergency quarantine facilities during the outbreak of the COVID-19 pandemic in the country in 2020.

Gordon, who lost in the 2022 elections, chairs the Philippine Red Cross which conducted testing for the disease and established isolation facilities and emergency field hospitals.

Auszeal Incorporated, a frozen food importer, chipped in P5 million to Ejercito’s campaign, an amount that was thrice more than its allowable donation of P1.4 million. Ejercito won a fresh term in the Senate. 

Tapa King Incorporated, the company behind the fast food restaurant of the same name, contributed P5 million to the campaign kitty of Padilla, who topped the senatorial race. Under the Comelec resolution, it was allowed to donate only P297,845.

See table below on corporate donations in the 2022 senatorial elections:

Two of the top domestic corporate contributors were omitted from the analysis as they were not found in the online database of the Securities and Exchange Commission (SEC).

The Comelec cap applies only to corporate donations, but not to individual donations. Election watchdogs have long sought campaign contribution limits for individuals to level the playing field for all candidates.

Violation of Resolution No. 10772 is considered an election offense and punishable by imprisonment of not less than one year but not more than six years.

PCIJ’s analysis is corroborated by a study conducted by election watchdog Legal Network for Truthful Elections (Lente).

A February 2023 paper on political finance reform found that eight corporate donors to party-list groups in the 2022 vote exceeded limits. 

Lente policy consultant and election lawyer Izah Katrina Reyes said it is imperative that the public, government, and civil society groups keep tabs on donors’ compliance with the Comelec resolution, lest it give rise to possible conflict of interest. 

“What we see is that there is a tendency for campaign contributors to be able to dictate or influence the candidates should they win the election. So when you are a business interest, whether you are an individual or a corporation with large contributions, then this particular influence is magnified,” Reyes told PCIJ.

In its paper, Lente also pushed for the regulation of private funding or corporate donations during elections to avoid occasions of corruption and undue influence.

For years, candidates, at least according to their declarations to the Comelec, have mostly relied on family wealth or tycoons’ contributions to fund their campaigns. History has shown some of these donors have gone on to benefit from the winning candidate.

Other top corporate donors 

The enactment of the Corporation Code of the Philippines was expected to increase candidates’ access to resources in the 2022 elections. Analysts initially feared it would balloon spending.

“The worst thing that can happen is that there’s an individual contributor and then corporate [contribution to a candidate], then [that’s] double [contribution coming from the same interest], ‘yun ‘yung ballooning [of spending],” said Ona Caritos, Lente executive director.

In all, however, PCIJ’s analysis showed that individual donors still dominated campaign donations in the 2022 elections.

Companies hardly flexed their financial muscle in the last elections. Only 57 companies made contributions to the senatorial candidates, totaling P113 million, or about 7% of the candidates’ total spending.

Caritos said it may be too early to feel the impact of the law. The corporate donors were also mostly small or medium-sized businesses. There were food businesses and ad agencies that contributed in-kind donations in the form of meals, or ad placements.

Senator Sherwin Gatchalian received P9.9 million – the second biggest corporate donation – from Foodsphere Incorporated, the company behind the production of the popular food brand CDO. 

Aside from Creative Pacific Corporation, Gordon also received an in-kind donation from mining firm Paramount Nickel Inc., which paid for P6 million worth of the candidate’s flights.

Aside from the P171-million donation made by Bagumbayan–Volunteers for a New Philippines partylist to Gordon’s campaign, the Creative Pacific Corp. and Paramount Nickel Inc. made the most contributions to the former senator.

Mandate Publications and Printing Express also contributed P5 million each to Villanueva, but these could not be found in SEC’s online database.

For this report, PCIJ included all corporate contributions for presidential and senatorial candidates, based on their campaign contributions and expenditures. Companies that were not found in the database of the SEC were also included to provide a holistic picture of the spending.

PCIJ omitted in the analysis Senator Jinggoy Estrada’s declarations in his SOCE that GMA Network and ABS-CBN contributed to his campaign. The Right to Know, Right Now Coalition had already earlier reported that it may be an error of reporting on the part of his staff.

For election lawyer Donnah Guia Lerona-Camitan, domestic corporations’ minor participation in election fundraising could mean that they do not find political spending a good business practice.

“Donations serve to align political candidates with corporate interests yet also entangle corporations in political affairs. At times, these donations sit in tension with stated corporate values and commitments,” she said.

Campaign finance reform needed for stricter implementation of election laws

Companies may have found themselves adjusting to the rules, Lente wrote in its report.  

In the SOCEs of some candidates, for example, a company name is declared as the donor but this is closely followed by the name of an individual related to the company. Most likely, this individual is an owner or holds an executive position in the company. 

Reyes said candidates may also still be figuring out how to declare some of the contributions they receive.

“We’re after truthfulness [in SOCEs] so talagang kung sino ‘yung nagbigay, who spent for it, whose money is it, that’s what we really want declared. So kapag nagkakaroon ng ambiguity as to [which] personalities, then it’s bad kasi it would go against the truthfulness of it [the SOCE],” Reyes added.

Lente has long campaigned for a limit on campaign donations from both companies and individuals.

After all, “it’s a democracy, and [elections] should be funded by more people,” said Reyes.

Stakeholders suggest that SOCEs be made public as a countermeasure to the weak implementation of campaign finance laws. It’s been extensively reported that the campaign finance office of the Comelec is understaffed and underfunded.

A public disclosure of SOCEs would allow people to assess campaign contributions and expenditures.

Guia shared that in the past, complaints for overspending backed by strong evidence led to the conviction of the candidates.  

“That is one thing the public can contribute to ensuring the integrity of the election process: if there’s a complaint, make Comelec unable to have a lackadaisical attitude on [handling] these cases [by providing clear evidence for the election offense],” Guia added. – Rappler.com

MANILA, Philippines – Loren Legarda won big time in her comeback bid in the Senate last year, coming in second with 24.3 million votes. She got a lot of help from her son and father, whose combined contribution to her campaign kitty totaled P136 million, based on her own declarations. 

Sherwin Gatchalian reported receiving a hefty P89 million from three family members, while Juan Miguel “Migz” Zubiri and Joseph Victor “JV” Ejercito each accepted at least P20 million from their parents to secure fresh terms in the Senate during the 19th Congress. 

Zubiri was eventually elected Senate president. 

It is expensive to run for office in the Philippines. The 12 winning senators reported a total campaign spending of P1.5 billion in their Statements of Contributions and Expenditures (SOCEs), an amount that watchdogs said may be an underreporting. Three candidates ran ads on mainstream media that were worth more than P1 billion, based on published rate cards or before discounts were given to the candidates.

Billionaire donors and business executives have always played key, albeit covert, roles in the campaign of national candidates.

But the 2022 senatorial race showed that some candidates relied more on the money of family members as well as their own to fund their campaigns.

Election lawyers said receiving financial support from relatives could lead to a possible conflict of interest especially if the family members also have business interests.

“[T]here is a tendency for campaign contributors to be able to dictate or influence the candidates should they win the election. So when you have a business interest…then this particular influence is magnified,” said lawyer Izah Katrina Reyes, policy consultant of poll watchdog Legal Network for Truthful Elections (Lente).

The “quid pro quo agreement” for a business to benefit from the influence of an incumbent official can be “really a possibility,” Reyes said.

Election lawyer Donnah Guia Lerona-Camitan said it also “raises questions whether elected officials can make impartial decisions against the interests of their family businesses for the benefit of the public’s interest.” 

Six of the 12 winning senators received a total of P291.91 million from their own families, according to the SOCEs that the candidates submitted to the Commission on Elections (Comelec). (DATA: Who financed the campaigns of 2022 winning senators?)

Family and personal funds accounted for a fifth of the P2.18 billion total spending reported by 48 candidates in their SOCEs. Sixteen candidates did not submit a finance campaign report to the Comelec.   

Two neophyte senators – Mark Villar and Rafael “Raffy” Tulfo – funded their campaign from their own pocket. Their combined campaign bill ran up to P170.61 million, based on their SOCEs.

A “limited or confined support base,” such as electoral campaigns largely funded by relatives or personal money, is not ideal, Reyes told the Philippine Center for Investigative Journalism (PCIJ) in an interview.

“What we really want is a more distributed support base for our candidates in terms of seeing their campaign contributions…. We want more active participation from our voters and the public,” she said.

Top donors backed Legarda

Two of the top five donors backed the campaign of Legarda, who came in second behind actor Robinhood “Robin’’ Padilla. 

Her son Leandro Leviste gave her P100 million, while her father Antonio C. Legarda shelled out P36 million. These account for 86% of the senator’s declared contributions.

Leviste is the founder and president of solar energy firm Solar Philippines.

According to an earlier PCIJ report, Leviste’s Solar Philippines cornered a significant share of the government’s Green Energy Auction Program (GEAP), a Department of Energy program that allows renewable energy developers to bid for supply contracts at a set ceiling price.

During the first auction in 2022, the firm won 90.58% of auctioned solar capacity, or 1,350 of 1,490.38 megawatts (MW), and 70.16%, or 1,380 of 1,966.93 MW, of renewable energy capacity across all technologies.

Solar Para sa Bayan Corporation, a subsidiary of Solar Philippines, also received a 25-year distribution franchise from Congress which then-president Rodrigo Duterte signed into law in 2019. At the time, Legarda held the lone congressional seat for Antique province.

Some lawmakers, renewable energy groups, and energy advocates opposed the legislative franchise, as it “effectively grants a monopoly and exempts one private company from the rules of competition and oversight.”

Former Comelec Commissioner Luie Guia said a donor’s relationship with a candidate, “whether there is a violation or not, is already a red flag for a potential conflict of interest.” But he added that it is more important that disclosures are honest.

Legarda said she did not defend the bill on the floor and abstained from voting “out of delicadeza” because the firm is owned by her son, according to an Inquirer.net report. “In fact, I would always be out to make sure that there is no conflict,” she said in 2019.

Reyes said Legarda’s abstention was “a good start to maintain neutrality…but what we don’t see are the discussions maybe among colleagues.”

Currently, eight bills on solar and renewable energy are pending at the committee level in the Senate. None of the bills were authored by Legarda, but she has publicly supported green initiatives in the past.

Gatchalian and family firms

Family and business partners helped Gatchalian secure his reelection. He ranked fourth in the race with 20.6 million votes.  

More than half of the contributions he received, or P81.91 million, were from his kin: over P58.41 million from his mother Dee Hua; P15.5 million from his brother Kenneth; and P8 million from his maternal aunt Elvira Ting.  

Dee Hua is the second top individual donor, next to Leviste. 

The Gatchalians have interests in various industries from plastic manufacturing to hotels and casinos, banking, and mining.

Earlier this year, Kenneth, director of Altai Philippines Mining Corp., was embroiled in a controversy over alleged illegal mining operations in biodiverse-rich Sibuyan Island in Romblon. Protesting residents accused the company of operating without necessary permits and violating environmental policies. 

The senator himself owns 9.71% shares in Wellex Industries, Inc., a mining and oil exploration firm, according to the company’s reports to the Philippine Stock Exchange (PSE) as of April 2023. 

In separate bills, Gatchalian proposed amendments to the Oil Exploration and Development Act and the Philippine National Oil Company charter. He also proposed income tax incentives for petroleum service contractors. These bills were referred to the committee on energy, where he sits as vice chair.

Bills on the suspension of excise taxes and value-added tax on petroleum and petroleum products were also referred to the ways and means committee, which he chairs.

The Gatchalian family was also earlier linked to at least nine offshore companies, according to the Pandora Papers. The family’s legal counsel claimed that the offshore companies were incorporated for “legitimate investment purposes” with plans to venture into “global trading.”

Gatchalian’s other backers included Sergio Ortiz-Luis and wife Margarita, who chipped in P9.5 million and P2 million, respectively, to his campaign.

Sergio is the president and chief executive officer of Philippine Exporters Confederation, Inc. and chairman of the Philippine Chamber of Commerce and Industry. He also sits on the board of Gatchalian-owned businesses, including Waterfront Philippines, Inc. 

Waterfront subsidiaries won government contracts worth P234.5 million between January 2021 and March 2023, according to data from the Philippine Government Electronic Procurement System (Philgeps).

Of these, 86.7% were sealed through direct contracting and negotiated procurement.

Direct contracting does not require submission of voluminous bidding documents, such as price quotation or a preliminary (pro-forma) invoice with conditions of sale. Negotiated procurement, on the other hand, is resorted to under “extraordinary circumstances” such as two failed biddings.

The law distinguishes between individual and corporate donors, but Lerona-Camitan said it is “a red flag” if there is a “direct and causal link” between an individual donor and a company that holds government contracts.

“This would be an indirect violation of the Comelec prohibition,” she said. “What cannot be done directly cannot also be done indirectly.” 

The Omnibus Election Code prohibits natural and juridical persons who hold contracts or subcontracts to supply the government with goods and services from making campaign contributions.

Parents for Zubiri, Ejercito

The parents of Zubiri and Ejercito also poured money into their campaign, propelling them into the winner’s circle. Zubiri ranked eighth with 18.7 million votes, while Ejercito placed 10th with 15.8 million votes.

Zubiri’s mother Maria Asuncion and his mother-in-law Lourdes Tan donated P20 million each to his campaign. 

His other top donor is businessman Francisco Tiu Laurel, Jr. who also gave P20 million.

Laurel also contributed P30 million to Partido Federal ng Pilipinas, the political party chaired by now President Ferdinand “Bongbong” Marcos Jr.; and nearly P8.75 million worth of airtime in GMA Network for Padilla, SOCEs showed.

Laurel is president of Frabelle Group, which ventures into deep-sea fishing and aquaculture, food manufacturing and processing, cold storage, shipyard operations, and real estate, among others. 

Frabelle Shipyard Corporation, a subsidiary, won six different contracts from the Mines and Geosciences Bureau between January 2021 and March 2023 totaling P15.69 million, according to Philgeps’ quarterly reports.

Laurel also has interests in the energy sector through Markham Resources Corporation, which develops hydroelectric energy projects in northern Luzon and in Mindanao. 

After the elections, Laurel was appointed member of the agriculture group of the Private Sector Advisory Council that was formed in July 2022. The group was expected to help the government address food security issues. President Marcos concurrently serves as agriculture secretary.

Antonio Tan and his son Miguel Alissandro also donated P10 million each to Zubiri’s campaign. They are the corporate secretary and president, respectively, of real estate company MVT Group and cladding firm Fasclad, Incorporated.

Ejercito, for his part, disclosed getting P20 million from his father, former president Joseph Ejercito Estrada, and P10 million from his mother, former San Juan City mayor Guia Guanzon Gomez.  

The senator also received P10 million from Edward William Tan, founder and director of the Brent Group, distributor of liquefied petroleum gas and other petroleum products, among others.

Ejercito called for the suspension of excise tax on fuel to mitigate soaring prices of petroleum products during the campaign.

Meanwhile, Ejercito’s brother Senator Jose “Jinggoy” Estrada did not report receiving support from the former president. He identified several media outfits as donors in his SOCE. The outfits denied this.

Estrada secured the 12th spot with 15.1 million votes.

Cousin, sibling support Hontiveros, Cayetano 

Reelectionist Senator Ana Theresia “Risa” Hontiveros reported a P3-million contribution from her cousin Marianne, former chair of AirAsia, Inc., while returning Senator Alan Peter Cayetano disclosed receiving P500,000 each from his brother Rene Carl and sister-in-law Mary Bianca Calalang.

Outside the family, Cayetano also benefited from the contributions of big business, including P10 million from Jaime Santos dela Rosa of Puregold Price Club, Incorporated.

Puregold was awarded government contracts between January 2021 and March 2023 worth P1.67 billion, according to Philgeps data.

Cayetano’s other donors included businessmen Jorge Villacorta Pascual, Jr. of JJ Drilltek Corporation and Danilo Michael Yamsuan of Elaia Green Vehicles, each donating P10 million.

Yamsuan is the first cousin of Bicol Saro Partylist Representative Brian Raymund Yamsuan, who also chipped in P10 million to Cayetano’s kitty.  

Hontiveros placed 11th in the race with 15.4 million votes, while Cayetano came in seventh with 19.3 million votes. 

Self-funded campaign for Senate neophytes

Villar and Tulfo financed their own campaigns in their first bid for a Senate seat, finishing sixth and fourth in the race and garnering 19.5 million votes and 23.4 million votes, respectively.

Villar’s campaign cost him P131.86 million. He is the son of real estate mogul Manuel “Manny” Villar, Jr., who topped Forbes’ list of Filipino billionaires in 2023 with a net worth of US$8.6 billion.

Tulfo, a prominent and feisty broadcast personality, meanwhile, reported spending P38.74 million on his campaign.  

His family is no stranger to politics and governance. 

His wife Jocelyn Pua and son Ralph Wendell Tulfo are both members of the House of Representatives, representing ACT-CIS partylist group and the 2nd district of Quezon City, respectively.

His sister Wanda Tulfo Teo was the tourism chief for two years during the Duterte administration, while his brother Erwin Tulfo had a short stint as social welfare secretary during the first few months of the Marcos administration in 2022.

While self-funded campaigns may lead to greater autonomy and minimize external influence when a candidate gets elected, legislating or encouraging such may be considered “anti-poor,” Lerona-Camitan said.

“It would in effect bar less fortunate candidates from running for public office. Additionally, it would undermine the well-protected principle on equal representation enshrined under our Constitution,” she said.

Padilla’s ‘secret weapon’ not disclosed in SOCE

Padilla, who topped the race with 26.6 million votes, identified his biggest donor as Jose Arturo “Jay Art” Tugade, who pumped P10 million worth of airtime in GMA Network for the candidate. 

Tugade, son of former transportation secretary Arthur Tugade, was appointed Land Transportation Office chief in November 2022, following a weeks-long stint as acting general manager of the Manila International Airport Authority. (READ: Transport chief Tugade keeps offshore firm off business list) 

In August 2022, Padilla proposed a cable car project to help address traffic congestion in Metro Manila. In the same month, a bill was filed by Senator Ramon Bong Revilla, Jr. for the creation of a “mobility czar” office that will address transport and traffic issues. A similar bill was filed the following month by Estrada. Both Revilla and Estrada faced plunder and graft charges in relation to the multi-billion “pork barrel” scam.

The measures were referred to the committees on public services, constitutional amendments, and finance. Padilla chairs the committee on constitutional amendments.

In a social media post in June last year, Padilla shared that he owed his victory to former president Gloria Macapagal-Arroyo, her husband Jose Miguel “Mike” Arroyo, and their son Juan Miguel “Mikey” Arroyo. 

Padilla called them his “secret weapon.”

“Ngayon naman eleksyon, nabalitaan ni ninang (Macapagal-Arroyo) wala akong logistics. Nagsagawa siya ng mga conference at convention para sa akin,” Padilla posted. (This election, ninang (Macapagal-Arroyo) found out that I did not have logistics. She organized conferences and conventions for me.)

“Inikot ako sa Pampanga at sa Iloilo. Sagot lahat ni FG (Mike Arroyo). Wala akong kagastos-gastos. Kaya ang naging katapos-taposan (sic) number 1 ako sa Pampanga! At kahit hostile ang Iloilo sa Uniteam, ako ay nakakuha ng mataas na boto,” he said. 

(She toured me around Pampanga and Iloilo. FG (Mike Arroyo) covered the expenses. I did not spend anything at all. That’s why in the end, I was number 1 in Pampanga! And even though Iloilo was hostile to the Uniteam, I got a lot of votes.)

However, Padilla did not include any of the Arroyos in his campaign finance disclosures. He listed only 15 individual and corporate donors.

This should prompt a Comelec investigation, said Guia. “All donations need to be reported; that is the law. Violation is an election offense.” 

Lente executive director Rona Caritos agreed. But Caritos, a lawyer, also acknowledged that the poll body’s campaign finance office “is undermanned, understaffed, [and] the skill set of most of the individuals [comprising] the office… is not compatible with their duties and functions.”

Gov’t contractors, new appointees 

Returning Senator Francis “Chiz” Escudero and reelectionist Senator Joel Villanueva benefited from the donations of government contractors.  

Escudero finished fifth in the race with 20.3 million votes, and Villanueva ninth, with 18.5 million votes.  

Escudero received P30 million from Lawrence Lubiano, president of Centerways Construction and Development, Incorporated. The amount is less than 1% of the construction firm’s awarded contracts. 

Centerways bagged P5.75 billion worth of contracts between January 2021 and March 2023 from Department of Public Works and Highways (DPWH) offices in the Bicol region, according to Philgeps data.  

At least P2.43 billion worth of DPWH projects awarded to Centerways was undertaken in Sorsogon province, where Escudero served as governor from 2019 to 2022.  

Maynard Ngu, chief executive officer of Cosmic Technologies, Incorporated (Cherry Mobile), also contributed P30 million to Escudero’s senatorial comeback. Ngu also donated mobile phones worth P1 million to Padilla in kind.

Between January 2021 and March 2023, Ngu’s company won P1.73 billion worth of contracts from local government units and the Department of Education. 

Lubiano and Ngu are among the top five donors in the 2022 senatorial race. 

Escudero also received P10 million from Arnel Isilen Peil of A.I.P. Construction, which won P1.74 billion worth of government contracts between January 2021 to March 2023, Philgeps data showed.

Escudero’s donors got presidential appointments after the May 2022 vote.

Ngu was appointed special envoy to China for trade, investment, and tourism in March. Leo Tereso Magno, who donated P10 million to Escudero, was also appointed presidential assistant for Eastern Mindanao in November last year. 

Magno, board chairman and chief operating officer of the Rizal Memorial Colleges, said his office cannot approve projects and contracts but is tasked to monitor and evaluate the implementation of such in the region.

Josue Gocella Tesado and Jessimar Catatista Panisales, both linked to Davao-based construction and trucking firms with government contracts, also donated P10 million each to Escudero’s campaign.

Tesado and Panisales, respectively, are secretary and treasurer of Maxan Construction & Trucking Services, Incorporated, according to Securities and Exchange Commission (SEC) records.

Maxan bagged P819 million worth of government contracts between January 2021 and March 2023, according to Philgeps data. Nearly 85% of this amount, or P693.84 million, are for hauling services of garbage and shredded currency notes.

Tesado also leads the San Josue Group, which ventures into real estate and leasing, metal roofing manufacturing, container yard operations, and banana plantations, among others.

Meanwhile, Villanueva received P20 million from a certain Ben Co.

Real estate firm New San Jose Builders, Incorporated (NSJBI), founded by housing czar Jose “Jerry” Acuzar, also donated P20 million to the campaign of Villanueva. 

NSJBI emerged as the top corporate donor in the senatorial race. It supported only Villanueva.   

Lerona-Camitan acknowledged that “[m]aintaining impartiality in the face of direct or indirect influence from campaign donors can be challenging.”

But she said a public official’s decision-making “should never be swayed” because his or her authority “stems from the collective will of the majority who elected them, rather than the financial contributions they received during the campaign period.” 

The election lawyer said it should be incumbent upon public officials “to refuse support from persons who may have potential conflict of interest or from those people who may have business interests in their campaign.”

Poll watchdogs have repeatedly called for stronger transparency and accountability legislation. Pending since the 17th Congress, a proposed “Comelec integrity bill” seeks to reinforce the independence of the poll body by providing office spaces separate from local governments and appropriating funds from the annual government budget, among others.

As of March this year, a technical working group has been formed to deliberate on the measure. – Rappler.com

MANILA, Philippines – Three companies owned or managed by the family of top Filipino billionaire Manuel Villar Jr. owe Las Piñas City at least P213.55 million in accumulated taxes and penalties, according to documents obtained by the Philippine Center for Investigative Journalism (PCIJ). 

For decades, Brittany Corporation, Villar Sipag Center, and Villar Sipag at Tiyaga Foundation have not paid real property taxes for a number of assets in the city, including Mella Hotel, three Evia buildings, Portofino Commercial, and the Villar Sipag Center. 

These three companies recently sought a waiver of the penalties totaling P71.6 million from Mayor Imelda Aguilar, sister-in-law of Senator Cynthia Villar, wife of the Villar patriarch.

Aguilar endorsed the companies’ requests to the city council, headed by her daughter, Vice Mayor Aguilar-Nery. The mayor said the companies needed to recover from the fallout of the COVID-19 pandemic.  

In March this year, the mayor communicated to the vice mayor to grant amnesty on penalties incurred by residents and businesses, including the Villar companies. The matter remains pending before the city council.

PCIJ obtained documents and correspondences about the tax deficiencies of eight properties belonging to Brittany Corporation, two belonging to Villar Sipag Center, and one belonging to Villar Sipag at Tiyaga Foundation. 

Members of the Villar family are either shareholders, officers, or simultaneously hold both positions in the companies and business entities that own the properties.  

Villar Jr., Cynthia, and their son, Senator Mark Villar, built their business empire and launched their political careers in the city by winning a seat in the House of Representatives. The Villar couple’s daughter Camille has taken a page from their playbook; she is now a lawmaker representing the city’s lone district. 

Forbes has listed Villar Jr. as the Philippines’ richest person in 2023 with a net worth of $8.6 billion or around P467 billion.

A summary of tax delinquents prepared by the city assessor’s office shows that 18 other properties owned or managed by the Villar family, whose documents are not available to PCIJ, have not paid taxes.

The summary shows 11 other Brittany properties not included in the letters obtained by PCIJ owing the city another P10.4 million. 

It also shows two other Villar-led companies – Golden Haven Memorial Park Inc. and Fine Properties Inc.  – failing to pay real property taxes from 1996 and 2018, respectively. They owe the city another P14.5 million.

The summary includes 300 properties. The city treasurer’s office sent notice to the owners of these properties in 2022.

PCIJ reached out to the office of Senator Cynthia Villar for comment. She is among the incorporators of Villar Sipag at Tiyaga Foundation and is a shareholder of Fine Properties, but she said she does not interfere in business concerns. 

“The subject matter of your query involves purely corporate concerns, which does not involve my function as a senator,” she said in a statement her office sent to PCIJ.

“The perceived issue is well within the competence of the management team of these corporate entities and I do not interfere nor involve myself in these business concerns. Nonetheless, I will refer the matter to the senior officers of these corporations, for their appropriate action,” she said.

Mayor Aguilar and Vice Mayor Aguilar-Nery have yet to respond to PCIJ’s requests for comment as of this posting.

Brittany is 99.97% owned by Vista Land

Brittany Corporation, the luxury real estate development company, owes the city government at least P137.75 million in real property taxes and penalties for eight delinquent properties. Two of the eight last paid their taxes 14 years ago. 

Brittany Corporation is 99.97% owned by Vista Land and Lifescapes Inc. (VLL), a publicly-listed company chaired by Villar Jr., based on its 2022 General information sheet with the Securities and Exchange Commission (SEC). 

The couple’s eldest son Manuel Paolo, one of the incorporators of the company, is listed as a 0.01% shareholder. Mark previously served as managing director while Camille is a member of the board and managing director of the commercial division.

The real estate development caters to the high-end market segment in Metro Manila. It is offering luxury houses from P10 million to P100 million. 

Disclosures of Vista Land as of December 31, 2022, reported that “the Villar Family Companies held 74.42% of the total issued and outstanding common share capital of the Company and 80.65% of the total issued and outstanding common and preferred share capital of the Company.” These shares are held by the family directly or indirectly through Fine Properties. 

Villar Sipag Center, on the other hand, operates a vast retail complex along the C-5 extension road in Barangay Pulang Lupa Uno in Las Piñas. It has unpaid taxes and penalties amounting to over P5.2 million for two commercial buildings – one housing a popular local fast-food chain and the other, a pharmacy chain. 

Real property taxes for the fast-food restaurant have not been paid since 2015. The taxes for the drug store, which opened in mid-2016, remained unpaid since 2017 or practically for the most part of its operations. It was not clear if the restaurant and the pharmacy were only renters or were operated by the company.

The third company, Villar Sipag at Tiyaga Foundation Inc., has not paid its real property taxes and penalties for Mella Hotel since 2019 amounting to at least P70.6 million. The hotel opened in July 2018. 

It’s a non-stock, non-profit organization established by the Villar couple in 1992.  Its SEC records show Villar Jr., Cynthia, and children Manuel Paolo and Camille as incorporators. Its website also identifies Villar Jr. as chair, Cynthia as managing director, and Mark as secretary and treasurer.

A summary of tax delinquents prepared by the city assessor’s office shows that the 132-room building was owned by the non-profit, but the property’s website said Mella Hotel is “the newest venture in the hospitality industry by Vista Land & Lifescapes.”

Requests for tax amnesty

The three companies wrote letters to Mayor Aguilar on December 22 last year requesting the city government to waive penalties, interests, and surcharges for 11 of their 29 properties amounting to at least P71.6 million.  

Aguilar endorsed the requests to the City Treasurer’s Office first “for evaluation and appropriate action” and later to the city council, headed by Vice Mayor Aguilar-Nery.  

Aguilar is the wife of the late Vergel “Nene” Aguilar, Cynthia’s brother who served as city mayor for 18 years. Aguilar-Nery is one of their daughters.

A certain Romeo M. Sabater wrote the request for Brittany Corporation, while a certain Momar M. Santos wrote for Villar Sipag Center and the foundation. All their letters had no business letterheads and both representatives did not identify their legal identities in the companies.

An online search showed that Sabater is a division head at Brittany Corporation. He also served as a business development department head of another Villar-led firm, Primewater Infrastructure Corporation. Meanwhile, Santos is a longtime associate of Villar Jr. and has served different roles in the family’s companies.

On December 27, the Office of the City Mayor, through acting city administrator Reynaldo Balagulan, forwarded the requests of Sabater and Santos to the city treasurer’s office “for evaluation and appropriate action.”

Three months later, on March 21, 2023, Aguilar wrote a letter to Aguilar-Nery to grant tax amnesty on penalties incurred by local residents and businesses, including the Villar companies. 

“Due to several restrictions imposed during the pandemic, the City of Las Piñas has experienced a significant decrease in revenue collection on certain real property taxes, fees, and charges,” Mayor Aguilar said in her letter to the vice mayor.

“With this, I would like to request your good office in your capacity as Presiding Officer of the Sangguniang Panlungsod to grant tax amnesty on incurred penalties, interests, and surcharges to help several of our residents and local businesses recover from the economic slump caused by the pandemic,” she added.

The tax delinquencies of the Villar companies, however, date back up to two decades before the pandemic. Only four of the 29 properties have arrears beginning in 2019 and 2020, the year the health crisis hit the country.

On March 24, the city mayor, again through the administrator, officially endorsed the requests of the Villar companies and other delinquent taxpayers to the city council. The council calendared the matter on March 27 and continues to deliberate on the matter to date.

PCIJ has no information if company representatives also requested tax amnesties for properties owned by Golden Haven Memorial Park, Inc. and Fine Properties, Inc.

Most of the properties – 16 of the total 29 – are located in either the C-5 extension road connecting Las Piñas and Parañaque or the Daang Hari road, officially known as the Las Piñas-Muntinlupa-Laguna-Cavite (LPMLC) Link Road. 

As a senator, Villar Jr. was among those who pushed for these two road projects that passed through properties developed by his real estate companies. It stirred controversy ahead of his failed presidential run in 2010.  

The Villars have maintained that their businesses did not benefit from their positions in government.

Decline in city income

The city treasurer’s office sent notices to the top delinquent taxpayers last year amid declining tax collection and city income during the pandemic.  

Las Piñas’ net income dropped from P818 million in 2020 to P521 million in 2021, according to Commission on Audit (COA) reports. This was much lower than the income of neighboring cities – Muntinlupa (P895 million) and Parañaque (P1 billion). 

The city’s tax revenue collections were also lower in recent years, according to reports from COA and the Department of Finance.

Las Piñas recorded an annual tax revenue of P1.7 billion from 2019 to 2021, way below Paranaque’s P5.5 billion and Muntinlupa’s P3.5 billion tax revenues for the same period.  

The Local Government Code allows the collection of local taxes, say for real properties, to reduce local government units’ dependence on the Internal Revenue Allotment (IRA) and increase funding for social services and public infrastructure.

The IRA is the LGUs’ share of national government revenues. 

Taxes redistribute wealth in a bid to reduce inequality, said former COA officer in charge Heidi Mendoza, who spoke to PCIJ about the importance of LGUs collecting taxes properly. 

Those with more money, properties, and benefits should pay higher taxes, she said.

“When you don’t pay taxes, you are depriving not just the government but the poor people because funds for services come from taxes,” Mendoza said. 

Mendoza said penalties should be paid, too, because these unpaid or delayed tax payments could have been used at the time when they were needed. “In budget execution, delays affect the predictability and timeliness of public spending, which then affect [the] implementation of services,” she said. 

Under the law, failure to pay taxes may lead to the filing of civil cases or the seizure of assets.  

The poverty incidence among families in Las Piñas, which has a population of 606,000, is at 2.5%.  It is lower than the national average of 18% but higher than the Metro Manila average of 2.12%, based on 2021 statistics. 

In comparison, eight Metro Manila LGUs have less than 2% poverty incidence among families. These are Manila, Mandaluyong, Marikina, Quezon City, Valenzuela, San Juan, Makati, and Muntinlupa.

At least P57-M funds could go to schools 

A percentage of the taxes collected from real estate properties are supposed to go to the Special Education Fund (SEF), which is allocated to the local school board for the operation and maintenance of public schools in the city. 

The fund could be used for the construction and repair of school buildings, facilities, and equipment, educational research, purchase of books and periodicals, and sports development.

The 11 properties of the three Villar companies, based on the city treasurer’s statements of accounts, owe a total of P57 million in SEF and P29.1 million in SEF penalties. This figure would be higher if the SEF and SEF penalties incurred by other delinquent properties are included.

Collecting unpaid real property taxes and penalties from Brittany Corporation alone would add a significant amount to the SEF. 

Brittany – the biggest tax delinquent among the Villar companies – has been profitable. The company recorded P1.34 billion in real estate revenues as of December 31, 2022. Its revenue represents 11% of VLL’s total real estate revenues, according to the 2022 annual report submitted to the Philippine Stock Exchange. 

This was a huge jump – a whopping 167% – from P504.4 million in 2021. VLL also posted an overall 6% increase in net income in 2022, from P6.9 billion in 2021 to P7.3 billion the following year.

Other companies on the list

Also on the list of delinquent taxpayers in the city are condominium developers Goldland Properties and Development Corporation, Madison Properties Inc., Ayala Land, and Sta. Lucia Realty and Development Company.

Some of them also requested a waiver of penalties. 

Torre Sur Condominium, developed by Lapanday Properties Philippines, Inc. and Torre Lorenzo Development Corporation, incurred a total of P14.4 million in taxes and penalties from 2018 to early 2023, according to the documents. 

In their letter to the mayor, the company said that their non-payment was not intentional and was merely an oversight due to the pandemic, adding that many of their tenants have so far failed to pay their association dues.

Another property owner, a private individual, blamed the property developer for her failure to pay real property taxes on her condominium unit. 

She explained that the developer “had cheated and fooled” her over the last decade with regard to her unit’s title. She said the developer failed to pay the real property taxes while the unit was under its name. The unit has incurred taxes and penalties amounting to P325,859.34 as of January 2023.

Another property, a nearly 19,000-square-meter area now called Urbanville, has unpaid taxes for nearly 40 years but it was a subject of tedious litigation that reached the Supreme Court. Its owner earlier filed a pleading but the informal settler families won the case with finality in 2008. The property has pending dues amounting to P1.46 million as of December 31, 2022. – Rappler.com

• A logistics firm contracted by DepEd, Transpac Cargo Logistics Inc. (Transpac), bagged a lucrative deal with DepEd in 2021 as lockdown restrictions eased, edging out bigger players with more assets and resources. 
• Revenues of Transpac took a big hit during the pandemic, dropping by 56.7%. 
• A document obtained by Rappler showed that DepEd owed Transpac P34.5 million – the reason why Transpac’s subcontractors sold laptops in a bid to recover lost income.
• DepEd moved too slowly to stop the sale of stolen laptops in stores and Facebook marketplace, even after the discovery of the irregular activities.

Conclusion
PART 1 | Negligence, corruption lead to fire sale of DepEd laptops

MANILA, Philippines – Prior to bagging the P667-million deal with the Department of Education (DepEd), Transpac Cargo Logistics Inc. (Transpac), a little known Las Piñas-based logistics firm, had a tough year – just like most businesses during the pandemic.

In 2020, Transpac revenues nosedived by 56.7%, ending the year with P39 million in revenues, as the country went into lockdown at the onset of the coronavirus outbreak. 

Its net income was hit even harder. Transpac recorded a net income of P204,627 in 2020, a dramatic 92% drop from 2019, according to financial records obtained from the Securities and Exchange Commission.

As COVID-19 restrictions eased in 2021, Transpac sought to recover what it could. 

And it was in luck.

2021 was when DepEd would – for the first time in recent history – seek to outsource almost all of its logistics needs to a single provider, bidding out a P671-million contract. This amount was worth more than the P451,333,921 total revenue Transpac earned in five years, from 2016 to 2020.

How did a company that did not appear to have warehouses or assets outside Metro Manila (and based on its financial statements, have very little liquidity) bag such a lucrative contract?

On the surface, the bidding and awards process appears to have been above board. And while the company was not yet in the red, a closer look at Transpac’s financial statements revealed that, for an enterprise of its size, taking on the enormous responsibility of distributing billions worth of DepEd technology and materials nationwide, was biting off more than it could chew.

Little known company

Transpac was founded in 1997 as Transpac Container Line Inc., before it amended its articles of incorporation in 2019 to reflect its current name, Transpac Cargo Logistics Inc.

Among Transpac’s incorporators are Sean M. Paler, the company’s vice president of sales and operations, and Maria Luisa M. Paler, who is listed as the corporate secretary. The company is classified as a “small entity” based on Philippine Financial Reporting Standards, or companies with total assets and liabilities between P3 million and P100 million.

Very little is known about the Palers, however, and how the company was able to bag the DepEd contract.

“The industry is in the dark on who is really behind Transpac other than its listed president is Win Paler,” a source from the business community told Rappler. “Win Paler” is Winfred A. Paler, president of Transpac and the father of Sean, who signed the DepEd contract. Win passed away recently, Rappler learned.

Transpac’s Facebook page, created in July 2020, has been mostly inactive, with its most recent post being made close to three years ago, on August 29, 2020. The post merely updated the company’s contact information.

The website says the company offers air freight shipping, express delivery, trucking services and air cargo charter services. It provides no information about office location nor the names of management and staff. Neither is there much info about the company’s track record.

Based on a search at the Philippine Government Electronic Procurement System (PhilGEPS) site, prior to the DepEd contract, Transpac handled mostly smaller piecemeal contracts for Philippine Postal Corporation (PhilPost) in 2017.

In the same year (2017), the company was awarded contracts totaling P4.75 million to haul mail from the Philippines to South Korea, Switzerland, Spain, Taiwan, France, the United Kingdom, Australia, and Singapore. 

It got another award in April 2017 from Philpost for P63.164 million for the air delivery of domestic mail until April 2018.

These contracts were easier to pull off and were worth a fraction of the multi-million-peso 2021 DepEd deal.

Edging out competition

Five companies participated in the bidding for the contract: Ximex Delivery Express (XDE) Logistics, Airspeed International, Metro Pac Movers (MetroPac), One Stop Logistics Inc. (OSLI), and Transpac.

XDE was founded in 1988 by Jerome S. Ibañez from Cagayan de Oro, according to its website. It offers land, air, and sea freight services, as well as door-to-door courier services. Its head office is in Taguig with a corporate office in Muntinlupa. The company’s page says it has 1,000 vehicles, 2,000 employees and contractors, and 17 regional offices in Luzon, six offices in the Visayas, and six in Mindanao.

Parañaque-based Airspeed International already has warehouses and distribution operations in all regions, according to its website. MetroPac, a logistics company under the Metro Pacific Group of business tycoon Manny Pangilinan, and OSLI, a company under Magsaysay Shipping Lines, are businesses with far more capital and assets than Transpac.

MetroPac is a logistics company founded in May 2016. According to its website, “the core business of MetroPac Movers, Inc. is focused on providing first-class warehousing and cold storage distribution centers.” OSLI, on the other hand, is based in Metro Manila with six regional offices, and is “powered by Magsaysay Group’s full service integrator for all logistics requirements.”

Transpac was able to beat them all.

Under the procurement law and requirements of the DepEd Bids and Awards Committee (BAC), the winning bidder should first qualify under net financial contracting capacity (NFCC) requirements, a mathematical formula that is supposed to determine financial capacity. Second, it should have had two previous contracts within the past five years worth 50% and 25% respectively, of the P671-million value of the logistics deal.

Based on data from Transpac’s audited financial statements, the company met the NFCC requirement. It is unclear whether it met the second requirement.

According to DepEd’s award resolution dated August 26, 2021, XDE had the lowest calculated bid for the project but was “post-disqualified,” meaning, it was disqualified after the bidding closed, for “failure to comply with requirements.”

OSLI was disqualified, too, for failing to submit a “financial bid form,” a mere procedural requirement. Airspeed International had the second-lowest bid, but was disqualified for failure to comply with the requirements.

Transpac’s winning bid was for a total of P667,450,729.

Rappler requested DepEd for a copy of Transpac’s complete bid documents, as well as the documents of other bidders to check whether the second procurement and BAC requirements about previous government projects was met. Also, the award resolution did not include the exact amount of the bids, the detailed explanation for the disqualifications, nor specific requirements other bidders might have failed to meet.

A formal request was sent to DepEd on March 6 and subsequent follow-ups were made four times between March 9 and May 2. We have yet to receive the requested documents.

Little cash, big risks

Transpac had only P7.1 million in the bank as of 2021, according to financial records. This is not nearly enough to cover operating costs. The company had to have either sufficient bank loans, credit, or great confidence to take on an operation of this magnitude. Or, this was simply a risk the company was willing to take, given a P667 million payday at the end of the one-year contract – an amount of income Transpac had not seen in recent years.

The contract itself mentioned no specific date nor time period as to when the payment for the project should be made, only saying that “Payments shall be made to TRANSPAC within a reasonable period after receipt of invoice or billing and complete documentation as stated above.”

According to Transpac’s demand letter, the department received Transpac’s invoice on May 5, 2022.

Prior to the DepEd project, based on its 2020 audited financial statement, Transpac had only one warehouse under lease in Pasay City.    

This meant that signing the deal for the national project would require the company to scale up quickly and set up one 2,000-square-meter central warehouse in Carmona, Cavite, and 15 additional 200-square-meter warehouses in every region – if it was to begin distribution by December 9, 2021. According to the contracts, the warehouse agreements were valued at P34.5 million for the regional warehouses, and P23 million for the larger central warehouse.

To staff these warehouses and distribution centers, Transpac needed to recruit subcontractors to deliver to the nearly 50,000 public schools across the country. The use of subcontractors to augment the logistics provider’s staffing needs was allowed as long as it did not exceed 20% of the total project cost, according to DepEd’s bidding documents.

By November 2022, already a year after Transpac – a company that badly needed to recover from its rough pandemic year – began working with DepEd, more money was going out than coming in. And the longer operations continued without payment from DepEd, the more its operating and financial expenses compounded by the day.

In a letter obtained by Rappler dated November 18, 2022, addressed to DepEd Undersecretary for Administration Kristian Ablan, Transpac demanded that DepEd – under the new administration – settle its obligations.

“These costs continue to create a dent on the cash flow of Transpac and have the obvious effects of diminishing the ability of Transpac to perform under the contract. Needless to state that the contract is reciprocal in character and Transpac’s capacity to perform is to a significant degree dependent on DepEd’s willingness to pay promptly,” Paler, vice president for sales and operations, wrote in his letter.

The unpaid millions in collectibles prompted Transpac to suspend deliveries to schools.

During the period that Transpac was DepEd’s sole logistics provider, it was tasked with moving billions worth of government-owned chairs, tables, laptops, books, and other school equipment from suppliers, to warehouses, and then to schools.

Rappler reached out to Sean Paler through text messages and a phone call to get Transpac’s side, but he has not yet responded as of posting. We will update this story once he does.

Subcontractors sold laptops

Was Transpac or its subcontractors responsible for the sale of the blue Coby NBPC laptops in HMR Trading Haus branches and the open market? 

Even after reports about missing government property first came out, HMR and dozens of other resellers continued for weeks to advertise and sell the Coby laptops in the Facebook marketplace in Cebu and Metro Manila – without any intervention whatsoever by DepEd.

By the time Transpac wrote DepEd for payment, the Marcos administration had taken over and Vice President Sara Duterte had assumed the post of education secretary as well.

“The request has been heaving, moving to and from the DepEd and Transpac, and among pertinent units of the DepEd, for numerous reasons. Thus to date, Transpac remains unpaid for the services rendered,” Paler’s letter to DepEd read. 

Despite efforts to obtain more details from Paler and others at the company last December via email, phone calls, and a personal visit, and several more follow ups in March and April, company executives declined to comment and preferred to keep mum.

A source involved in DepEd’s procurement process and familiar with Transpac operations told Rappler that it was the subcontractors who allegedly ended up selling the DepEd laptops in an attempt to recoup what they could from the unpaid fees.

The same source blamed DepEd for losing the laptops and putting in peril other properties stuck in Transpac’s warehouses.   

“The way I see it, it’s the inability and seeming lack of interest and know-how on the part of the contract management division and accounting division [of DepEd] to implement the contracts, particularly on the matter of payment and operations. This is compounded by the lack of guidance from the Usec [undersecretary] and/or Asec [assistant secretary] in charge. No expertise or familiarity seems to be present in the units currently assigned to work on the logistics system,” the source said. 

The source was referring to Undersecretary for Administration Kris Ablan and Assistant Secretary Chris Arnuco.

DepEd, however, deflected the accusations, saying, there is “no liability to speak of” on the part of the department. DepEd spokesperson Michael Poa told Rappler in a text message: “The issue here is Transpac’s failure to fully perform and comply with the contract to deliver goods/equipment to our schools – going as far back as November 2021.”

In January 2023, through a department order, a procurement unit headed by Undersecretary Gerard Chan and Assistant Secretary Omar Romero was, however, created.

The DepEd order said that the revised designation of officials was to “improve upon the reporting structures, functions, and staffing compliments to ensure their relevance and responsiveness to the changing department.”

Ablan told Rappler that creating a separate unit dedicated to procurement would be beneficial to DepEd. 

“Sa laki ng procurement requirements kailangan sariling strand. Commitment ‘yan ni VP Secretary,” he said. (Because procurement requirements are huge, a separate strand is needed. That’s a commitment of Vice President Secretary Sara Duterte.)

Internally, it is the contract management division that supervises contracts still active in the department, while the accounting division sees to it that suppliers and contractors get paid.

When shown on December 21, 2022, Transpac’s demand letter dated November 18 of the same year, Ablan told Rappler he wasn’t aware of it, and that it was the first time for him to see the letter. It took a full month from the date of the letter for Ablan to become aware of DepEd’s unpaid obligations at the time.

When initially asked about the resale of DepEd laptops in the market, Ablan said he didn’t know why the laptops were being sold and that he was unaware of the unpaid warehousing issue. He also said the matter was being investigated.

Pressed further for DepEd’s action on the issue, Ablan said in February, “It was already endorsed to accounting and legal departments.” 

Rappler also reached out to Arnuco to get his side, but he declined to comment and instead referred us to the DepEd spokesman.

When asked whether payments had already been made to Transpac, DepEd gave no response despite several follow ups. We will update this story once we get a reply.

Slow to move

DepEd sources familiar with operations and who requested anonymity told Rappler there was no orderly transition and turnover between the previous to the current administration. This explains why critical projects like the DepEd Computerization Program faltered in implementation. 

Neither did the current administration act promptly to exact accountability from the subcontractors responsible for the illegal sale of the Coby laptops, resulting in losses in public funds.

When the new Marcos administration took over in June 2022, they did not renew the contract with Transpac nor open up bidding for other contractors to take over. 

In a phone call on February 20, Poa told Rappler that suppliers are now delivering equipment and supplies directly to intended schools – the way it used to be before the Transpac mess.

It took the DepEd under the new Marcos administration almost four months before it issued its first press statement on the missing laptops issue. It was only on February 20, 2023, when it first broke its silence to briefly say it was coordinating with law enforcement agencies “to apprehend the perpetrators.” Nearly three months later, no apprehensions have been reported.

To address its logistical and procurement issues, Philippine Business for Education executive director Justine Raagas said this kind of problem can be solved if big agencies (like DepEd) “decentralize” their procurement processes. 

“Make it faster by making your regional unit or the local offices, make them accountable, but make sure that processes are still stringent,” she said. “It is an issue on delivery – bringing down the laptops to where they are intended. I guess, this is where our call for education governance and decentralization comes in,” Raagas added. – with research by Ailla dela Cruz/Rappler.com

AT A GLANCE:

• Public schools reported not receiving laptops they were supposed to get during lockdowns.
• Laptops procured by the Department of Education (DepEd) for public schools ended up being sold in retail stores and on Facebook marketplace.
• Former DepEd undersecretary Alain Pascua, who chaired the Bids and Awards Committee, says the problems “arise from the implementation of the contract that got caught in the middle of the transition of administrations.” 

First of 2 parts

MANILA, Philippines – Negligence and apparent corruption at the Department of Education (DepEd) under the Duterte administration caused laptops intended for public school teachers to end up being sold in retail stores. 

At the center of the loss of these computers is the award by DepEd of a P667-million contract in 2021 to logistics provider, Transpac Cargo Logistics Inc. (Transpac). It’s a small logistics company based in Las Piñas, Metro Manila, whose subcontractors sold laptops that belonged to DepEd, a source familiar with Transpac’s logistics operations, said.

Equally responsible is DepEd itself, which, at the transition of the Duterte and Marcos administrations, failed to pay its logistics provider, according to a Transpac demand letter obtained by Rappler. The contractor played a critical role in the distribution to public schools of billions worth of public property. 

While Transpac failed to prevent its subcontractors from selling laptops, DepEd, for its part, moved too slowly to exact accountability and preserve government property paid for with public funds. 

In October 2022, after investigations were conducted by the department’s Central Visayas office, at least 100 laptops were discovered to have been sold in a surplus store in Cebu.

Red flags were raised then when a buyer in Cebu who was looking to purchase a Coby NBPC 1958 laptop chanced upon one being sold for only P9,999 at the Mandaue City branch of HMR Trading Haus, a national surplus store. 

It would have been a good purchase except that it bore the markings of DepEd property that carried the Coby brand in cyan blue.

At least four other similar looking Coby NBPC 1958 laptops being sold in another HMR store in Rizal province were inspected and checked by Rappler against serial numbers of laptops known to have been supplied to DepEd. We confirmed them to be laptops intended for public school teachers.

When asked several times in December 2022 how many DepEd laptops were sold in HMR, company executives declined to respond to Rappler’s queries.

According to a contract Rappler obtained, a computer laboratory package that consisted of a laptop, Smart TV, and lapel cost P53,365. An informed source familiar with the pricing pegged the unit price of a laptop at about P27,780 – almost triple the P9,999 selling price in the market.

In December, too, the Senate blue ribbon committee wrapped up its investigation into a separate mess: the P2.4 billion worth of outdated and overpriced laptops flagged by the Commission on Audit. The Senate panel found that the deal was overpriced by at least P979 million.

Must Read

Why COA flagged DepEd for P2.4 billion worth of ‘outdated’ laptops

These two instances are not the first time for DepEd to be caught in the crosshairs of controversy but the sale of government property in a surplus shop begged for an explanation.

Multi-billion DepEd computerization program

Computerization in public schools is not a recent development. As early as 2004, the DepEd – under the administration of Gloria Macapagapal-Arroyo – already had in place a computerization program for public schools. 

In June 2010, under the Benigno Aquino III administration, guidelines for the implementation of what was called the Department of Education Computerization Program (DCP) were released. This multi-billion-peso annual initiative aimed to improve access to technology by thousands of public schools across the Philippines, empowering them to “meet the challenges of the 21st century.” 

A decade later in 2020, also the year when a strict and severe pandemic lockdown was declared by then-president Rodrigo Duterte, as many as 11,495 public schools had been eyed as DCP beneficiaries. 

Invitations to bid were issued by DepEd that same year to provide, among others, laptops to mobile teachers and computer laboratory packages to secondary schools. Contracts were signed in February 2021, with deliveries expected by end-2021 till January 2022. 

The 2020 DCP package contracts were worth almost as much as the P2.4-billion irregular Dell laptop deals. Amounting to about P2.34 billion, the DCP contracts allocated P1 billion for the purchase and distribution of Coby laptops and other gadgets. 

In the past, DCP suppliers took charge of delivering their products directly to public schools across the country. Schools had no choice but to accept what was delivered to them even if these were defective. 

A Rappler source with first-hand knowledge about the procurement process said that when suppliers would deliver direct to schools, there were instances when, owing to “lack of quality control,” schools ended up with items like chairs and tables that were different from what they were supposed to receive.

The problem of delayed deliveries and lack of accountability have been long-running problems of the DCP program, too, according to the Commission on Audit’s (COA) 2020 report.

According to the same COA audit, only 7,555, or 16.29% of the 38,827 revised targets of the DCP packages for the years 2018 to 2020, were delivered. Enlisting a third-party logistics provider became the DepEd’s solution to this problem.

“So under [then-education secretary Leonor] Briones, they decided to help ensure better control of what is delivered by putting up regional warehouses where the supplier will now be asked to deliver,” the same source said.

Multiple projects

In October 2021, DepEd contracted a logistics service provider to store various supplies and equipment in regional warehouses spread across the country, and to deliver them to public schools.

DepEd’s Bids and Awards Committee issued the Notice of Award for the P671-million “call-off”contracts to Transpac on September 8, 2021. This type of contract allows a government agency to award a supplier multiple projects without having to hold multiple biddings.

The contract not only put Transpac in charge of warehousing and distribution of laptops, but also tasked the contractor with the deliveries of classroom furniture, technical vocational, livelihood, science, and math equipment.

The chairperson of the Bids and Awards Committee at the time was Undersecretary Alain Pascua – the same DepEd official, who, along with other ranking education officials – was put in the hot seat for signing off on the procurement of the overpriced Dell laptops.

In a text message to Rappler on March 6, Pascua, however, said that the problems with Transpac “arise from the implementation of the contract that got caught in the middle of the transition of administrations. I am no longer aware of the decisions and policies of the new and present administration.”

The former undersecretary defended the award to Transpac, saying he did not believe there was anything anomalous about the contract. But a number of schools never received their laptops, even over a year after the lockdowns ended.

One such school was in the province of Guimaras, a mostly rural and small island off the coast of Iloilo. One public school teacher told Rappler they waited patiently for a DCP package worth P50,000 to arrive. But it never did.

Unable to wait for their computers that didn’t seem to be coming, teachers resorted to taking loans to be able to get their own laptops.

“Puro utang ito, hanggang ngayon, binabayaran pa (These laptops we are using, we paid for through loans, and we are still paying for them until now),” the teacher, who did not want to be identified, said. The laptops were the same ones they used during the lockdowns.

To get a rough idea of just how many laptops did not make it to their intended schools, Rappler obtained the full list of the 11,495 schools that were supposed to receive them and did an informal survey, making 646 calls to schools in 32 different provinces and seven different regions from Northern and Central Luzon and all of the Visayas region. Rappler focused its informal survey on provinces whose schools were assigned the Coby DCP packages.

Of the 646 calls made, 139 answered. Of the 139 who answered, at least 30 schools, or about 22% of schools surveyed by Rappler, said they did not receive their DCP laptops.

The incidents of lost DepEd laptops mirror violations of the Anti-graft and Corrupt Practices Act, also known as Republic Act 3019. The department under the Duterte administration chose a service provider that proved incapable of fulfilling its contractual obligations that resulted in the massive waste of public funds.

Section 3 of RA 3019 explicitly forbids a public official from entering on behalf of government into “any contract or transaction manifestly and grossly disadvantageous to the same, whether or not the public officer profited or will profit” from these.

The same law regards as corruption neglect or refusal by a government official to act “within a reasonable time on any matter pending before him” to obtain material benefit or advantage “or for the purpose of favoring his own interest or giving undue advantage” to any other interested party.

While DepEd sought to solve delivery problems from the past by getting a third party to handle logistics, it wound up creating a different set of problems for itself. (To be concluded) – with research by Ailla Dela Cruz/Rappler.com

NEXT: Part 2 | Tiny logistics firm bags P667-million DepEd deal – and fails to deliver

The concrete block, surrounded by a rectangular outline of building ruins, is what remains of a gigantic magnetite processing plant dismantled by the government in August 2013.

Natural elements slowly decimated the abandoned building after it was ransacked by villagers over time for steel materials, which they sold to junk shops.

A little over a decade ago, this side of the once-pristine black beach was far beyond the reach of sea tides, said Catholic priest Father Albert Rabe, who hails from the town.

“There were even sand dunes spread across the length of the beach from San Vicente to Caoayan, which acted as [a] natural barrier against the sea. Now, they are almost all gone,” he said.

Along the beach bordering Sta. Catalina town and nearby San Vicente, kilometer-long erosions scar the coastline. They reach as high as 15 feet, exposing the soil beneath the sand.

San Vicente, Sta. Catalina, and Caoayan are located in the northwest portion of the northern Philippines, facing the West Philippine Sea. For years, illegal offshore mining for black sand or magnetite in these towns ran unabated, causing drastic changes in the landscape and lives of locals. 

In 2008, residents, community, and church leaders took action, calling the attention of regulators and law enforcement agencies. But protests across the region either fell on deaf ears or protesters were red-tagged. It would take years before government agencies finally stepped in to stop the illegal activities.

With the effects of heavy sand extraction still lingering years later, residents who had to move their houses and find work elsewhere believe the action taken might have been for naught.

“If black sand mining was stopped from the instance it was noticed, it would not have resulted (in) these irreversible changes,” said Rabe.

Digging for ‘black gold’

Black sand or magnetite is also known as “black gold” because of its value. In fact, sand in general is one of the most exploited resources in the world after air and water. Some 40 to 50 billion metric tons of it are being used every year, or an average of 18 kilograms per person per day, according to a 2022 study by the United Nations Environment Programme.

Sand is the most important solid substance that makes modern life possible, Vince Beiser says in his book The World in a Grain. It’s in the things we use every day, from the concrete that makes up most houses and buildings, glass bulbs that light our homes, the clothes and hair care products that we use, to computer screens, the chips that run them, and the cables that connect to the internet. 

The demand for this resource has thus become parallel to the rise of cities and countries. For example, in a June 2021 report, research company ReportLinker found that the drive for the huge demand in magnetite was due to the Chinese government’s increasing investment in buildings and infrastructure, as well as the growth in automotive, shipbuilding, machinery, engineering, and consumer goods in the Asia-Pacific region. The global magnetite market is expected to rise to an estimated $130.8 billion (P7.273 trillion) by 2026, according to the report.

In its 2019 State of the Environment report, the Philippines’ Environmental Management Bureau (EMB) stated that non-metallic mineral reserves, which include black sand, comprised about 99% of the total mineral reserves in Region I, where Ilocos Sur is found. 

Iron magnetite sand, which accounts for about 31% of non-metallic mineral reserves, can be found only in Ilocos Sur and the adjacent La Union province.

Latest data from the Mines and Geosciences Bureau (MGB) showed that the Philippines produced a total of 1.75 million metric tons of magnetite from 2012 to 2014, all coming from offshore mines in Cagayan province. All the minerals mined, worth $41.6 million (P2.263 billion), were exported to China.

Sand mining laws

Black sand mining in the Philippines is regulated and could only be done within specific areas.

The Mining Act of 1995 prohibits mining in offshore areas within 500 meters from the mean low tide level and onshore areas within 200 meters from the mean low tide along the coast. The same law bans mineral extraction within one kilometer of the boundaries of reservoirs established for public water supply, archaeological and historic sites, and any public works.

Meanwhile, Batas Pambansa Bilang 265 prohibits the extraction of gravel and sand and such other activities as it would erode and diminish the natural beauty of beaches.

In 2018, the first report of the interagency Fact-Finding Committee on Illegal Mining titled "Philippine Mining Unearthed" identified quarrying of magnetite black ore or black sand as the "most common form of illegal mining operations." Apprehension data showed that black sand mining often took the guise of dredging or sand extraction.

While plain old sand seems ubiquitous, it is a non-renewable resource, which means sand extraction leaves shorelines crumbling, beaches stolen, and marine ecosystems destroyed like what happened in Ilocos Sur. 

Moving houses, declining catch

For instance, disturbance in the sea caused by illegal mining activities gradually reduced the catch of local fisherfolk. This forced them to go further away from the shore, which was more dangerous and costlier, said fisher Manong Karding (not his real name), who requested anonymity for safety concerns.

Fishers would be lucky to snag half a banyera (tub) of fish for a good day's work when the ships started to frequent the coastal area, far from the usual full tub, he said. 

Many like him were still afraid of complaining for fear of retaliation from foreign miners and local politicians.

"Others were simply forced to look for different jobs and relocate since we do not know how long the mining will last and how it will affect us," he said.

What used to be a major livelihood became a "sideline" to agriculture and other labor jobs for Manong Karding, 40, since the prospects of fishing remained bleak.

He built his home a kilometer from the beach in the early 1980s, in Paratong village in Sta. Catalina. But he was forced to move four times, eventually settling in nearby Subec village.

The reduction of shorelines and rise of seawaters were gradual in the late 1990s but seemed to hasten when illegal sand mining activities picked up, he said.

"Our first location is now touched by waves. Vast portions of Paratong really got submerged, even in nearby villages," he said. 

In San Pedro village, Narvacan town, some 20 kilometers from Paratong, sea waves have reached the village, splashing against houses during strong typhoons. Like parts of San Vicente and Sta. Catalina, coastal erosions have eaten portions of the beaches in San Pedro.

Coastal erosions are a normal occurrence but could be aggravated and hastened by concentrated wave energy, triggered by changes in the seafloor such as extraction of sand, according to marine geologist and professor Fernando Siringan of the University of the Philippines Marine Science Institute.

Siringan said offshore mining, which disturbs the habitat of marine organisms, might also be the main factor behind the diminishing fish catch.

Changes in the benthic (sea floor) habitat occur not only in the area where sand is extracted. It spreads to adjacent areas, too, the scientist said. Such changes definitely affect the fish population, he told PCIJ in an interview.

Study: Sand mining areas to be submerged in 50 years

A 2016 study conducted by researchers at the State University of New York at Buffalo and University of California found that nine of 20 identified black sand mining areas experienced land subsidence at rates ranging from 1.5 to 5.7 centimeters every year from 2007 to 2011.

The 20 areas were identified as black sand mining sites in Luzon, the largest Philippine island, based on ground and news sources. The study used radar signals from Earth-orbiting satellites to measure changes in land-surface altitude, despite the small spatial extent of the activities.

Candon City, some 50 kilometers from Sta. Catalina, has a subsidence rate of 3 centimeters per year and is projected to be underwater in 50 to 70 years.

The study revealed that most mining sites were at low elevations and the rapid subsidence resulted in high exposure of the coastal areas to flooding and seasonal typhoons.

Even years after mining activities have stopped, subsidence will likely continue to affect the areas due to the disruption of the sediment budget, the study found.

Community discovers, documents illegal mining

Black sand mining in Ilocos Sur was first documented in 2008 when residents of San Vicente town and San Sebastian village, two areas separated by a river, noticed ships hauling sand from the sea and creating stockpiles on the shore. 

Residents then wrote a petition to the regional office of the Department of Environment and Natural Resources (DENR) to stop the activities in the area. The DENR did not officially respond to the petition.

Rabe said the DENR in 2009 denied the existence of offshore mining in the area.

Since 2008, protests across the region urging the government to stop mining activities have fallen on deaf ears and protesters have been red-tagged, said Sherwin de Vera, research and education officer of environmental advocacy organization Defend Ilocos. (In December 2017, De Vera was arrested on a charge of rebellion filed in 2014 and was freed after a month. His case was eventually dismissed.)

He said that before the 2010 elections, protests were held in Sta. Catalina, San Vicente, and Vigan against black sand mining. A year later, various sectors and groups opposed to illegal mining convened at St. Paul College, in Bantay, Ilocos Sur, and formed Defend Ilocos.

Residents and advocacy groups, including members of the clergy, documented the hauling of sand in Caoayan, Ilocos Sur from the sea to processing plants on the shores, and its effects on the environment.

Letters and manifestos to stop the illegal mining activities were repeatedly sent to various government offices, including the Office of the President, over the years.

However, offshore mining still persisted, said De Vera.

Following incessant written complaints by residents to various government offices, the Mines and Geosciences Bureau (MGB) and the Provincial Environment and Natural Resources Office of Ilocos Sur conducted an investigation along the coasts of San Vicente, Sto. Domingo, and San Ildefonso towns on October 4, 2011. They reported that "no actual extraction of magnetite sand was observed."

About this time, Mang Karding's family, devout Catholics, started to join the Ilocos Sur Collective Action for the Protection of the Environment (ISCAPE), a broad network of environmental groups, in various protests and prayer rallies, hoping to bring back the pristine fishing grounds of Sta. Catalina.

In 2011, ISCAPE discovered concrete structures built in Sitio Namnama containing equipment and machines for magnetite processing.

Rabe, also a member of ISCAPE, said photos and videos of heavy equipment and stockpiles of black sand were sent to the DERN and MGB, as well as seacraft docking in the vicinity of Ilocos Sur for weeks.

In May 2012, citizens and public officials, including Senator Aquilino Pimentel III, filed with the Supreme Court a petition for the Writ of Kalikasan in connection with "large-scale mining operations" of magnetite ore in the Ilocos-Pangasinan coastline.

The complainants urged the High Court to issue a Temporary Environmental Protection Order to stop the exploration and mining activities in the area. In an en banc or full-court decision, the Supreme Court granted the writ and ordered the Court of Appeals to hear the case.

However, in a December decision, the Court of Appeals junked the case for lack of merit.

MGB issues cease-and-desist orders in 2013

Five years after the first formal complaint against illegal sand mining, MGB finally issued two cease-and-desist orders (CDO) to Wellresource Mining Inc. early in 2013 to stop operations. However, ISCAPE claims that mining activities persisted. The group documented vessels coming to shore, mounds of black sand piling within the vicinity of the corporations, and dump trucks carrying alleged black sand to Salomague Port in Cabugao, Ilocos Sur.

In May 2013, the MGB issued another set of CDOs against three Chinese companies: Hong Ze Mining Corp., Yinyi Philippines Investment Holding Group, Inc., and An Bang Mining Company for operating without necessary permits and for mining within the 200-meter onshore area in San Vicente and Sta. Catalina where mining is prohibited.

Based on local government data, Wellresource was issued a Temporary Industrial Sand and Gravel (ISAG) Permit while Hong Ze held a Mineral Processing Permit. Both were issued by the MGB regional office.

Documents from the Securities and Exchange Commission showed that Yinyi, Hong Ze, and Wellresource were registered as corporations in 2010 while Anbang was registered in 2009.

Wellresource, an all-Filipino company based on the records, received P2.5 million ($45,115.64) from Yinyi, whose incorporators are all Chinese nationals.

However, despite the CDOs, truckloads of black sand aggregates continued to be transported from the three adjacent towns to barges at Salomague Port in nearby Cabugao town and Curimao Port in Ilocos Norte, Rabe said.

All four companies were no longer on the list of applicants and holders of mining concessions, according to MGB data as of March 2023.

DOJ finally steps in

Finally in August 2013, after a series of dialogues, then-justice secretary Leila de Lima led a joint raid called "Operation Bagnet," which led to the dismantling of the illegal mining facilities.

Formed through a joint department order in October 2012, the multi-agency initiative included the Department of Justice, the DENR, and the Department of the Interior and Local Government. 

Records of the joint operation showed that 104,188 metric tons of black sand concentrates were confiscated in Caoayan and San Vicente. At that time, the haul was worth $3,125,640 at $30 per metric ton.

The processing plants were also demolished.

"It took a long time and huge damage to the environment and the people before there was action. But, it was answered prayers," said Rabe.

In that same month, government raids in the Cagayan region also uncovered foreign companies, mostly Chinese, operating illegal magnetite extraction.

Cases filed, dismissed

In December 2013, three cases filed against individuals caught smuggling black sand concentrates in San Vicente were dismissed for "lack of evidence."

News website Bulatlat reported that three truckloads of black sand were seized by law enforcers during a raid in October 2013. The evidence was then turned over to provincial police but eventually vanished under police custody. 

The sand seized was not presented in court during the trial, said Rabe who was one of the complainants.

Another case was filed against Wellresource Mining in July 2012 but was similarly dismissed due to lack of evidence.

"The silver lining is that the illegal black sand mining was stopped. But after, the damage became very heavy and irreversible," said De Vera.

Sightings of ships suspected of extracting sand occurred until 2014, said Rabe.

Looming threat

In 2012, then-president Benigno Aquino III suspended the issuance of new mineral permits and agreements, including those covering black sand mining operations, until favorable revenue-sharing schemes and mechanisms have taken effect.

However, Aquino's successor, former president Rodrigo Duterte, lifted the moratorium in 2019, arguing that the mining industry could "usher significant economic benefits to the country" and support government projects and programs. 

According to consolidated MGB data, only 10 concessions were given permits by the government to mine magnetite under mineral production sharing agreements (MPSAs) and financial and technical assistance agreements (FTAAs).

Under MPSAs, the government conceded a total of 73,274 hectares of the Philippine seabed to eight concessions in Cagayan province and four in Leyte, both for magnetite mining.

The MPSAs are expected to expire between 2030 to 2035 according to consolidated data from the MGB.

Under FTAAs, two offshore magnetite mines covering almost 20,000 hectares were allowed in Pangasinan and Ilocos Sur until 2045.

Both MPSAs and FTAAs allow foreign corporations to extract minerals for 25 years and are renewable for the same duration.

There were over 50 applications for the exploration of magnetite deposits along the coasts of Leyte, Negros Occidental, Pangasinan, Ilocos Norte, Ilocos Sur, La Union, Cagayan, Agusan del Sur, Aurora, Bataan, and Zambales.

According to a June 2022 report by the EMB, only four magnetite extraction projects in the country were tagged by the bureau as environmental critical projects with approved environmental compliance certificates. Three were located in Cagayan while the other one was in Camarines Norte. None were located in Ilocos Sur. 

Small-scale illegal black sand mining, however, has been documented in various coastal towns in Ilocos Sur down to Pangasinan, said De Vera.

Across the country, various environmental groups reported a total of 20 magnetite mining activities in the northern Luzon coast, starting from Cagayan province to the Ilocos region, and up to Zambales. Black sand mining has also been reported in the island province of Leyte.

The groups included Defend Ilocos, Kalikasan People's Network for the Environment, Alyansa Tigil Mina, Katinnulong Daguiti Umili iti Amianan (Kaduami), and Pangasinan People's Strike for the Environment.

Pending bills

No law has been passed to prohibit black sand mining.

House Bill No. 10618, "An Act Prohibiting The Exportation Of Black Sand And Its Derivatives In Their Raw Form," failed to muster approval in 2021.

The bill wanted black sand to be exported only upon undergoing advanced processing to leave other minerals and resources behind.

De Lima, who became a senator, filed Senate Bill No. 1075 in 2019 to prohibit black sand mining operations in the country, saying it continued "to wreak environmental havoc while placing people's health and livelihood at great peril." The measure did not pass.

"People can come to visit us in Sta. Catalina so that they can see for themselves the effects of black sand mining," said Rabe. 

Mang Karding still dreams of the day when their nets will again be filled with the bounties of the seas off Ilocos Sur. Perhaps not soon, but in the near future.

"We cannot leave the coast as this is our home. Besides, the sunset in Sta. Catalina remains the most magnificent day-ender," he said. – with research by Martha Teodoro, PCIJ/Rappler.com

$1 = P55.42

This article was produced in partnership with the Environmental Reporting Collective. Journalists from 12 countries expose how a weakly regulated industry overlooks the environmental destruction and human toll of the highly lucrative and low-risk business of sand mining.

Beneath the Sands, a one-year investigation by the Environmental Reporting Collective (ERC), examines the cost of mining sand, the world's most exploited resource in the world after air and water. 

ERC and its reporting partners in 12 countries expose how a weakly regulated industry overlooks the environmental destruction and human toll of the highly lucrative and low-risk business of sand mining.

Threatened for many years, he requested protective measures from Colombia’s National Protection Unit (UNP) for the first time in 2017. At the time, he was president of the Junta de Acción Comunal – a local solidarity organization – in Puerto Libertador, his hometown.

Under the supervision of the Colombian Ministry of the Interior, the UNP is a security organization that coordinates the protection and escort of people or communities threatened on account of political, judicial, journalistic, union, community, economic, or other types of activities.

In Colombia, more than 10,000 individuals are currently under UNP protection, including 187 journalists, and nearly 50,000 are protected collectively, according to figures provided by Augusto Rodríguez, the director of this organization. In the department of Córdoba, where Rafael Moreno was born, 202 people are under UNP protection.

Moreno was first granted protection in June 2017, given a bodyguard, a bulletproof vest, and a panic button. But more than a year later, in November 2018, the risks he faced were described as “extraordinary.” An armored vehicle and a bodyguard were added to his protection scheme.

But relations between the protection authority and the journalist become strained. In 2021, the protection measures ceased for three months, with the UNP claiming that Moreno had “abused his means of protection.” He asked several times for this decision to be re-evaluated, in light of the numerous threats he had been receiving.

In 2022, the threats intensified. In July, almost two months before his murder, the journalist found a letter with a bullet in the trunk of his motorcycle. “You think you’re untouchable because you speak out publicly, but nobody here is,” the anonymous note read.

“We know everything about you and will not forgive you for what you’re doing.” After this, his case was re-evaluated and he has reassigned a bodyguard. 

On the day of his murder, Moreno was alone in the restaurant he managed in Montelíbano. According to a UNP press release, the journalist had dismissed his bodyguard the previous morning.

The bodyguard then disappeared for a period of several days, before reporting the facts to his hierarchy two days after the journalist’s killing, according to the information we received. Forbidden Stories tried to reach out to him, without success.

“The person responsible for the use of protective measures is the protected person himself and if he asks the [bodyguard] to leave the premises, this decision is beyond the control of the contracting company and the UNP,” a representative for the UNP said in response to questions sent by the consortium while admitting that there were “obvious flaws” within Moreno’s protective measures.

“Things are not perfect, [but] we have to move forward and modernize the whole system,” Rodríguez, the director of the UNP, added. – Rappler.com

Aïda Delpuech is a French-Tunisian freelance journalist currently based in Tunis.

Phineas Rueckert is an American journalist for Forbidden Stories, currently based in France.

Forbidden Stories is an international consortium of investigative journalists that pursue the work of assassinated journalists or journalists under threat.

In a video from mid-September 2020, journalist Rafael Moreno, aided by a thick rope, begins to descend into a hole about a meter wide and several meters deep in the ground. With a grin on his face and the sounds of reggaeton in the background, Moreno speaks to the person holding the camera as he finds his footing and slowly descends into the earth.  

“It feels like I’m reliving the days when I was a miner,” he says.

Moreno, an investigative journalist from the densely forested region of Córdoba in the north of Colombia was no stranger to this gold mine, called El Alacrán. After all, the adjacent village of the same name is where Moreno grew up. It was, in his words, a “little lost corner of the world” that he taught his own children to be proud of having roots in. 

Everyone in El Alacrán still remembers “little” Rafael Moreno. Though the journalist had left the village at the age of 18, he came back regularly. “He’d stay at our place, in his former house. He was part of the community,” María Martínez, who now lives in the house Moreno grew up in, remembered. “I would tell him: ‘Be careful, stay calm and quiet, you could get killed.”

“That’s what happened,” she said, wiping tears from her eyes. 

Just over two years after posting the video, on October 16, 2022, Moreno was shot dead in the neighboring town of Montelíbano. Today, the video stands as a testament to Moreno’s personal background and one of his greatest battles as a journalist and community leader: documenting and denouncing the illegal extraction of minerals in this region of Colombia.

This mandate became clear in conversations between Moreno and Forbidden Stories in the days before his death. Threatened for his work since at least 2019, Moreno was in contact with the consortium with the goal of securing his documents through the SafeBox Network, a platform that allows threatened journalists to protect sensitive information by sharing it with Forbidden Stories. 

“We are working on environmental questions,” he said in an initial call with Forbidden Stories on October 7, 2022, nine days before he was killed. “[We are investigating] public administrations and [companies] that operate without any environmental or mining licenses.” 

Starting days after Moreno’s death, 30 journalists, coordinated by Forbidden Stories, came together to pursue his unfinished work – the first time a consortium of journalists have pursued the work of a colleague who had expressly asked for his work to be published posthumously if something were to happen to him. Today, these investigations are being published by 32 media outlets around the world. The Rafael Project relies on documents, emails and freedom of information requests Moreno left behind, in addition to ground reporting and research contributed by the consortium partners. 

Over six months, Forbidden Stories and its partners examined three of the mines Moreno had begun to investigate, finding significant irregularities in their operations and in most cases confirming the hunches Moreno himself had made public in the months and years before his death, including failures to consult with indigenous communities, mines operating without a license and environmental damage caused to local communities and ecosystems.

‘A blessing and a curse’

Sitting at a wooden table, her blue-encased smartphone resting next to her, Brenda Bohorquez Diaz began to sing a song she had composed. “Here, where the wealth is minerals / drawn in a traditional way / our families have gold in our hands,” she crooned. 

Diaz, who is one of the spokespeople for the community, lives in El Alacrán – the same small mining town Rafael Moreno grew up in. 

In El Alacrán, “the land is our wealth,” Diaz explained. The community of 1,200 people lives modestly. Here, miners extract the precious metal manually, using shovels and basic machinery to sift through the rich soil.  

For decades, the artisanal mine has managed to keep afloat despite the arrival of large-scale mining operations to the area. With its vast carbon, nickel, copper, gold, silver, cobalt, and iron reserves, this part of southern Córdoba, called Puerto Libertador, has 50 active mining permits – about half of the permits in the region. But in El Alacrán, Diaz worries this might be changing. 

Today, the town is threatened by a proposed megaproject that risks disturbing the delicate balance. Led by the company Cordoba Minerals, headquartered in Canada with shareholders in the US and China, the colossal San Matías project aims to turn Colombia into the world’s biggest copper exporter. The proposed 20,000-hectare project would exploit 22,000 tons of copper per day, as well as smaller amounts of gold and silver. According to the company’s president, the project has the support of local and national authorities, as well as local communities.

In the months before his death, Moreno had begun to look into this megaproject, which the company calls “a small-scale initiative in a global context.” In June 2022, his media outlet Voces de Córdoba sent out a call for testimonies in a Facebook post. “These communities deserve respect,” the post read. He was never able to fully investigate. 

Following up on his work, Forbidden Stories visited the site of the proposed mining project and spoke to community members. In interviews and informal conversations, these community members told us that Colombian authorities had not consulted local communities before granting a license to Cordoba Minerals, nor did the community support the project. “This project will bleed our land dry,” Diaz said. “Our existence is incompatible with the project. One day, they will kick us out.” 

(In a statement shared with Forbidden Stories and its partners, Cordoba Minerals denied the presence of indigenous communities in the village of El Alacrán. Something residents contest. “Several indigenous families from the San Pedro community live there,” Israel Aguilar, former tribal chief of the Zenú indigenous reservation of Alto San Jorge, said.)

Diaz pointed to a house on the main road of the village, where workers wearing shirts with the Córdoba Minerals logo were dismantling the sheet metal and the entire structure of a modest house to make room for an exploratory drilling site. “They were surprised to find out how many people we were,” she said. According to residents, the company has said the house will be reconstructed after the exploratory drilling is completed. (In a statement, a spokesperson for Cordoba Minerals denied that the house could have been affected by the construction of the exploratory drilling site, but confirmed that the company had indemnified certain individuals related to specific construction sites.)

Miners in El Alacrán say that despite multiple attempts to obtain a mining permit dating back 40 years, the National Mining Agency has refused their demands. Now, the region is moving forward with the megaproject, granting a license to Cordoba Minerals – which already holds half of the permits in the region, according to an analysis by the Center for Latin American Investigative Journalists (CLIP), a partner on this project. 

The San Matías project, residents worry, will lead to negative health and environmental consequences – concerns that the company itself admitted to in a 2019 report that evoked the “potential deterioration of the community’s health and an increase in social pathologies” in a section on project risks. 

“This wealth is a blessing and a curse,” Diaz said. 

Rafael’s final obsession

Moreno’s work on mining wasn’t just relegated to his hometown of El Alacrán.

The journalist and his colleague Organis Cuadrado regularly denounced pollution and environmental damage linked to some of the larger-scale mining projects in the region, often driving to remote locations and posting Facebook videos showing plumes of smoke and debris rising from distant evacuation vents. 

Several months before he was killed, Moreno took on a new David vs Goliath battle. In a June 2022 Facebook post, he announced an investigation into “irregularities” in a large carbon mine in the municipalities of Puerto Libertador and Montelíbano, run by a company called Carbomas S.A.S. 

The June post marked an inflection point in a protracted battle with Carbomas, stemming from a freedom of information request Moreno had sent several months before requesting a copy of the company’s environmental permit, certificate of extracted materials and a guarantee that the mining project would have a positive socio-economic impact on the surrounding communities. 

Moreno suspected that Carbomas had been operating without a license, and hadn’t consulted local communities, which is legally obligated in Colombia under most circumstances. 

One month after he had sent the request, the company responded to Moreno, saying the request was “inappropriate.” Moreno and Caudrado took this to mean that the company was “covering up information about clear irregularities.” “This denunciation is based on my investigative and ground reporting,” Moreno said in a 25-minute video responding to criticism of his reporting. “I’m not making anything up, it’s all documented.” 

Behind the scenes, though, Moreno appears to have been facing rising pressure linked to this investigation, Forbidden Stories can reveal. Accessing Moreno’s email account after his death, Forbidden Stories obtained an exclusive document showing that in early July 2022 Moreno had retracted his freedom of information request to the mine. 

This retraction came just three days after Moreno found a death threat left on his motorcycle, accompanied with a bullet. “You think you’re untouchable because you speak out publicly, but nobody here is,” the typed note, which was unsigned, read. “We know everything about you and will not forgive you for what you’re doing.” 

Although it’s not possible to say for sure that the retraction of the freedom of information request was linked to the death threat, what’s clear is that after early July, Moreno abandoned his investigation into Carbomas. Forbidden Stories’ review of Moreno’s personal documents, as well as public Facebook posts, found no additional mentions of the mine. 

As part of the Rafael Project, our consortium pursued Moreno’s work on Carbomas. A document we obtained through a freedom of information request to the Autonomous Regional Corporation of the Sinu and San Jorge Valleys (or CVS by its Spanish acronym), a regional environmental watchdog agency, confirms Moreno’s reporting. This several hundred page document reveals that at the time of Moreno’s initial accusations against the mine, Carbomas appears to have not had an environmental license for its new carbon mine “La Estrella.” 

Additionally, previously unreleased satellite images from Planet Labs, obtained by the OCCRP – a member of the consortium – suggest that in May 2022, the time of Rafael Moreno’s accusations, the mine was already in the exploitation stage, although the company did not yet have an environmental license. “This image clearly shows that the mine was in the exploitation phase, given the advanced level of deforestation and the presence of cavities,” Guadalupe García Prado, director of the Guatemala-based Extractive Industries Observatory, told Forbidden Stories. (Carbomas did not respond to questions about the start date of its mining operations.)

According to the CVS document, the company applied for an environmental license two months after Moreno’s initial freedom of information request, on June 21, 2022. Its license was approved several months later, in November – about a month after Moreno’s killing. 

Carbomas is not an isolated case. In fact, the company sells its carbon to one of the largest nickel mines on the continent, Cerro Matoso – which for years has been decried by community members, journalists and activist groups for its negative health and environmental impacts on neighboring communities. 

Naturally, Moreno investigated this mine too. 

Polluter number one

In a region not known for its pomp and circumstance, the entrance of the town of Montelíbano stands out for its loud display: a colorful sign reading “Capital of nickel” in front of a towering Caterpillar 773D bulldozer. 

If Montelíbano is known for one thing, it’s the Cerro Matoso mine. The largest nickel mine in Latin America and fourth largest in the world by surface area, Cerro Matoso is known well beyond the contours of Córdoba. Along the route into town, trucks squeeze by each other on narrow roads, transporting ferronickel to the port city of Cartagena. From here, nickel is shipped off to China, the United States and Europe, where it’s used to produce stainless steel products. 

In Montelíbano, Cerro Matoso boldly advertises its contribution to the community with a silver plaque celebrating its 40 years of operations. The large bulldozer, per the plaque, was donated by the company that owns the mine, South32, as a “symbol of the mining-industrial activity in the region.” “We are participating in the energy transformation because our products are highly sought after for the production of solar panels,” Pedro Oviedo, the mine’s chief of operations, told Forbidden Stories.

But beyond the glare of these ostentatious displays, nickel shines less brightly. To some, it’s viewed as a pride point, but for many others, the Cerro Matoso mine is an environmental and health disaster. 

Cerro Matoso takes up nearly 85 hectares of land in the middle of an indigenous reserve belonging to the Zenu de l’Alto San Jorge people. Several indigenous communities surround the mine, including one village – Puerto Colombia – which is situated just 750 meters from the mine.

“Here you won’t find a single person in good health,” Estela Isabel Hoyos Arcia, an inhabitant of Puerto Colombia who complained of itching eyes and other health issues, told Forbidden Stories. 

Residents believe that the mine’s smokestacks, particularly active at night, they say, are to blame. In November 2021, Moreno published images showing a cloud of pinkish smoke appearing to come out of Cerro Matoso’s smokestack and propagate across a wide distance. “Ah, how beautiful our region is with the decorations of the Cerro Matoso plant,” he wrote ironically beneath one photo. 

Cerro Matoso called foul, saying Moreno’s and other images uploaded around the same time were backdated. In response, Moreno and Cuadrado, his reporting partner, published a video showing the mine from a distance. “Today is November 23, 2021,” Moreno states in the video. “The pink cloud you see is the origin of the communities’ health issues.” (In a statement to Forbidden Stories, the mine’s chief of operation said: “Only water vapor comes out of our chimneys. Regarding the pink cloud, it’s certainly a flaw in the system, it’s an exception.”) 

Videos from other sources suggest that there were other incidents of the pink smoke that same year and again in April 2022. According to the Colombian Ministry of the Environment, “non-controlled emissions” were seen coming from the mine as early as 2017, a fact that was later corroborated by the Health and social protection ministries, which mentioned the presence of an “orange cloud.”  

Several years later, in 2020, CVS accused Cerro Matoso of particle emissions exceeding environmental standards.

(In a statement to Forbidden Stories and its partners, Cerro Matoso denied all accusations regarding air pollution, writing: “No measurement [of air pollution in 2022] has reached the limit of the annual average of the guidelines defined by the World Health Organization.” The company also invoked its transparency, saying that all measurements from its sampling stations are available online.)

Inside the mine, health conditions are even worse, according to Victor Pineda, a former mine employee. “A lot of gases are released during these operations,” he said. “They contain substances that are often carcinogenic, including cancerous crystalline silica.”

The millions of tons of waste generated since the beginning of the mine’s activities are stored open-air, where they are easily dispersed by the weather, Pineda added. The waste is “composed of highly toxic particles,” he said. “All it takes is a little wind or rain for the particles to travel and contaminate” the surrounding area.  

Four kilometers from the mine, the indigenous village of Guacarí-La Odisea is also affected by the mine’s emissions, with even young children suffering from “unusual” pains. Yolanda Rosa Hayos, 63 years old, cried as she described having “pain everywhere” and “black blemishes that appeared all over my body.” 

When she visited the doctor – paid for by a non-profit linked to the mine – she was told not to worry. This irony was not lost on Camilo Castellanos, a doctor of toxicology at the Pontificia Universidad Javeriana. Cerro Matoso, he said, “is at once the judge and the jury when it comes to health questions.” 

For community members, there’s no doubt that the nickel mine is causing devastating health problems. “These respiratory problems are leading us to our tomb,” one resident said.

A national case

In 2013, Israel Aguilar, governor and tribal chief of the indigenous Zenú de l’Alto San Jorge, and Luis Hernán Jacobo, president of the Council of Afro-Colombian Communities of San José de Uré, filed a case in Colombia’s Constitutional Court against Cerro Matoso and two national mining agencies: the Ministry of Mines and the National Mining Agency for Environmental and Health Damage. The Court agreed to take on the case, investing significant means to establish whether or not the mine was responsible for damage to nearby communities. 

Through this probe, the Institute of Legal Medicine and Sciences – one of the country’s luminary research agencies – conducted an unprecedented study aimed at identifying the presence of nickel in the blood and urine of roughly 1,150 people living in the vicinity of the mine. The results, confirmed by the Ministry of Health, were clear: “High levels of nickel in the blood, well above the benchmark authorized in international studies.”

Estela Isabel Hoyos Arcia, an inhabitant of the village of Puerto Colombia, held the results of her tests firmly in her hands. They were startling: six micrograms (μg) of nickel in her bloodstream and 19 in her urine, or roughly 10 to 11 times higher than the benchmark set by Quebec’s National Institute of Public Health, one of the strictest norms worldwide. 

In March 2018, the Constitutional Court issued its judgment against Cerro Matoso, requiring the company to financially compensate and provide healthcare services to the affected communities, as well as renew its environmental license, which dated back to 1981. If the company failed to comply, the Court reserved the right to order the “suspension of extractive activities.” 

South32, the owner of the mine, and its powerful network of lawyers, which included Eduardo Cifuentes Muñoz, the former president of Colombia’s Constitutional Court, appealed the case. They argued that “the court had misinterpreted the medical report published by the Institute of Legal Medicine and Sciences,” specifying that the “relation of direct causality was not established regarding the impact seen in the population and the exploitation of Cerro Matoso.”

Company lawyers argued that it was impossible to attribute the high levels of nickel in the samples to the mine, saying that other “external factors” may have influenced the results.  

The Legal Medicine Institute’s methodology, nonetheless, was validated by all the public institutions and parties relevant to the case, including Cerro Matoso itself. 

“Of course there’s an external factor, it’s the mine itself,” Castellanos, the toxicologist at Pontificia Universidad Javeriana and a member of the Legal Medicine Institute’s methodology team, said. “The levels of nickel observed in the samples were between 10 and 100 times above the legally established Quebec norms. Going beyond the report, the levels of nickel are high enough that I am intimately convinced that the mine is intoxicating the population in a chronic fashion.”

“This is the strongest possible evidence that the mine is responsible,” Javier de la Hoz, a lawyer who represented communities at the time, told Forbidden Stories. 

(In a statement to Forbidden Stories and its partners, Cerro Matoso cited, among other things, a 2016 report by a toxicologist of “international renown,” which contested the methodological reports of the Institute of Legal Medicine.)

In its response to our questions, Cerro Matoso invokes, among other things, a report made in 2016 that they do not communicate and that would have been carried out by a toxicologist “of international renown”, which would raise the methodological limitations of the Institute of Legal Medicine.

Nonetheless, several months later, in September 2018 the Court went back on its ruling, voting in a second instance court to annul most of the proceedings against Cerro Matoso. To de la Hoz, there was no doubt that this was the result of corruption. “Three high-level sources who were present at the internal sessions have confirmed this to me,” he told Forbidden Stories. 

The Constitutional Court case was not the only controversy for Cerro Matoso. In 2015, a few months after the Constitutional Court decided to look into the complaints against Cerro Matoso, another major event occurred. BHP Billiton, the historic owner of the nickel operation since 1980, sold the mine to South32, an Australian subsidiary spun off from BHP Billiton, which had previously tried unsuccessfully to sell Cerro Matoso. This spin-off company inherited the mining giant’s non-strategic assets. 

“BHP created South 32 to get rid of all its dirty projects,” de la Hoz said. 

After the trial, an agreement was reached with the communities. Since then, almost 12 million euros have been spent on social projects in the surrounding communities, something Cerro Matoso highlighted in response to our questions.

In Puerto Colombia, the village closest to the mine, nearly all the houses are brand new, while others are still under construction. But residents say that it’s not enough. “Our health doesn’t have a price, and this new house won’t bring it back,” Hoyos Arcia said. 

Other communities have been affected. In San José de Uré, an Afro-Colombian village located 10 km from the Cerro Matoso mine, another health drama has been unfolding in silence: over the past two years, some 20 women have undergone a procedure called a hysterectomy in which their uterus is removed, according to a field investigation conducted by Radio France International, a member of the Forbidden Stories consortium. All of the women suffer from the same symptoms: severe bleeding and unbearable pain. “Why are so many of us suffering from this?” they asked. 

According to a report from the Institute of Forensic Medicine, uterine fibroids are one of 17 diseases suffered by the populations surrounding the mine. Although the Constitutional Court ordered Cerro Matoso to provide comprehensive health care to the victims of these ailments, none of these women have received any help. (In a statement to Forbidden Stories and its partners, Cerro Matoso contended that “only one person has requested care for this protocol.”)

Aguilar, the governor and tribal chief, was resigned. “The health issue is not a done deal,” he said. “And the consequences on our mother earth are worse than before.” 

In Córdoba, denouncing mining activities at your own risk

Much like Moreno, local leaders and affected community members have continued to make noise about the health and environmental consequences of mining activities in the region – often at significant personal risk. 

Ever since the signing of Peace Accords between the Colombian government and the Revolutionary Armed Forces of Colombia (FARC, by its Spanish acronym), a rebel group, 56 local leaders, many of them actively resisting mining projects, have been killed in the south of Córdoba, according to the Observatory of Human Rights and Conflict, a project carried out by the Institute for Peace Studies (Indepaz). In Colombia, mining activities were the most common source of social and environmental conflicts in the country. 

Aguilar, who in addition to representing indigenous communities in the region is also a former miner, has had to take numerous precautions in his everyday life. “I can’t move about in public spaces,” he told Forbidden Stories. “At home, I can’t even spend more than 20 minutes on the balcony because it’s too risky.” 

In his frequent public speaking events, Aguilar is accompanied by armed security guards and has received numerous threats. He is one of more than 200 human rights defenders to benefit from this type of protection, provided by the National Protection Unit, or UNP, in Córdoba. 

“Here, there’s a triangle of power: armed groups, [the clan del Golfo, a powerful criminal faction], politicians and mining interests are all part of the same ecosystem of crime and corruption,” one source, who spoke on the condition of anonymity due to security risks, said. 

“Absolutely all of the mining companies here pay the clan,” another anonymous source told us. “Where there are mines, there are paramilitary groups.”

Victor Pineda, the former Cerro Matoso employee who left the company in 2003 after 21 years due to health issues, including dysautonomia of the nervous system and a series of digestive and cardiac problems, has been fighting for 20 years to get his illness recognized as work-related and receive compensation. He has accused the company of not taking the necessary precautions to protect him from extreme heat. 

Several days after the assassination of Moreno, Pineda shared several Facebook posts of Moreno’s about Cerro Matoso in the journalist’s memory. A week later, he received a threatening letter in his window: “Stop trying to act like an environmental leader. You saw what happened to journalist Rafael Moreno in Montelíbano. You have been warned.” 

“I don’t know why I was personally threatened,” he said. “Many of us denounced the mine, and I’m neither a leader nor a spokesperson.” 

Organis Cuadrado, Moreno’s colleague who also roundly criticized the mining industry, for his part, has decided to keep a low profile since his colleague’s death. Since October, he has emceed a local music and news program on a radio station called La Piragua. “I have a family and I want to see my kids grow up,” he said. “I know I’m next on the list if I continue to denounce [mining activities] like Rafa and I used to.” 

Since Moreno’s death, Cuadrado has been accompanied by two bodyguards and only travels in armored vehicles. The killing of his friend and colleague marked a turning point in the region. Even if some continue to raise their voices, many more have gone quiet. “It’s silence,” Cuadrado said. – Rappler.com

This article has been republished from Forbidden Stories with permission.

Forbidden Stories is an international consortium of investigative journalists that pursue the work of assassinated journalists or journalists under threat.