Part I: Personal net worth — a case of perjury or money-laundering?
“When I travel, I don’t charge the government, although it’s allowed because it is work-related. I pay my own way. When you are this big, you have to follow the rules. You can’t afford not to, because all eyes are on you. It is not a wise business practice to use government perks. I’ll serve the three terms (allowed by the Constitution). After that, I’ll think about the future. But I’ll stop at being a congressman.” — Senator Manny Villar
There was no doubt about it: the C5 issue had been troubling enough on its own. The scale of its core allegation — that an esteemed solon had willfully deployed public funds for his own personal benefit – had been nothing short of vertiginous. The masterful studies by both Winnie (http://www.youtube.com/watch?v=nUQDt-sXdlk) and Jamby (http://www.scribd.com/doc/25528863/Senator-Madrigal-Expose-on-Senator-Villar-C-5-Scam-Part-1) conveyed volumes, as had Joker’s allegations of conflicts of interest a decade before (http://article.wn.com/view/2010/02/07/Joker_savaged_Villar_in_1998/). The latter’s recent (and arguably dubious) shift in tone notwithstanding, a seed of doubt had already begun to nestle in the public mind.
Still, there were other issues those lengthy readings had failed to shed light upon. Looking at Villar’s own C5 Primer and his Senate speech on 2 Feb 2010, one wonders at that controversial 2008 P200M budget insertion, which had been initially embargoed by the DBM, but was subsequently used for the Sucat flyover after it was realized that the C5 extension was in fact a dead-end road. Had there even been an existing “program of work” so as to justify the term “double insertion”? What we have on record, in fact, is an admission by Engineer Adriano (the consultant for Villar-owned businesses who had allegedly dictated the Villar amendment to the 2008 national budget; this, at least, was according to Yolanda Doblon, Director General of the LBRMO, the Legislative Budget Research and Monitoring Office in the Senate) that the amount had been arbitrarily made in anticipation of the fact that the original P 200M would most likely be reduced; the superfluous P 200M may have been added after the dead-end realization had been made, prompting Villar to use the embargoed funds.
GMA supposedly instructed DPWH to submit the study to use the embargoed funds for the fly-over only after the budget allocation had already been made, thereby effectively providing a “program of work” to justify the release of funds. Needless to say, this is highly irregular: in established funding practice, a program of work is usually submitted before. Does this suggest that the additional P 200M had been retroactively added to ultimately “free up” a hitherto unprogrammed amount?
Adriano, a Villar real estate employee, had been put in a critical legislative role. And while there have been indications that, as a Lower House representative, Villar had put some of his employees on the congressional payroll, Adriano himself was apparently not on the Senate payroll. So why was he dealing with LBRMO in the first place? And why does Committee Report 780 contain several admissions indicating position and knowledge with respect to the 2008 budget allocations? Separate documents also tag Adriano as the sole contact person authorized to “deal” with government agencies and the courts (DAR, NIA, lower courts, a Malacañang employee, LGUs, etc.: does this suggest bribery?) before specific Villar company interests could even be addressed.
This is not to quibble over minor details after the fact. But there was no doubt about it, as I said: there had been dubious business practices all round. So who was this Manny Villar and how had he managed to amass wealth that was nothing short of stratospheric in so short a span of time? According to PCIJ, after only 14 years in government, Villar’s net worth had risen to P 1.05B in 2007 or to a staggering 1,292% increase from his assets in 1992:http://pcij.org/stories/top-bets-for-president-grow-wealth-despite-poll-expenses/.
In order to assess this “sipag at tiyaga” phenomenon as fairly as I knew how, I decided to investigate him myself, and to separate both propaganda and polemic, on the one hand, from what could be empirically verified, on the other. I began to think in terms of a concentric circle: at the center of the circle, I would look at his personal finances (ultimately the measure of a man, one might say), before examining his land dealings in specific regions (as the circle expanded outwards) and, finally, his national/international endeavors on a larger scale (the outermost rim of the circle itself).
The personal: Statement of Assets, Liabilities and Net Worth
So I began with his Statement of Assets, Liabilities and Networth (SALN). The documents studied (with the help of two gifted accountants, two lawyers and several highly-placed financial analysts, not to mention a handful of deeply committed patriots who patiently withstood my incessant questions and valiantly wore as many hats as were needed at any given moment) are copies of SALNs filed in the Philippine Senate. The difficulties in accessing them notwithstanding, they are technically a matter of public record. They cover an 8-year period (2001-2008, inclusive) because the 2009 SALN is only due for filing on 30 April 2010.
Anyone who has had to draw up a balance sheet or assess their own personal net worth will tell you that it can be a royal pain in the neck. But those insufferable categories and dreadful numbers notwithstanding, none of it, really, is rocket science. In a nutshell, it’s simply a snapshot of your financial health in any given year. The net worth statement includes what is owned (assets) on the left side of the sheet, what is owed to creditors (liabilities) on the right side of the sheet, and the net value (or difference) between what is owned and what is owed (net worth). Unless you’re a vagabond or happen to be fabulously wealthy, you generally have both A&L.
So what do Mr Villar’s SALNs indicate (SALNs from 2001 to 2008 at scribd.com here:http://www.scribd.com/doc/28483980/Villar-s-Sworn-Statement-of-Assets-as-of-12-31-01-p1; http://www.scribd.com/doc/28484047/Villar-s-Sworn-Statement-of-Assets-as-of-12-31-01-p2; http://www.scribd.com/doc/28484179/Villar-s-Statement-of-Assets-as-of-12-31-02;http://www.scribd.com/doc/28484208/Villar-s-Statement-of-Assets-as-of-12-31-03-p1;http://www.scribd.com/doc/28484243/Villar-s-Statement-of-Assets-as-of-12-31-03-p2;http://www.scribd.com/doc/28484348/Villar-s-Sworn-Statement-of-Assets-as-of-12-31-04;http://www.scribd.com/doc/28484342/Villar-s-Sworn-Statement-of-Assets-as-of-12-31-05;http://www.scribd.com/doc/28484286/Villar-s-Statement-of-Assets-as-of-12-31-06;http://www.scribd.com/doc/28484151/Villar-s-Statement-of-Asset-as-of-12-31-07;http://www.scribd.com/doc/28484116/Villar-s-Sworn-Statement-of-Assets-as-of-Dec-2008; and the the columnar numerical analysis)? The assets reported consist of only three main types:
a) Real Properties: i) Land/Buildings
b) Investment in Shares of Stock
c) Personal Properties: i) Cash in Bank; ii) Receivables; and iii) Other Personal Properties
Please note that this analysis is based on “acquisition cost” or “book value,” as reported in the SALNs. To simplify the analysis, the cost of living and personal expenses of someone of his stature and wealth have not been considered. A comprehensive reading no longer requires Cynthia Villar’s SALNs because they are, in fact and law, only one economic unit. The 2007 and 2008 SALNs were also jointly filed by the spouses, which means that the net worth indicated is in fact their joint net worth.
General Observations
* No liabilities were reported at all: ergo, Net worth = Assets, which means that he had nothing to pay off.
* His net worth from 2001 to 2008 increased by P 641,133,934, or 133%, making his 2008 Networth 258% of his 2001 net worth.
*According to several published reports (please see the PCIJ reference below for an example), he started with a networth of P75M when he first entered politics as a Congressman in 1992. In a span of 16 years, therefore, he managed to increase his net worth by over 1000 percent!
*The biggest increase can be found in his Personal Properties — P 618,363,371, or 309%, making his 2008 Personal Properties 409% of those in 2001.
*An increase in net worth suggests that he made or realized income in the previous years equal to at least the amount of the increase, considering that he has had no liabilities.
*There is, however, no indication that he made such an income, nor is it suggested how this might have even been possible. As a Philippine senator, his declared salary is only P426,500.
Real Properties
* Real properties generally refer to real estate or immovable properties.
* In 2001, he reported only the following Real Properties at acquisition cost:
Residential, BFRV Las Pinas: P 3, 181, 089
Residential, BF Vista Grande: 80, 000
Residential, BF Int’l LPC: 50, 000
Residential, Putatan, Muntinlupa: 446, 370
Residential, San Nicolas, Cavite: 337, 360
Residential, Naga Rd., LPC: 500, 000
Total: P4, 594, 819
* From 2002-2006, he declared the same properties, but at the aggregate acquisition cost of P4,588,619 (lower by only P6,200, so — for the purposes of this analysis — the lower figure is used).
* In 2007, this figure suddenly ballooned to P 19,518,532, or by 425% of the 2001 level. In absolute terms, this is an increase of P14, 929, 913.
* The 6 real properties listed from 2001-2006 became 38 parcels/pieces in 2007. These are the same properties declared in 2008. Reportedly, they are registered under the names of:
Cynthia alone, 10 parcels: P 5, 794, 232
Manny alone, 6 parcels: 2, 600, 500
The Spouses jointly, 8 parcels: 5, 503, 060
“Cynthia, married to Manny”: 14 parcels, 5, 620, 740
Total: P19, 518, 532
* There is no way to determine from the face of the SALN alone if the 6 properties he declared from 2001-2006 are the same 6 properties listed in his name in Annex “A;” for one, they are different in value/acquisition cost as those previously reported (PHP 2,600,000 v. 4,588,619 in 2002-2006). Those reported in 2001-2006 are listed by location; those in 2007-2008 are listed by title number and area, so an accurate comparison is difficult. However, since the aggregate acquisition cost of these properties in 2001-2006 are not much different from the 2007-2008 values, it may be safely assumed that the 6 properties in MV’s name are the same 6 properties he declared in 2001-2006.
* The rest of the listed properties – those registered under “Cynthia A. Villar m/to Manuel B. Villar,” and those registered in their joint names – are conjugal: should they therefore not have been declared in his SALNs from the outset as well? It is after all highly unlikely that they were only acquired in 2007, in view of the acquisition/book values that were given.
* Considering the values/amounts reported, it is equally unlikely that the Laurel Property on Shaw Blvd. (currently the NP HQ) is included in this list. This property is widely-known as having been acquired by Mr Villar and his wife: in a PDI article by Gerry Lirio in July 2008 (http://newsinfo.inquirer.net/inquirerheadlines/nation/view/20080713-148119/Villars-take-over-storied-Laurel-house-on-Shaw-Blvd), conversations with Cynthia on their purchase of the property are quoted, including their plans regarding the property, renovation costs of P4M, and the private dinner they shared when they first moved in, etc. Does this, too, suggest misrepresentation and therefore perjury? It should be remembered that we are after all required by law to declare all our assets and liabilities without any exclusions: any misrepresentation is considered to be perjury, which is a criminal offense.
Investment in Shares of Stock
* From 2001-2008, he declared Investments in Shares of Stock in a lump sum amount of P200, 837, 890 – no breakdown and no changes.
* In 2007, he itemized in Annex B.2.1 of his SALN the following “Investment Items” at “Book value” (i.e., acquisition cost):
Shares of Stock, Adelfa Properties: P 99, 997, 000
Shares of Stock, Fine Properties: 98, 000, 000
Shares of Stock, MB Villar Co: 1, 000, 000
Shares of Stock, Macy’s Inc: 500, 000
Shares of Stock, Mooncrest Properties: 1, 340, 890
Total: P200, 837, 890
Could this really have been all? Where were the shares in the other companies? Indeed, had Mr Villar not gone out of his way to declare his enormous wealth to all and sundry? So why is it not in the books, one is compelled to ask?
Since the total value of the foregoing investments is also P200,837,890 — the same amount he reported from 2001-2006 as “Investments” — and the companies are also the same companies he reported in 2001-2006 as those in which he and his wife had “business interests and financial connections,” is it not more likely that he is referring to the very same investments (which remained unchanged from 2001-2008) here?
In 2007, his investments in shares of stock increased by P7,846,850, although they remained unchanged in 2008. These consist of the following items:
Shares of Stock, PLDT: 10,600
Shares of Stock, Sun Life: (no value given)
Club share, Alabang Country Club: 1, 100, 000
Club Share, The Country Club: 4, 150, 000
Club Share, Quezon City Sports Club: 150, 000
Club Share, Tower Club: 356, 250
Club Share, Sta. Elena Golf Club: 1, 800, 000
Club Share, Camp John Hay Golf Club: 280, 000
Total: P 7, 846, 850
Based on the reported values of the “additional” investments above (which were at acquisition cost), it is improbable that they were acquired only in 2007; given real estate values, it is more likely that they were acquired much earlier, but were reported in his SALN only in 2007.Could this be another ground for perjury?
* From 2001-2008, he has consistently declared only 5 companies in which he and his wife have an interest: Fine Properties, Adelfa Properties, MB Villar Co., Macy’s Inc. and Mooncrest Properties. So where and how does Vista Land relate to these companies? What is his connection to, and interest in, Vista Land? And what of other companies associated with him or otherwise referred to by him in press statements as “his” company/ies? This bears much more careful scrutiny.
* But, as a highly-placed hedge fund insider later qualified: ”an analysis of the SEC filings of Vista Land (VLL) indicate that VLL is 35.83%-owned by Fine, 22.48%-owned by Adelfa, 5.35%-owned by Polar and 2.12%-owned by ML&H Corp., or at least 65.78%-owned by holding companies that were all controlled by MV/CV. Fine is nearly 100%-owned by MV (51%) and CV (~49%); Adelfa is 39%-owned by the spouses and 51%-owned by a company called Althorp Holdings. I assume that the remainder comprises most of the public float. I am also assuming that the Villars or Villar-controlled entities (i) control Althorp; and (ii) own enough additional shares to take the Villars’ aggregate controlled shareholdings in VLL to more than the 2/3 supermajority threshold. In short, there is no need for MV/CV to directly own VLL shares if he already controls the companies that own a controlling stake in VLL (itals mine).”
* The C-5 Report should also be considered, given its core allegation, precisely, that he used his position to allocate funds for the road that traversed and benefited “his” housing subdivisions. According to the C-5 Report, Adelfa Properties, which is owned by Mr Villar and his wife Cynthia, owns Brittany Corporation (formerly Azalea), together with Vista Land and Paolo Villar, MV’s son. Vista Land, on the other hand, is also owned by Adelfa and MV’s sons Paolo and Mark. Adelfa further owns Golden Haven Memorial Park. Brittany, Vista Land and Golden Haven are therefore 100% owned by MV and his family indirectly, through Adelfa. These companies — Adelfa, Brittany and Golden Haven — all sold properties to the government as right of way for the C-5 Project.
Personal properties
* As stated earlier, this is where the most dramatic increases in his net worth can be found:
Amount/Value Increase YoY % Increase
Increase 2001: 200,085,040
2002: 274,868,165 74,783,125 37.37%
2003: 325,798,839 50,930,674 18.53%
2004: 415,327,318 89,528,479 27.5%
2005: 554,398,826 139,071,508 33.48%
2006: 710,225,075 155,826,249 28.1%
2007: 813,180,674 102,955,599 14.5%
2008: 818,448,411 5,267,737 .65%
* Cumulatively, from 2001-2008, the increase in absolute terms is P618,363,371 – or a three-fold increase (309%) over an 8-year period – making his 2008 declaration 409% of the 2001 values.
* From 2001-2004, these were simply reported as “Personal Properties;” in 2005-2006, as “Other Real and Personal Properties.” Here, too, we observe no details or itemization.
*In 2007, “Other Personal Properties” were itemized as follows:
Cash in Bank (SA/CA/TD): P 24, 573, 990
Receivables: 701, 106, 684
Other Personal and Real Properties: 87, 500, 000
Total: P 813, 180, 674
(See Annex B.2.2 of his 2007 SALN)
In 2008, “Other Personal Properties” were:
Cash in Bank P 29, 212, 803
Receivables & Other Personal & Real Properties 789, 235, 608
Total: P 818, 448, 411
(See Annex B.2.2 of his 2008 SALN)
* It is unfortunate that he lumped “Receivables” with “Other Personal and Real Properties” in 2008, so no assessment can be made about whether “Receivables” increased in 2008. For the purposes of the ensuing analysis, the 2007 figure of P701,106,684 will therefore be used. Taken together with the rest of his assets, receivables – even at the amount of P701,106,684 declared in 2007 – comprise more than half of his entire net worth! (Receivables of P701,106,684 divided by his 2008 net worth of P1,046,651, 683 = 67%).
* It is intriguing, to say the least, that he would have receivables in the first place. Remember, this is money one is expecting to receive. This category is usually reported by business enterprises, like corporations and single proprietorships, and arises from sales on credit or loans extended in the course of business. But is he actually running a business as a single proprietor? Is he selling goods or services, where it is customary to sell on credit; or is he engaged in the business of a lending investor, pawnshop or some such enterprise, where he would tend to extend credit or loans? If so, should he not have reported in his SALN that he is a single proprietor/individual engaged in business? As far as we know, he deals only through corporations – like those 5 companies he declared in his SALN, in which he has “business interests or financial connections.”
* What could this imply? The only plausible explanation is that he extended personal loans, year after year, to unspecified parties, or had money claims with these parties, as would give rise to such receivables. If this is the case, to whom did he lend or from whom does he have money claims, and why? Is this not a matter of public interest, considering the enormous size of his “receivables”? Indeed, a typical rural bank outside of Metro Manila and other urban centres, such as Cebu or Davao, might not even have a loan portfolio this sizeable.
* More significantly, if he lent money, where and how did he get the funds to lend? If he has money claims, what is the underlying obligation of the supposed debtor/s? Logic – and the causal connection between creditor and debtor – dictates that he must have had a source for the moneys he lent out and, since he had no reported liabilities, he must have generated enough income to lend. As stated earlier, an increase in net worth — where, as in this case, there are no liabilities — presupposes that income was earned to the extent, at least, of the increase in net worth itself. So where and how did Mr Villar get the money?
* The increase in his net worth could not have come from the following:
a) The sale of real properties: he reported 6 in 2001-2006, with fair market value — by his own report in the SALN – of P4,012,760 (2006 SALN), and there are still 6 in his 2007-2008 SALN registered in his name alone. Moreover, as of 2008, his Real Properties included 32 “additional” parcels/pieces.
b) The sale of shares in his companies: shareholdings in the 5 companies he declared remained constant from 2001-2008; there was therefore no change.
c) Stock market transactions in quick deals; i.e, he bought and sold “short term” (could this have been margin trading?): if he had invested in the stock market, should he not have declared these investments in his SALN? Apart from his shares in the 5 companies and the club shares in various golf and country clubs, there were no other such investments declared. Assuming that he bought and sold in quick succession such that, as of the end of each year, he had no other shares than those he held in the 5 companies (hence, no other stock investments to declare in the SALN), could he have made so much on these deals without having first sunk in a significant investment so as to enable him to take such positions in the first place?
d) He could have also earned interest on his bank deposits but, given the level and nature of his declared Cash in Bank in 2007-2008 of less than P30M, the interest income could not have been that significant.
* So where was the increase coming from? In a newscast aired on 10 February 2010, he declared that the increase in his net worth came from dividends (http:www.youtube.com/watch?v=RSFqGxfeYIU&feature=youtube-gdata). If so, these dividends (a sum of money paid to shareholders of a corporation out of company earnings) must have only come from the 5 companies he declared. Records obtained, however, indicate that, of these 5, only Fine Properties was reported to have declared dividends of P196,000,000 on 2 December 2006. This is certainly very far from the net increase in his net worth from 2001-2008 of P618 M+.
* Even assuming that his companies had in fact declared dividends, it would appear that they have not been paid out – hence the term “receivables.” This suggests that he does not have the funds on hand, and only has the expectation that these “receivables” will be converted into cash in due course. If so, how could he have over a billion pesos “of his own money,” which he has openly admitted to having spent on his campaign and that of the NP’s?
* In any case, regardless of the source of the increase in his net worth, should he not have paid income taxes on them? Did he in fact do so? Dividends constructively received by individuals are subject to a final tax of 10% of the gross amount, to be withheld by the corporation-declarant. Assuming that the P700M+ “receivables” are dividends, the withholding tax would be at least P70M. BIR insiders (who were apparently too apprehensive to go on record) have privately suggested that nothing near this amount has been paid in taxes, although this has yet to be verified. Still, as this is a matter of public interest, perhaps we could prevail upon Mr Villar to address these insinuations and clear his record once and for all?
The considerations above strongly suggest that he may have deliberately “inflated” his net worth with the ingenious use of receivables to justify his widely-publicized wealth and the billions he is now spending on his campaign, which he continues to describe as “his own money.” When “hidden wealth” or “ill-gotten” gains are put through legal channels (like reporting them in the SALN) so they can “surface” as legitimate, can this be considered to be a case of money-laundering? In other words, did he make up those receivables to make it look like he had more assets than he actually did so he would therefore appear to be extremely wealthy, in the hopes that people wouldn’t look into how he has been able to finance what has arguably been the most expensive political campaign in Philippine history?
As far as this writer can see, there are only three possible conclusions one might make about his declared assets (what remains undeclared, of course, is another story entirely). Either my assessment is riddled with errors (in which case this also applies to the battery of financial and legal experts/scholars I have had to consult informally) or there’s something seriously amiss with his SALNs, in which case he could conceivably be accused of perjury. Otherwise, if my graver suspicions are correct, he could be accused instead of money-laundering. Either way, the implications make the mind reel, and the voter would do well to consider how this might affect the public in the long term (especially the poor, who have arguably lost out in terms of desperately-needed social services). We are after all no longer talking about opportunity cost here but about actual losses to the public purse at a time of serious economic recession; if, as a solon, Mr Villar was able to achieve more than a 1000% increase in his net worth in his relatively few years in “public service,” what could happen to our entire social infrastructure if and when — perish the thought! — the man becomes President of this embattled republic? Perish the thought, indeed: unlike Dante’s inferno, which ultimately leads upwards into the light, MV’s concentric circles can only propel us towards a collective abyss from which we may barely recover.
A private postscript
Once upon a time — oh, 24-odd years ago, I think it was, when the unending grief of the Marcos era had finally begun to lift its thick and impenetrable shadow in a youthful clarion call to freedom — I carried with me a dream that the Philippines would one day be more than just another banana republic, teeming with warlords and armies, oligarchs and monopolies. As I peer yet again upon the threshold of history, the moment gives me pause, and I pray that our voters will be wise enough not to be taken in by glib and facile solutions or appealing personalities bereft of substance; I pray that we boldly defy dishonesty (even as that easy buck is unfailingly served up before us on a gleaming, silver platter) and instead consider sacred — no matter the personal cost — this country’s future and that of our children’s unborn children.
References:
M B Villar:
– Campaign expenditures and personal finances:http://newsinfo.inquirer.net/breakingnews/nation/view/20100208-252010/Villar-on-campaign-ads-Its-my-money-Im-spending
http://www.mb.com.ph/articles/246775/campaign-funds-poll-expenses
http://pcij.org/stories/top-bets-for-president-grow-wealth-despite-poll-expenses/
http://www.malaya.com.ph/02092010/news8.html
http://www.philstar.com/Article.aspx?articleId=555104&publicationSubCategoryId=63
– C5: http://www.scribd.com/doc/25761977/Villar-Ethics-Presentation
http://www.scribd.com/doc/25470164/Enrile-Committee-Report
– Laurel mansion: http://www.wbber.com/v/oX3rK9dQLqc/jose-p-laurel-mansion-bought-by-manny-villar-8508
– Poverty: http://propinoy.net/2010/02/08/was-manny-villar-really-ever-poor/
Popularity: 1% [?]
So if Nielsen is correct that Villar, at the lowest estimate, has spent P500B on ads, then he should be broke by now.
What about the alleged selling of P7B shares after IPO? Was there such a sale? Did the IPO raise that much money?
I’ve always thought he underdeclared his SALN…this new theory of yours of fluffing like a peacock is new and compelling…if so, who is lending him money?
…maybe Manny Pacquiao is lending him campaign cash?
How influential is Chavit in Manny Paquiao’s financial decisions?
gumawa ng bagong storya.
O sige kay Willy revillame na lang at kay Dolphy mayaman din sila.
Chopper ata ni willy yung gamit gamit nya.(joke)
Ang tanong ko,bakit ayaw na yata maniwala ng tao sa C5 scandal.
Nung simula pa lang ng project me bill board na sya sa SM Sukat sa Daang hari and somewhere else? o baka nadito na naman tayo sa pare pareho lang silang kurakot attitude.If that is the case then I will no loger complain about what the anti pinoy’s are saying as long as it is just about some quirks and quirks that lead to paralysis.(none of those attacks intentional or otherwise)
Pacquiao is no Einstein but he ain’t stupid…
Nash, sorry to only be responding now. Forgot I hadn’t responded to this pala.
That’s precisely my point, see. He’s broke, if his SALNs r to be believed. But there are a lot of gaps. It’s common knowledge naman that he made a lot of money on the IPO of Vista, his own company. But didn’t declare at all that he’s ever owned Vista shares! Of course, I don’t think he would have; otherwise, insider trading or sham IPO (he is not the “public’) iyan.
As they say, when you have things to hide, you are bound to get caught in the same tangled web you spin to hide them… ;-)
I like these words :
I pray that our voters will be wise enough not to be taken in by glib and facile solutions or appealing personalities bereft of substance
Norman sison and bongV, benign0 and schumey, ding Gagelonia and chinoF and leytenian plus primer and PhilManila will say amen to your words. As to who is the personality who has substance — that is what elections are for. May the popular one win!
“not to be taken in by glib and facile solutions or appealing personalities bereft of substance”
Agree! Who was it that said: ‘Becoming a Patriot is the Last Refuge of a Scoundrel.’
Choose your wild.
Mr. Villar is the consumate Politician. His hand is in your pocket.
While his other hand is patting you at your back. He does not use
perks. But, look at what he did. He built roads near his subdivisions
at our expence to make him Billionaire.
Real estate guru finds formula that works including market research to verify demand and supply. In the Philippines, the process of getting into this type of business could be very easy especially if the developer has acquired land paid in full. The land itself becomes his collateral to grow his wealth not only for 300% but duplicating the concept will provide him stream of lifetime income and overwhelming wealth. ( Donald trump is a good example). All he needs is an architect, an engineer and establish a development team including PR people and marketing to design the subdivision and submit to the local office, city or province for final approval. Imagine how much wealth can be generated when the concept is duplicated over time. Of course, when you are a politician with expertise in finance, you can easily create a financial statement that nobody can understand. I believe that the Senate nor Congress lack the capability to comprehend the many details of Finance. Small towns are being isolated , unprotected from abusive business practices because of lack of proper regulations.
A subdivision is designed to accommodate many homes. Each homeowner will pay real property tax which is based on the value of real property. Provinces, cities, towns,barangays and school districts raise money through the real property tax. The property tax -money funds schools, pays for police and fire protection, MAINTAIN or make roads ( in Philippines) and funds other municipal services enjoyed by residents.
If I was the mayor of the town where a proposed development or subdivision is on going or coming to my desk, I will calculate future revenue from property tax and see if a C5 can be financed first by a private entity or public. Too bad, money Villar is too fast for the slow pinoys and He was Senate President.
On Money Villar owning multiple corporation is a business strategy to protect his own asset. The legal concept is called an umbrella company. It mirrors its namesake, the umbrella. The umbrella covers those underneath it from the sun. In corporate, the umbrella becomes a corporate shield or a singularity that is used for varying logics. Those under the umbrella are as a rule, separate corporations that share services, conveniences, and combined legal or financial transactions. Typically finances are entered separately under an umbrella company but the capacity to gain from acquisitions and perform internal transactions can be utilized. In general , umbrella corporations are not a category of corporation but instead are a way of structuring corporations to offer benefit either to the customer/people or to the corporate entities’ owners. Unfortunately, the umbrella concept here in Philippines only protects Money Villar.
On Villar campaign spending, it doesn’t need to come from his own pocket. Who knows he might have borrowed money from a bank and used all his assets as collateral. Cash Flow statement may not be consolidated. The umbrella concept is also a type of risk management. It can shuffle everything underneath. And a person of that high network don’t need to declare all his cash for bankcruptcy purposes. One big cash account can be on a trust or who knows…
Yes of course it’s a great blog… whew.
Villar’s SALN reflects only his personal asset including his wife. On campaign funds, it can come from any individual, corporation ( profit or non profit) in a form of donation except when individuals or organizations who hold significant interests in the form of contracts, franchises, or grants with the government.
Villar owns many companies under the Umbrella strategy. His personal balance sheet only reflects the distributions or dividends from these companies. BUT, these companies are not prohibited by law to donate its corporate cash to his campaign. In LAW, there are NO limits on corporate donations to political parties. Batas Pambansa 881 Article XI, Omnibus Election Code. BUT, there are limits on total political party expenditures. Section 101 set a limit of one peso and fifty centavos (Php 1.50) for every registered voter. References: Section 101, Article XI, Omnibus Election
In PRACTICE, Global Integrity reported that the regulations governing the political financing of parties and of that individual candidates are not effective. NADA… ZERO..
Political Party expenditures is not the same language as Personal expenditures. When Villar said, he is spending his own money then he probably can get away with it.
Assuming that Villar’s Umbrella companies registered in Philippines cannot justify the cash outlay for his personal campaign, there are other business strategy that OTHER cash may come from.
For Tax Management purposes, there’s a global management strategy called transfer Pricing strategy. This strategy is old and is actually encouraged as a standard tool for every owner-managed, midcap multinational or even fortune companies to manage tax liabilities. Google transfer pricing on how it works and add GSK and microsoft on how these companies changed its product and service pricing from their offshore umbrella companies to avoid taxation in the US ( as an example). Same concept will apply to Philippines company with an offshore umbrella company. The exchange of money can be illegal but not the crime of money laundering. Tax evation maybe but it will require the IRS to do its job. But the IRS has no jurisdiction to the offshore companies except it can trace the money thru the banking system. When a country’s banking system lacks the transparency , following the trail of money can be very difficult. In addition, corporate financial statement may not reflect what is disclose.
Other strategy is to delay tax payment to the government. Disneyworld as an example sometimes delay its corporate tax payment to the IRS especially when the purpose of holding the money is for expansion and to increase employment. Of course, the government would rather want to see employed people. As we all know, government revenue comes greatly from individual income tax not from corporate tax.
Lila… where’s the party…. Happy Birthday!!!!
Hahaha — leytenian, hindi pa ako natutulog, no? Seriously, worst bday in history… ;-(
Incidentally, your substantive comments ROCK. I promise to respond after my deadline (no, i didn’t finish) and after the spa my girlfriends insist on taking me to…
More soon! ;-)
Lila,
OFF TOPIC:
Happy Birthday!
have a relaxing one..(spa)
HAPPY BIRTHDAY, Lila!
Karl and Bert — thanks, gentlemen! ;-)
If they team up with Manny Villar, management stockholders (Kris Aquino and also farmers) can pull out the most value out of Hacienda Luisita.
True or false? Whatcha thunk?
HLI with a cooperating president in Malacanang, can raise the market value of Hacienda Luisita.
Come on, Mike H. Surely u can do better than that. Any chance u might actually engage with the material itself?
Lila,
Wow, when you say you research your blogs, you mean it, eh? Accordingly, it will take some time to digest the details. As an initial response I would say the financial statements are Swiss cheese and no professional accountant would stand for that, so string up his accountant along with “da man”. Is there a government auditing function? The people who check on the accountants, as banks have? Probably not.
Do they report income statements along with balance sheets? That is the other significant part of financials; third is cash flows. The income statements would say more clearly where the money is coming from.
Second,I am doing the research on Admiral Dewey that you and Karl suggested, and Dewey’s observations on Aguinaldo parallel your observations on Villar. So basically, not much has changed in the power structure that says rules are good for holding back competitors, and I should get what I can get.
More later after I digest the details . . .
Thanks for the fine grist for my mental mill . . .
Joe
thanks Joe(for the research),so the more things change the more they remain the same?
Lila,
I first saw thise master piece(one of them)of yours in B7, it is quite extensive.
I hope people should stop having the notion na pare pareho lang kurakot ang mga politiko at wala namang malinis sa kanila.
If we all submit to that notion then no one will buy this c5 issue,no matter how obvious.
I believe Cocoy,Schumey,Angela and others has also have blogs about Villar we might want to review them as well.
I am still crossing my fingers that this anti corruption campaign of Noynoy will be absorbed and digested by the masses.
Lila,
Of all the time that I needed my printer most, guess what? My laser printer went south on me. These are too much informations to take in one sitting. Guess, I’m gonna have to get another cartridge and, it ain’t cheap either.
I will have to print it out and read your Novel, I mean, your essay. And ponder, to what Manny Villar and his better-half, along with his “Ponzi Schemer’s” are up too. Wow! startling informations here.
Matt Taibbi is the one that exposes Goldman Sach, the world’s most profitable investment bank and, he writes.
These are the key words “DISORGANIZED DEMOCRACY” and “ORGANIZED GREED” A crooked investor will find a way through the loophole and take advantages for his/her own[their] gain.
So, as much as the Philippines democracy is at disarray and, as long there is a disorganized democracy, again, a crooked person/organized greed, will bend the rules.
Food for Thoughts:
• Who is that “Crooked Person”
• Or, the “Crook” that took your “Tax Money” for their self gain.
As Gordon Gekko has said:” For lack of better term. Greed
is good. It works!”
equalizer,
Somewhere down the road, they are bound to get caught. Next thing you know, they “end up” in the “SLAMMER.” Happy Trails…!
Yeah, I was shocked too when I started going over the data. I hoenstly didn’t know what would emerge. Yun pala…!!!
Lila,
I have no doubts, if there is anyone can do better, that can do worst for the Filipinos. That would be Manny Villar. In the farm subsidies, bailouts, corporate favoritism, or licenses and privileges given to certain individuals and companies, we are in fact seeing the myriad ways that government has reared its ugly head into the business markets.
By creating his own government and, his own corporations. His empire found a way for his[their] “corporate greed” to established, and fabricate scheme after scheme to guarantee the superficial appearance of free enterprise, thus, line the pockets of each (could it be that of his real estate business or his financial “ponzi schemers”), and creating a framework, as if to cover the government from any wrongdoings.
Oh yeah! This is no laughing matter either.
If you were to really think about it, these market interventions creates an all powerful corporations, which are seen as capitalist greed at its worst. Manny Villar, and the Department of Public Works and Highways, has been lying to the Filipinos, to how, they have managed and support to construct C-5. Their existence and profits are often guaranteed by government; (thanks to Manny Villar’s favoristism), making them completely inefficient. We the Filipinos, then blames the inefficiency on corporate greed and, surely enough, let’s not forget, on capitalism.
If you really think about it, our government is bordering to a more “Socialism” society. And Manny Villar, has found a ways to challenge these channel for self gain.
Food for Thoughts:
If you don’t mind getting screwed, go right ahead, and don’t forget to check that box next to his name. Adios Amigos…!
Good job, Lila. The answer to your question where he got all the money can only be explained by his income tax returns, which, unfortunately, are not available publicly. The most we can do is speculate. One way an owner can milk his company and avoid paying tax is for him to borrow cash and pay it off by assigning real estate. The assignment is booked by his company at market value, or even at an inflated price, which more than washes out the cash advance, with plenty of room to spare for future cash advances. Since the transaction is not a sale, the owner has no tax exposure because the maximum value he is answerable is pegged at the amount of the cash advance, but he would likely book the transaction officially at his old cost. Whether it is proper or not for the company to overstate the value of the property received as asssignment is up to the auditors to decide, which, in many cases, will probably be passed anyway. In effect, the income that the companies should have booked is passed on to the owner through an off-the-books transfer of profit transaction. The owner will keep cash and buy more property and still have some receivables (representing the overstatement of the value of assignment), and the companies will likely not make money and pay no dividends. Imagine the multiplier effect of this modus operandi if repeated many times. I think Noynoy has an ace here. He could make a public presentation of his own tax returns and challenge Villar to do the same.
Very hard to get those tax returns, macapili… ;-(
Thanks for all the great insights, all. I have to churn out another piece for Philippine Graphic by midnite tonite, so I won’t have time to respond until after my deadline. But please keep the questions and comments coming, and I promise to get to them as soon as my Noynoy piece is done.
Thanks! ;-)
P.S. Sorry about the crazy formatting. I was really trying to align the numbers in a a tabular fashion so they would be easier to read, but they keep getting reformatted both in blogspot (where my personal blog is) and here… Hope the figures are still visually accessible even in this format.
Maybe it’s better to use html statements for tabular presentation.
Good post.
But how does he compare with other real estate magnates? Like the owners of Ayala Land for example?
Quarterly Diiviidend Report VOL. I NO. 5 4th Quarter 2009
Vista Land & Lifescapes, Inc. VLL
1Q-4Q 2009
Dividends Declared (Php) 0.033
Dividend Yield (%) 1.76
1Q-4Q 2008
Dividends Declared (Php) 0.064
Dividend Yield (%) 6.46
1Q-4Q 2007
Dividends Declared (Php) 0.0
Dividend Yield (%) 0.0
http://www.pse.com.ph/html/MarketInformation/pdf/quarterly/2009/QDR_4Q2009.pdf
There are approximately 1,120 holders of common equity security of the Company as of
December 31, 2008 (based on the number of accounts registered with the Stock Transfer Agent).
The following are the top 20 holders of the common securities of the Company:
1. Fine Properties, Inc. 3,042,615,495 35.633%
2. PCD Nominee Corp. (Non-Filipino) 3,002,762,901 35.166%
3. Adelfa Properties, Inc. 1,556,461,666 18.228%
4. Polar Property 456,811,000 5.350%
5. PCD Nominee Corporation (Filipino) 255,728,580 2.995%
6. ML&H Corporation 181,190,507 2.122%
7. Bestimes Investment Limited (Non-Filipino) 26,814,493 0.314%
8. Althorp Holdings, Inc. 5,000,000 0.059%
9. Barclays Bank PLC (Non-Filipino) 3,565,800 0.042%
10. John T. Lao 1,502,000 0.018%
11. Sulficio Tagud Jr.&/or Ester Tagud 401,000 0.005%
12. Tomas L. Chua 400,000 0.005%
13. Federal Homes, Inc. 324,850 0.004%
14. Christian A. Aguilar 290,617 0.003%
15. Chan Chak Ching 250,000 0.003%
16. Marcelino C. Mendoza 206,690 0.002%
17. Benjamarie Therese N. Serrano 200,000 0.002%
18. Maribeth Tolentino 200,000 0.002%
19. Manuel Paolo A. Villar 200,000 0.002%
20. Mark A. Villar 200,000 0.002%
http://www.vistaland.com.ph/documents/Financial%20Statements/VLL_SEC%20Form%2017A_December%2031,%202008%20Final.pdf
Villar has investments on only Adelfa and Fine Properties as declared in his 2008 SALN
http://www.scribd.com/doc/28484116/Villar-s-Sworn-Statement-of-Assets-as-of-Dec-2008
adding the shares declared on Villar’s SALN, and multiplying it to dividend payout per share (which I assume is the right computation to arrive at a total dividend payment)
3,044,171,956 * 0.064 (per SEC report as of 2008)
= 194,827,005.184
isnt it a far cry from the P789+ M declared as Receivable and Other Personal and Real Properties?
there are 8,538,740,614 shares for VLL, a total divident payout for investors of VLL for 2008 would be 546,479,399.296.. its still not close to P789+ M..
assuming that this is correct..
* Of course, as a highly-placed hedge fund insider later qualified: “an analysis of the SEC filings of Vista Land (VLL) indicate that VLL is 35.83%-owned by Fine, 22.48%-owned by Adelfa, 5.35%-owned by Polar and 2.12%-owned by ML&H Corp., or at least 65.78%-owned by holding companies that were all controlled by MV/CV. Fine is nearly 100%-owned by MV (51%) and CV (~49%); Adelfa is 39%-owned by the spouses and 51%-owned by a company called Althorp Holdings. I assume that the remainder comprises most of the public float. I am also assuming that the Villars or Villar-controlled entities (i) control Althorp; and (ii) own enough additional shares to take the Villars’ aggregate controlled shareholdings in VLL to more than the 2/3 supermajority threshold. In short, there is no need for MV/CV to directly own VLL shares if he already controls the companies that own a controlling stake in VLL (itals mine).”
65.78% of 546,479,399.296 is 359,474,148.86.. its still not close to P789+ M..
could it be that dividends were rolled over for the whole period in question in question? along with the dividends from other investments taken by his declared companies? i do not know if its a corporate practice either
Hi justwondering, as I noted above, MV’s dividends can only come from the 5 companies he declared: Adelfa, Fine, MB Villar, Macy’s and Mooncrest. Thus, even if Vista declared dividends, none of it could have been received by him, since he is not a shareholder of Vista — he did not declare this to be so, remember? VL dividends can only go to its shareholders — Adelfa and Fine among them (the biggest shareholders). Simply because Villar is a shareholder of Adelfa and Fine does not mean that he receives the VL dividends as well. They stay with Adelfa and Fine until Adelfa and/or Fine also declare dividends to their respective shareholders — i.e., Villar and spouse.
In this case, however, only Fine declared dividends — in 2006 — of about 196 M. So ito lang ang dividends ni Villar, see…
If he claims that the dividends are from Vista, that means he has shares of stock in Vista. The problem is, he didn’t declare in his SALNs that he is a shareholder of Vista. So: if he is, doesn’t this create another problem for him?
Villars total financial assets are supposedly around $500 million.
That valuation is net future valaution and changes from day to day and from month to month.
SALN’s do not take into account the net future valautions of shares of stock.
However they constitute wealth and can be negotiated for liquid assets to spend.
How dumb can people get.
Obviously I’m not focusing on net future valuations — duh.
Funny, I noticed this on MLQ’s wall the other day:
“Villar is different kind of candidate. His wickedness (self -interest) will help give a new perspective to the old cacique mentality that has permeated Philippine politics. He married into a rich politically connected family and parlayed that union into a big business enterprise.
“The man is a shrewd operator. He is the most magulang of all the candidates. He is the right kind of crooked politician this country needs. He was able to restructure and force his foreign creditors to take a huge hit. All with taxpayers subsidy…
“Vote for the wickedest candidate that is out there.
“The most grievous mistake during Cory’s tenure was the entry of the neo-classical economists who put this country on a track of dollar integration all based on a now failed ideology of EMH…The country will be paying the price for generations.
“However for the wicked there are so many opportunities for arbitrage.
“Down even to selling women and organs. The BSP is trapped in a debt prison and has only one policy framework… Protect the value of the peso.
“That makes interest rate leveraged arbitrage for the short term the vehicle for making money…Most people do not know that they are getting deeper into debt…
“This is probably the only country where the government itself is deliberately trying very hard to destroy the state.”
–
Sound familiar? Forget the spelling and syntax errors: just focus on the *content.* Sounds like colossal stupidity to me.
The increase in the networth does not necessarily suggest a realized income or earned income that is equivalent to the income reported in the income tax returns.
Personal assets can be reported at its current value which may be higher than the acquisition cost. (it is a pity that these were not itemized in the SALN and which is also difficult to do taking into consideration that personal asset also include jewelry and other collections like painting, antiques, etc. ).
Buildings and other real properties are presented at acqusition cost because any appraisal (fair market value or assessed value) are recorded at separate accounts in the balance sheet. It is only when these assets are sold when gain or loss on its sales are recorded in the books. Even the accumulated depreciation is recorded separately.
It is not suprising that the couple (joint income tax returns) may report dividend income from their investments and passive income such as rent income. They own buildings, don’t they.
Receivables may come in the form of rent and cash dividend. When cash dividend is declared by a corporation, it is liability to the issuing corporation and a receivable to the recipient.
The CHANGE in the networth equals the realized income, passive income and the increase in the value of personal assets. It is not only the salaries received.
BTW, I am not pro-villar.
Dear Mr. CA T,
You are absolutely right and I agree with you. Analyzing the SALN requires basic accounting grounding. Thanks for providing some of that here.
Net worth is comprised of items that come from diffrent documents or reports. From income statements, from appraisal increments, from a whole lot that the SALN does not show.
That being so, it would be foolhardy to judge based on this document alone as the data cannot be crosschecked. More so when we are talking of one individual (SALN) versus data from corporate reports (SEC, etc.)
Thus, I agree with you on this one.
Dean
Dear CA T,
BTW, You do not have to post a disclaimer that you are “not pro-Villar”. Accounting should be apolitical until it is spun that way by those who don’t understand it.
Regards again,
Dean
Nah, I’m pretty comfortable with my grounding, thanks. I suspect I’ve been in school longer than most, so I wouldn’t underestimate other people’s training, if I were u… Indeed, with due respect to the Ateneo, etc, it’s not exactly Oxford…
More importantly, the analysis has been checked by people far more qualified than anyone here in FV (both of us included), so I’m pretty comfortable with that too.
Are your analyses entirely apolitical? This would suggest the contrary: http://blogs.gmanews.tv/dean-dela-paz/index.php?/archives/3-Loren,-Loren-sinta.html
In fact, Loren even cites u on her website, and the quote sounded like pretty major spinning to me…
The SALN is the only requirement for a government employee. Cash flows, balance sheet and income statements are basic financial statements required from business entities especially by the SEC.
False premises/assumptions, sorry. As stated in the analyis, all assets are reported at acquisition cost (kindly refer directly to the uploaded SALNs above), so this is an apples-to-apples comparison, meaning peso-for-peso value, not distorted by market or current value considerations. And, at such peso-for-peso values, the increase in net worth is as reported in the analysis.
There is no claim at all that they earned rental income. It was MV himself who said on TV that the increase came from dividends, so why speculate that thay could also have earned rental income? Perhaps, that’s precisely what u should be asking the Villars…
As for the dividends being receivables, that’s precisely the point: he does not have the cold cash on hand, so where is all that money he’s been spending on his campaign coming from?
Cat,
Yes, I should have realized that, we are talking about an individual. Mr. Villar claims his money comes from running his businesses well, but the businesses are private, and therefore we have no access to the income statements. The sources of his money can only be patched together, as Lila has done so thoroughly.
Thank you.
Joe
Joe,
The financial statements of the business organizations should be made available to the public by the SEC. That is the reason why SEC required partnerships, corporations and non-profit organizations to submit the three basic financial statements.
SALN reflects that of the income derived from businesses in the form of dividends. The rest of the incomes of the corporations are retained by the corporate entities.
The analysis of the SALN is based on limited information so that assumptions can not be avoided.
What Lila did is a work of a forensic accountant which an ordinary accountant no matter how gifted he is will not be be able to do objectively if the person doing it is not independent of the person subject to close scrutiny and or the person requiring the investigation.
Joe, I’ve now uploaded SEC documents for Adela, Brittany, Fine, C&P, and Vista Land in my personal blog. I’ll upload them here later when I have more time. In case u wanna see them, u can check lilashahani DOT blogspot DOT com.
Look forward to reading your views.
Lila,
Now I see where the money comes from. Villar owns too many common stock which typically carries voting rights that can be exercised in corporate decisions. He can easily convert his shares to cash by 1. through the sale of stock in a company known as equity financing. ( here he will be taxed ) or 2. debt financing can be done to avoid giving up shares of ownership of the company. ( for example issuing bonds to his other umbrella company and this umbrella company extend him cash thru a line of credit – no taxation yet because there’s no sale).
Looking at the numbers, this guy is rich. :D
In my view, this is a weakness in our system. There should be limitation of personal expenditures on political campaign. I am curious about Althorp Holding company also.
The umbrella is too big to fail and yet unethical when it buys the people’s vote -using innocent children.
Hey leytenian, what exactly do u do ba? Again, great points u make here. They r so many that I need to make a list of them before addressing them all. Ditto with The Ca t’s insights. Could u please do me a favor and leave them under my blog (lilashahani dot blogspot dot com)? Sorry, I just want to make sure I keep a record of these questions/points in one place so I can address them later….
Lila,
Holding company is another story. VLL is traded with a value of over 19 billion. This does not include reserved or savings by a parent holding company registered in another country where its tax treaty is favorable. Ex: Asset Protection Personal Holding Company in Switzerland or Cyrus. The word ASSET protection may cover liability including non disclosure of this asset on SALN.
The fact that the personal assets have increased over the years, the assumptions that the increase could be because they are at presented at their current values. As I have said, it should have been itemized which may not be possible. Baka masyadong marami.
The mere fact that he owns the building, he must be leasing it even to his own business which will have distinct personality separate from the Villars. You or gifted accountants can not assume that they are used for personal reason.
I am a CPA myself and I will be more worried if despite the businesses that he declared, his networth is not increasing because if that is so that means he is not declaring all if his income.
Please note that I never presumed that they were presented at current values; he listed them at COST/BOOK value and those were the figures analyzed. You may wish to check for yourself the source documents referred to in the links.
Assets were analyzed as he listed them. List of real estate appended as annexes to his SALN. Also investment in shares of stock, receivables and personal assets appended as annexes. These are all source documents. Yes, it would be good if he itemized further, like his receivables of P700M, so the public might know from whom he claims these receivables and why, if in fact he really has such receivables. That’s why questions are being raised.
His list of real properties does not indicate whether it is a building or not. They are merely identified by title numbers and area, with corresponding acquisition/book value. I cannot even assume — and I did not — that “they are used for personal reason” or that “he must be leasing it to his own business.”
Incidentally, please note that he did not declare any business. All he declared were 5 companies in which he and his wife had investments: Adelfa Properties, Fine properties, MB Villar Co., Macy’s, and Mooncrest. I suppose being a shareholder does not necessarily mean that he/his wife are themselves engaged in the business? If so, he did not say so in his SALNs, which in 2007 and 2008 were jointly filed with his wife.
Since u are a CPA, you might wish to analyze the SALNs yourself, and let us know your findings.
Lila,
I would have loved to. But as you can read in my pinaysaamerika, I am busy with my current project.
CPA as I am, I am cognizant of the fact that I will be needing volumes of documents to express an objective opinion about the statements in question, the way we were trained in the accountancy where objectivity means all claims should be backed up by docs. We do not speculate, we do not assume. Everything should be in black and white.
If ever we make assumptions, we checked its validity.
As you claimed, there are so many information that are needed. And I agree.
Another thing, it had been my principle not to argue with someone who is not in my line of expertise since there will be a lot of clarification and “education” as to the terms used.
The exchange of ideas will be lopsided all the time. And this is the reason why I avoid arguing with people who have their own lines of expertise too who I recognized to have spend time, for research and accumulated years of experience to develop such authority.
The debate will be lopsided and both parties will be presenting their respective arguments. If they are not in the same page, there is where irritations begin.
For example when I wrote that “the change in the networth does not necessarily reflect a realized income, you already countered with false assumptions and premises” but I am just stating a fact. We’re governed not only by regulatory agencies but also GAAP, SFABs proclamations to standardize so that the right use of the term is important to us.
Example while you equate acquisition cost with the book value,
and you expect that values will be at their historical costs all the time, the accountant in me objects.
For me to explain that, i have to make a lot of computation.
I have also to explain how to arrive at book value; how an assessed is different from appraisal or from market values and what rules govern accountants to pick which values to use.
An increase in the networth does not represent cash income alone. SALN (which I prepared myself when I was in the government) gives you the freedom to lump up your personal assets into a total amount.
Now if there are questions or investigations, the investigation committee can ask for itemized list. To conduct a forensic accounting, it takes months and you have to hold the hard documents to see if they are authentic. There is also a need to get certifications from third parties have to acquired from banks like the banks, investment companies and clientele.
The certification from the bank is to check the cash balance as of the given period. Cash in bank in the statements may not necessarily reconcile as that with the bank at the same date because there may have been deposits which were already recorded in the books but are not yet credited by the bank (Deposit in transfer) and there may be encashment of checks (outstanding checks in the past) and bank transfers (bank debits) which are not recorded in the books. thus we have the so -called bank reconciliation to know the real balance and you can not get these certifications not unless you are the auditor.
So you see how complicated it is just to come up with opinion?
If this exercise of proving Villar’s real networth is politically motivated, I won’t do it because I am of the opinion that I think it is a waste of time.
majority of the voters who come from the lower income bracket woud not even understand what this analysis all about.
Windowdressing may be present but to prove it, it will take a village to solve the maze.
Read Conspiracy of Fools which is about the lies, the crime the greed of the Enron execs which were made possible thru creative accounting. For it to be discovered, someone has to “blow” the whistle, otherwise, the books were prepared to withstand close scrutiny.
The Ca t, I’ll be happy to go thru your blog but I don’t have time right now. I’m afraid I’m rushing to meet a deadline. I will address your points shortly.
But I will say this: I would never put my name on a set of conclusions if I had not carefully vetted and cross-checked them first. U r of course free to come to your own conclusions but I am pretty certain that the people who went over the data with me r more qualified than u or me put together (I am not a CPA but did have to do a lot of macro/micro economics, finance and accounting in grad school). Two were not only CPAs; they actually teach accounting in respected institutions. Unlike u, I’m not interested in casting doubt on your qualifications; I’m just pointing out that they r pretty solid consultants. I wish I had the liberty to mention their names but unfortunately they have asked to be remain anonymous…
As for being politically motivated, I have never hidden my personal misgivings about Villar. But I really had no idea what the data would yielded until I went through the material itself. Initially, I thought that they would be too skilled in accounting (since both spouses r CPAs) to let any inconsistencies show on paper, so I was actually surprised with what I came up with. I may prefer Noynoy but I am not an unconditional fan either and also have questions about his candidacy. I also need absolutely nothing from Noynoy and would have the same professional reality even if Villar were to win the presidency, so this is certainly nothing personal.
But, yes, I found the data to be disturbing, which is why I wrote about it. U r free to infer whatever u choose.
More later.
Lila,
My book project which is a book on financial management has a deadline to beat too and that is what is written in my blog together with trivial matters which I chose to write about in between formulating and solving accounting problems to go with the illustrative problems in the book.
Humility aside, I did not only teach Accounting in the undergraduate but also Managerial Accounting, Financial management, Economic Analysis and Quantitative Techniques in the Graduate School. To teach in the graduate school, I must have post graduate degrees too. Isn’t it?
I served as a dean in one university. But teaching alone does not give you the qualification of an expert, neither is the title CPA. CPA is just a license to practice the profession. You should really have worked in an accounting/auditing firm to develop that investigative skills and have worked in the industry.
And I have worked as a consultant too aside from putting up an S and regular corporations in the US. Do I qualify as an expert?
Did I tell you that my other doctorate is in Economics?
This is not tooting my horn but is just presenting my credentials to show you that I know what I am talking about.
If you read my suggestion for you to read, I am giving you a tip as to how they hide the hidden wealth or how they milk the cash cow or giving you the hint that there are ways by which the controlling ownership of corporations is hidden not only from the public but also from regulatory agencies such as SEC.
The Ca t, I appreciate that u have now gone out of your way to repeatedly establish that u are not only a CPA but are highly qualified on many levels and have a great deal of professional experience. But there really is no need, u know. I never doubted your qualifications for a minute. For that matter, I don’t require that people have doctorates before I take their ideas seriously. A decent insight is decent regardless of the background of whoever came up with it.
Just as a reminder, the only person whose qualifications to do the reading above had been questioned had been MINE. So this is not to disparage your obvious experience but to simply point out that one of my sources is not only an economics scholar of international caliber but also highly-placed in the PSE, etc. Not tooting his horn or my connection to him here: I’m just saying that he routinely advises national and international institutions, so he’s certainly no slouch. Another one was a dean for an international institution and was also in a critical role in cabinet. The rest were accountants and lawyers. When I first consulted them about what I was trying to do, some threw out some of my original ideas and made additional suggestions about where I might look. What u see above involved repeated consultations and now incorporates their criticisms. I only mention their background because u appear to doubt their qualifications as well.
So this is not about your not being qualified, in my view. I’ve no doubt that u are. But I also highly respect the people I’ve consulted. So perhaps there is a difference of opinion about the validity of the data used, which is certainly fine. As I’ve said, you’re free to make your own conclusions.
i have every intention of looking at the substantive points u raised (not the last post, which is mostly about qualifications, but the ones before) and will do so once I have the time to sit down and go over what u and leytenian (who I owe a response to as well) have brought up.
Rest assured that your views r being heard and taken into account. I’ll respond after my deadline.
Thanks.
“The fact that the personal assets have increased over the years, the assumptions that the increase could be because they are at presented at their current values.”
I’ve looked at the SALN form and the last column says “acquisition cost” for both real and personal property, and the totals apparently are used to calculate the networth – not the “assessed value” or the “current fair market value.” This tells me that the networth is based on acquisition cost, not market or any other value, and therefore the increase in networth could only come from income as far as the SALN is concerned.
MAGDALO lookd in detail at Mann Villar’s SALN and th other
docments relatd to C5.MAGDALO’s cnclusion — Mnny Villar
shuld bethe nxt persdent Pilipipinas.
EllenTrodesilas reportd that the Aquinocampaign also talked
negotiatins to MAGDALO — MAGDALO conclusion is Villar
shuld be thenex president Pilpinasns.
Magdalo and Ellen Tordesillas are entitled to their opinion but they are not necessarily correct. If no significant dividends were declared by Villar companies where did the income of Villar come from? As I pointed out the increase in Villar’s networth should come from income and not from increase in market value of properties because the SALN requires reporting at acquisition cost.
Great points, macapili — couldn’t agree more.
Mike H, kala ko Gibo ka? Ngayon naman Villar, even after all the above? Even if u don’t agree with everything, some of it is difficult to disprove. As for Magdalo, perhaps u should ask Danny Lim how much he was offered to join Villar’s camp…
This is my second attempt to post. The first one was so obviosuly censored.
Does anyone know which and how many shares of stock Villar owns together with yesterdays clisng marekt price to come to a figure of his stockholding worth as of yesterday?
That would give anyone a clear idea of how much this man is worth. That asset valuation is not taxed until it is sold. One does not have to declare market valuation of ones stockholdings.
Villar is said to have stocks and other assets worth $500 Million.(market price) That is the theoretical value only. He can obviously raise cash many ways. Spending ten to twenty percent is a whole lot of money to become President. (Php 2-5 Billion) But it still is his own.
Equity markets are doing well in the Philippines.
He also could be getting stock options as payments just like the Ayala boys.
Lila Shahani is woefully equipped to do an audit of his personal wealth. Why make it so compicated.
A few simple questions would have sufficed.
Rule of Law: REPUBLIC ACT NO. 6713
Violations:
Conflict of Interest: arises when a public official or employee is a member of a board, an officer, or a substantial stockholder of a private corporation or owner or has a substantial interest in a business, and the interest of such corporation or business, or his rights or duties therein, may be opposed to or affected by the faithful performance of official duty.
SECTION 4. Norms of Conduct of Public Officials and Employees. — (A) Every public official and employee shall observe the following as standards of personal conduct in the discharge and execution of official duties:
(a) Commitment to public interest. — Public officials and employees shall always uphold the public interest over and above personal interest. All government resources and powers of their respective offices must be employed and used efficiently, effectively, honestly and economically, particularly to avoid wastage in public funds and revenues.
3.SECTION 7. Prohibited Acts and Transactions. — In addition to acts and omissions of public officials and employees now prescribed in the Constitution and existing laws, the following shall constitute prohibited acts and transactions of any public official and employee and are hereby declared to be unlawful:
(a) Financial and material interest. — Public officials and employees shall not, directly or indirectly, have any financial or material interest in any transaction requiring the approval of their office.
(b) Outside employment and other activities related thereto. — Public officials and employees during their incumbency shall not:
(1) Own, control, manage or accept employment as officer, employee, consultant, counsel, broker, agent, trustee or nominee in any private enterprise regulated, supervised or licensed by their office unless expressly allowed by law;
(2) Engage in the private practice of their profession unless authorized by the Constitution or law, provided, that such practice will not conflict or tend to conflict with their official functions; or
Recommend any person to any position in a private enterprise which has a regular or pending official transaction with their office.
(c) Disclosure and/or misuse of confidential information. —
Public officials and employees shall not use or divulge, confidential or classified information officially known to them by reason of their office and not made available to the public, either:
(1) To further their private interests, or give undue advantage to anyone; or
(2) To prejudice the public interest.
ACCOUNTABILITY AND RESPONSIBILITY:
1. House of Congress is the committee who shall establish procedures for the review of statements to determine whether said statements which have been submitted on time, are complete, and are in proper form.
2. The Administration and Enforcement of this Act is the responsibility of The Civil Service Commission and The Ombudsman
If this is a case of Perjury? A financial statement that is misleading, but not actually false, cannot lead to a perjury conviction.
If this is a tax evasion case? An SALN is not a tax return.
If this is a money laundering case? Villar’s holding company can easily convert common shares to cash, use his company as a corporate donator of his campaign or even pay himself a lump sum income and may file his tax return when due. BUT Villar can claim his campaign expenses as losses and in the end will become a wash from paying income tax. :DDDDD. In LAW, there are NO limits on corporate donations to political candidates.
Conclusion: It is a dysfunctional system of conflicting interest.
Great question, leytenian. I double-checked with my legal counsel again and it seems that it IS perjury only because u have to SWEAR to it and sign…
P.S. Natapos din ang article ko finally!! Relaxation time… :-)
and BTW, since you asked me what I do, I am a dancer ;-) . So are you going to tick tock with me on perjury and hate speech? lol
this blog is extensive. well done. Looking forward to another one this week? :D
Talaga? Wow naman, ha. As for those AP folks, they’re really not my priority right now. But we can certainly discuss…
More from one of our legal analysts, btw:
A public officer or employee who willfully and knowingly make untruthful statements in his SALN can be charged with the crime of PERJURY (Art 183, Revised Penal Code). Perjury carries the penalty of imprisonment from 6 months to 6 years. Even if not charged criminally, if such officer is found guilty of making untruthful statements in his SALN in an administrative case, he can be dismissed or removed from service (See Section 9, R.A. 3019) even if there is still no criminal case filed or decided:
1. Public Officers are required to periodically file a Statement of Assets and Liabilities and Networth (“SALN”). This is required under Section 7 of the Anti-Grant and Corrupt Practices Act (R.A. No. 3019) and Section 8 of the Code of Conduct and Ethical Standards for Public Officers and Employees (RA 6713).
2. All SALN are required to be made under oath.
3. The crime of Perjury is committed when a person makes an untruthful statement on a material matter under oath. Thus, when a person knowingly make an untruthful statement on a material matter in his SALN (which is made under oath), he commits the crime of perjury. To prosecute for perjury, it must be proven that (a) the some or all statements in the SALN are untruthful and false; (b) the misstatement pertains to a material (not trivial) matter;and (c) It is knowingly done by the person.
4. The crime of Perjury prescribes in ten (10) years. Meaning, one can charge an erring public officer within ten years from commission of the crime.
5. An erring officer can be removed from office through an administrative proceedings. However, take note that the Senate has its own rules on administrative cases. I am not aware of any Senator ever being subjected to administrative case before the Senate.
Ms. Lila Shahani and To All:
http://www.mabuhayradio.com/sections/real-estate/5391-c5-sound-and-fury-is-solita-monsod-painting-the-full-picture.html…………http://www.mabuhayradio.com/sections/real-estate/5420-monsodas-c5-analyses-errors-and-consequences.html
Thanks, Jose — interesting points. But perhaps u should take these C5 points up with Ms Monsod instead. If u notice, my piece is about his SALNs. I’d be happy to engage with u on the latter.
Best wishes.
The financial world has never been my strong suit—I like math ok, but in stuff like this it usually just bores me. But if I read the net worth figures right, Mr. Manny seems to be doubling his net worth on the average of every 4 years & serving us in congress at the same time. In the words of Mr. Spock, “Remarkable, Captain!”
As I recall from an old math puzzle about rice grains on a chess board, if he can keep this up the rest of his life, he’ll have most of the money in the world! That’s a whole lot better than any businessman in Fortune Magazine! Maybe we should find a way to invest in him…Wait! I remember another guy who did uncommonly well: Bernie Madoff!
Also, I can’t help noticing assets that almost certainly should have been previously reported suddenly showing up from one year to the next—the however-many-it-was millions in club shares, for instance, or the conjugal real estate. Maybe we should worry about that stuff instead of piddling around with all the numbers: not, “where did it all come from?” but, “why wasn’t it all reported all along?”
Sori, coming down on people is not my usual style, but how can anybody trust this guy? These questions are so simple—why aren’t they being asked?
On GMA News yesterday:
http://www.gmanews.tv/story/187997/lp-bet-villar-excluded-laurel-house-from-saln
The response I sent the GMA News editor, in response to the claim made by Villar’s spokesperson, which hopefully he will also publish:
Dear Editor,
Please note that Crown Asia is a Vista Land company. U might find the attached GIS of Vista Land helpful: http://www.scribd.com/doc/28598445/Vista-Land-and-Landscapes-GIS-2009-07-02... See more
Kindly note that there r two Villar sons on the board; please also note the list of stockholders.
As I posted in my blog (http://lilashahani.blogspot.com/2010/03/concentric-circles-private-musings-on.html), which Risa Hontiveros refers to, “an analysis of the SEC filings of Vista Land (VLL) indicate that VLL is 35.83%-owned by Fine, 22.48%-owned by Adelfa, 5.35%-owned by Polar and 2.12%-owned by ML&H Corp., or at least 65.78%-owned by holding companies that were all controlled by MV/CV. Fine is nearly 100%-owned by MV (51%) and CV (~49%); Adelfa is 39%-owned by the spouses and 51%-owned by a company called Althorp Holdings. I assume that the remainder comprises most of the public float. I am also assuming that the Villars or Villar-controlled entities (i) control Althorp; and (ii) own enough additional shares to take the Villars’ aggregate controlled shareholdings in VLL to more than the 2/3 supermajority threshold. In short, there is no need for MV/CV to directly own VLL shares if he already controls the companies that own a controlling stake in VLL.”
Please post this response.
With thanks and best wishes,
Lila R. Shahani