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Biz Buzz: Wanted: New DICT head

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Biz Buzz: Wanted: New DICT head

/ 05:27 AM September 25, 2017

Rodolfo Salalima, the former lead lawyer of Globe Telecom who went on to become the first secretary of the Department of Information and Communications Technology, has earned a lot of new fans because of his bombshell revelation in announcing his resignation to DICT employees.

Of course, the departure of a high-profile public official is rare in the Philippines, more so when the official says it’s because of the constant interference and corruption he repeatedly had to resist.

Then again, Salalima isn’t the typical public servant.

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The most constant criticism against him was conflict-of-interest, given his former ties with Globe Telecom. Where some might pander to public opinion and perception, Salalima embraced his private sector roots. In various occasions where he was a guest speaker, he never denied his friendliness with the telco industry he regulated. His views on the way forward were mostly aligned with theirs.

One can hardly blame him. Given his 40 years of experience in the industry, it’s likely that Salalima himself helped shape those very strategies. He would instead counter that he knew where his loyalty stood once in government, which was to the Filipino people.

In public office, he resisted corruption. According to those close to him, integrity mattered and there was also Salalima’s personal success.

In his speech to DICT staffers last Friday, Salalima said he had to completely shut down his law office, which he said earned “millions” of pesos every month, in exchange for a smaller government pay check.

He said his resignation also came as a relief to his family, which preferred that he stayed away from government service.

Even now, stories are emerging on the various favors that Salalima had to resist throughout his 14-month tenure.

Biz Buzz learned that Salalima wanted to quit as early as last year after being pressured to disburse some P200 million to unnamed individuals or groups. He didn’t, of course. We assume he will tell President Duterte all that he knows once their planned meeting pushes through.

Eyes are now cast on Salalima’s potential replacement.

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While there’s constant talk of musician Ramon “RJ” Jacinto, presidential adviser on ICT and economic affairs, we’ve heard candidates include Thomas “Tim” Orbos, undersecretary for roads of the Department of Transportation.

Regardless of shortcomings Salalima the public servant might have had, his replacement would have big shoes to fill when it comes to integrity. —MIGUEL R. CAMUS

Unlicensed insurer

If you’re going to come to the country to poach business from an established local player, you’d better be ready for a fight, as one UK-based insurer is finding out—the hard way, of course.

Lawyer Jose Bernas is urging the Insurance Commission to look into the supposedly illegal operations of insurer Marsh UK in the Philippines. Specifically, Bernas emphasized the foreign company’s self-admitted use of “fronting insurers” to bypass Philippine laws and conduct business in the country without a license.

“While Marsh Philippines is a licensed insurance broker, Marsh UK is not,” he said in a recent letter to Insurance Commissioners Dennis Funa and Jose Marie Tolentino. “Marsh UK is a reinsurance broker that may only tender brokerage services to an insurer and cannot tender insurance brokerage services nor insurance services to an insured or potential insured (client).”

Bernas referred to a particular case wherein Marsh UK sent the head of its Singapore office, David Jacob, to meet with the top executives of Cebu Pacific. Interestingly, it was this same case where a complaint was filed against Marsh UK before the UK High Court for allegedly disclosing highly confidential and proprietary information. Before a final ruling could be reached, Marsh chose to settle the matter out of court.

During the meeting, Jacob allegedly presented a predetermined reinsurance package to the aviation company, wherein Marsh would assume all the insurance risks under a special arrangement with a “fronting insurer.” In an earlier letter they sent to the IC, Marsh UK acknowledged that their intention was to solicit the insurance business of Cebu Pacific, stating that “Marsh was now able to compete” with other local insurance companies and that the purpose of the meeting was to “invite Cebu Pacific to consider giving Marsh Philippines and Marsh UK an opportunity to tender for the Cebu Pacific account.”

“I don’t think it gets any clearer than that,” noted Bernas. “They practically admitted their violation to the IC, which is to solicit local clients and take full responsibility for their insurance needs. First of all, a reinsurer can’t do that, much less a foreign reinsurer with no license to operate in the country.”

Based on the terms of Marsh UK’s deal with its “fronting insurer,” the latter would be paid only a nominal fee, while Marsh would be paid a fee amounting to five times or more that amount. “Effectively, Marsh UK pays a local company to use their name, while they handle every aspect of the business—including the primary and legal risk of liability. Apart from being prohibited, that’s a very risky proposition for any local company,” Bernas emphasized.

The letter concluded by reiterating the need for an evidentiary hearing to determine whether Marsh UK, Marsh Singapore and Marsh & McLennan Companies Inc. are indeed doing business in the Philippines and whether the license issued to Marsh Philippines should be canceled for conspiring in an alleged illegal act. —DAXIM L. LUCAS

On the fence

The Department of Transportation has an important role to play in Philippine Airlines’ offer for a new passenger terminal, a Terminal 2 annex building, in Manila’s Ninoy Aquino International Airport.

So far, the DOTr is staying on the sidelines until PAL can resolve a row with landowner Philippine Amusement and Gaming Corp. over a 2014 lease rate signed by the previous board it now finds to be disadvantageous.

According to Transportation Secretary Arthur Tugade, PAL’s proposal was well and good but he would rather that PAL and Pagcor discuss their issues first.

Recall that Pagcor publicly called out PAL over the latter’s proposal for a P20-billion Terminal 2 annex building—which would augment capacity congestion in Naia. It cited the P40-a-square meter rate for the 10 hectares that PAL leased.

PAL, of course, wants to build on this land and perhaps more, if allowed. It also indicated its openness to renegotiating the rate, which it maintained was legal and binding, but Pagcor also needed to come to the table and help with its goal to cut Naia’s congestion on the passenger side. (The runway is another matter entirely).

It appears public and private sector stakeholders need to join forces to combat the real issue—congestion—because it doesn’t seem like we’re getting a new air gateway for Manila anytime soon.

Naia alongside Clark International Airport is it, at least based on the infrastructure projects being lined up. Latest proof of this is the $7-billion Metro Manila subway project, which should be fully operational by 2025.

A big reason for the larger budget was Tugade’s argument for a direct subway connection to Naia, the same way some of the best cities around the world have linked their airports to railway systems.

So, it seems the government is betting big on Naia and so is the private sector. The way forward seems clear. —MIGUEL R. CAMUS

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