Thursday, March 22, 2012

CJHDevCo execs charged with estafa: Congress starts probe on Camp John Hay row

By Alfred Dizon and Dexter A. See

BAGUIO CITY –The congressional committee on bases conversion is set to subpoena the books of Sobrepena-led companies, including the Camp John Hay Development Corp., during a hearing Wednesday to investigate the Sobrepena’s alleged questionable business practices and unpaid debts to government.

This, as CJHDevCo directors and officers led by Robert John Sobrepena, were charged with estafa for the “double sale” of a property here in the John Hay Special Economic Zone.

The Bases Conversion Development Authority, the government body that governs the JHSEZ, filed the criminal complaint with Department of Justice March 9.

This, after the BCDA discovered that LogHome No. 9, which was included among CJHDevCo’s dacion en pago, or payment-in-kind, to BCDA was earlier sold to another party, a fact reportedly concealed by CJHDevCo.

ArnelPaciano Casanova, BCDA president and chief executive, said CJHDevco defaulted on its lease payments for the JHSEZ, so BCDA agreed to a payment-in-kind arrangement in 2008.

BCDA later reportedly discovered the double-sale of one of the dacion en pago properties turned over by CJHDevCo.

“CJHDevCo has resorted to dirty tricks and tactics to evade paying its financial obligations, but we will not let them get away with their obligations,” Casanova said. “It appears that CJHDevCo is involved in fraudulent business practice.”

CJHDevco’s debts for the unpaid lease rentals of the JHSEZ have already reached P3 billion, a BCDA press statement said. `

“While the firm (CJHDevCo) claimed that it has made payments of P1.4 billion, which includes the value of the dacion en pago properties, the total lease that they should have paid over the last 16 years of leasing the JHSEZ should have been P4.4 billion. So there remains an unpaid balance of P3 billion.”

The BCDA chief executive also revealed that CJHDevCo has actually stopped remitting to BCDA the proceeds of the dacion en pagoproperties.

Records showed that CJHDevCo remitted a total of P4.6 million to BCDA as profit share of the dacion en pago properties for the years 2008 to 2009.

However, the Sobrepena-led lessee has allegedly stopped remitting any profit share since then.

“We have asked CJHDevCo several times to open its books to shed light on the non-remittance of the dacion en pagoproperties,” Casanova said, “but the Sobrepena group has refused repeatedly, despite numerous follow-up letters we sent them. There is obviously a lack of transparency in the financial transactions of CJHDevCo.”

Casanova said BCDA has “bent backwards” several times to accommodate CJHDevCo’s requests to restructure its debts. “In fact, BCDA has restructured its debts three times,” Casanova said, adding “and the only time CJHDevCo ever paid part its arrears was when the debts were restructured.”

CJHDevCo asked for a fourth restructuring late last year, but this time, BCDA rejected the proposal.

“CJHDevCo has had a history of asking for a restructuring every time it cannot pay,” Casanova said. “CJHdevco pays a small portion of the arrears upon the signing of the restructuring agreement. Then once agreement has been signed, it stops paying. It’s a vicious cycle.”

Addressing larger concerns, Casanova said the people of Baguio will be at the losing end if CJHDevCo’s debt is not collected, since Baguio City will be continually denied of 25% share in the rent proceeds -- to pay for the Baguio Convention Center and other development projects.
In Congress, the committee, chaired by Kalinga Rep. Manual Agyao, approved the motion of Ilocos Sur Rep. Eric Singson, to subpoena the financial records of CJHDevco and all related Sobrepena companies and to conduct an independent audit of these companies.

CJHDevco currently owesP3 billion in unpaid lease rentals for leasing a portion of government property in the John Hay Special Economic Zone.

The Baguio City local government will receive P750 million if the BCDA, the government body that governs the JHSEZ, is able to collect the unpaid lease rentals of the delinquent lessee.

CJHDevco is owned and managed by Fil-Estate Corp., chaired by Robert Sobrepena, who also owns and manages the College Assurance Plan (CAP), the pre-need company known to have defaulted on its obligations to plan holders, and the Metro Rail Transit Development Corporation (MRTDevco), which currently owes the Department of Transportation and Communications more than P1 billion.

“CJHDevco’s debts place the government and the city of Baguio in a very disadvantageous position,” Singson stated, as he moved for the subpoena of financial documents of CJHDevCo. The John Hay lessee has not filed their financial statements with the Securities and Exchange Commission (SEC) since 2008.

CJHDevCo claimed losses while operating in the JHSEZ, and cited these as reasons for defaulting in their payment. The BCDA however revealed that CJHDevco has been declaring dividends while defaulting on their payments to government.

“They have not disclosed their books to us,” said Casanova, adding “At the heart of this is transparency. We want a private sector partner who we can trust and who is transparent to the public. CJHDevCo has been claiming losses without presenting proof and without stating the billions of revenues it generated as well.”

CJHDevCo has claimed losses in business opportunities due to the Supreme Court ruling nullifying tax incentives in the JHSEZ in 2003.

CJHDevCo also cited as reason for non-payment, the delay in the processing of their permits by the One-Stop Action Center.

BCDA refuted such claim because the ruling was already cured when BCDA actively lobbied in Congress, resulting in the signing of RA 9399 and RA 9400, two laws that granted tax amnesty and restored the tax incentives to JHSEZ locators. Hence, CJHDevco did not suffer any damages as it never paid any tax.

Casanova also said that the reason for the non-issuance of the permits to CJHDevco was a result of their own neglect, “They have not filed their income tax return and submitted financial statements to the Securities and Exchange Commission (SEC) since 2008,” Casanova said, adding “as a government agency, it is our policy to help enforce government laws. We require submission of income tax returns.”

Baguio Rep. Bernardo Vergara moved for the creation of a technical working group to address the concerns of both parties. The TWG was created with the provision of issuing a subpoena to all financial documents to CJHDevCo and its affiliated companies to shed light on their business practices.

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