Divestment of business interests
CUSTOMS Commissioner Alberto Lina has assumed leadership of the Bureau of Customs (BOC) with a lot of baggage.
His predecessor, John Philip Sevilla, resigned after he refused to appoint, despite instructions from key Malacañang officials, someone identified with the Iglesia ni Cristo to a sensitive BOC position.
This allegation, plus Lina’s quick appointment, has spawned speculations that politics, in particular, the coming 2016 elections, was behind Sevilla’s unexpected resignation.
Aside from the political undertone, Lina faces serious conflict of interest issues arising from his ownership of logistics and freight companies that transact business with BOC.
According to reports, one of his companies is under investigation for cargo brought into the country between 2011 and 2013 that were released without paying taxes and duties.
When asked about the conflict of interest issue, Lina said he will follow the law on the matter and divest from the business interests concerned and, if necessary, close these companies to dispel apprehensions about his sincerity in administering BOC’s affairs.
Buyback
The circumstances behind Lina’s appointment and his actuations in the past on a similar situation hardly inspire confidence he will faithfully live up to his promise of divestment.
When Lina was appointed in 2005 by then President Gloria Macapagal-Arroyo as customs commissioner, he reportedly divested his interests in the companies that did business with BOC.
Five months after his appointment, he joined the so-called “Hyatt 10” or group of top government officials who resigned their positions to protest Arroyo’s alleged manipulation of the 2004 national elections.
When the political dust had settled, Lina bought back the shares of the companies he earlier said he divested from and resumed control over them.
The buyback raised suspicions that his alleged divestment was fictitious and that the sale of his shares in those companies was a sham.
In a recent TV interview, Lina did not deny the buyback, but explained he did it because he was still young then and needed the businesses to meet his financial needs.
This time around, 10 years later, Lina has again committed to divest his business interests that may compromise his ability to efficiently manage the second highest revenue generating agency of the government.
Services
Should the public believe him, or at least give him the benefit of the doubt on his sincerity to avoid any conflict of interest at BOC?
Note that the Aquino administration will be gone in 14 months. There is no assurance Lina will remain at BOC even if a protégé of President Aquino is elected to the presidency in 2016.
Considering Lina’s political color, his chances of staying on the job are slim in case an opposition candidate or somebody not close to the President wins the election.
Is Lina really willing to unload his stocks [assuming there are takers] in his multi-million, if not billion, peso logistics and freight companies in exchange for 14 months of government service?
This is not to doubt Lina’s patriotism or willingness to sacrifice his personal fortunes for la patrie.
But motherhood statements are cheap. How many times have we heard protestations of love for country from government officials who later turned out to be scoundrels?
Ombudsman Conchita Carpio-Morales has her hands full filing criminal charges against government officials who consider their offices as sources of “trust accounts” rather than positions of trust.
Technique
At present, there is no official mechanism or procedure in place that governs compliance with the anti-graft law provision on divestment by government officials of business interests that may conflict with the performance of their duties and responsibilities.
It is up to the official concerned to figure out how to unload his business interests that may, directly or indirectly, benefit from the powers of his office.
The technique used nowadays is to “sell” the business interests to relatives, business associates or friends who, on record, have the resources to pay for the book value [not fair market value which is usually higher] of their shares of stocks.
In spite of the sale, however, the stock certificates remain in the name of the supposedly divesting official.
After the official leaves the government, the stocks are resold to him at the same price to avoid payment of the capital gains tax or at a slightly higher price [for which capital gains tax shall be paid] to make the Bureau of Internal Revenue happy.
It’s a neat arrangement. The official is seen as law abiding during and after his government service. At the same time, he keeps his business interests safe and sound until he takes over them again.
Offer to sell
Another way of publicly showing compliance with the divestment requirement without really meaning to is to go through the motions of offering for sale the stocks of the business interests.
In the hands of a skillful lawyer, the sale of the stocks can, on paper, look compliant with the law, but its legal effects can be diluted through side agreements or conditions that negate the transfer of ownership upon the happening of certain events within the control of the seller.
Or the offer to sell the shares contains onerous provisions or pre-conditions that are meant to discourage prospective buyers from taking it seriously. In other words, there is no honest intention to sell on the part of the seller.
To use street language, it’s offered at presyong ayaw ibenta (or at a price not meant to be sold).
So if there are no takers, the official can say with a straight face that he tried his best to comply with the law but had been unable to do so for reasons beyond his control.
Let’s see how things play out in Lina’s case.
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