Elections a family business

Posted at 07/12/2013 12:06 AM | Updated as of 07/12/2013 12:06 AM

P465M donations from kin, own money sent 11 to Senate

(Last of Two Parts)

Who gets voted is just half the story of elections.

Who finances the campaign, who gains or loses money, and by how much, are the more salacious pegs to the narrative. Money makes elections go round, and tracking its trail, the pivot of transparency and accountability that voters must exact of those they elected into office.

The 12 candidates for senator who won and their national political parties have reported that they raised P1.53 billion in donations and incurred P1.67 billion in expenses.

Of this, 11 of the 12 new senators said their relatives and immediate family members donated a total of P305.5 million. Eight of the winners said they spent another P159.5 million of their own money.

If these reported figures are true and accurate, P465 million or a fourth of the total P1.98 billion that all the 33 senatorial candidates and their parties told the Commission on Elections (Comelec) they raised from individual and corporate donors last May came from family money and personal funds.

Over 2,100 persons and just 73 corporate donors contributed funds in the senatorial race in the last balloting.

But because elections are largely family affairs in the country, funds from kin and personal money accounted for a third of the total spending by the candidates and parties last May.

Except for a re-elected senator, Francis Joseph "Chiz" G. Escudero, all the others who won had a father, mother, brother, sister, spouse, aunt, uncle, or cousin shelling out cash to get them to power.

A cottage industry

From financing to winning elections, politics has truly become a family cottage industry in the Philippines.

Two new senators – Cynthia A. Villar and Juan Edgardo "Sonny" M. Angara – not only won but also inherited the Senate seat just vacated by their husband and father, respectively.

Political and/or showbiz pedigree largely powered the victory of four others: Joseph Victor "JV" G. Ejercito, Ma. Lourdes Nancy S. Binay, Paolo Benigno "Bam" A. Aquino IV, and Mary Grace Poe-Llamanzares.

For some of the same reasons, name recall, and possibly the habit of some voters to go for the usual, six were re-elected: Escudero, Alan Peter S. Cayetano, Lorna Regina "Loren" B. Legarda, Aquilino Martin "Koko" L. Pimentel II, Antonio F. Trillanes IV, and Gregorio "Gringo" B. Honasan.

Some may think that by their fat donations to their relatives who ran for office, these political families should be poorer by the millions now.

Blessing, curse

Elections, however, offer blessings to the big spenders. While these families may have lost piles of cash to campaign donations, once in power, they – or their winning members at least – would now have access to even bigger piles of pork barrel and other perks.

In fact, even before they could warm their seats in the Senate, three candidates have already been blessed in terms of excess campaign donations.

According to the Statement of Election Contributions and Expenditures (SOCE) they filed with the Commission on Elections (Comelec), Binay gained P8.2 million in excess donations, Bam Aquino, P1.2 million, Escudero, P746,690, and Poe-Llamanzares, P40,743.

Binay’s windfall is equivalent to more than what she could earn, by lawful salary, if she manages to serve three full terms in the Senate.

Poe-Llamanzares however reported P3.4 million in unpaid obligations.

Defeated candidates Juan "Jack" C. Ponce Enrile Jr. and John Carlos "JC" G. de los Reyes also had remaining funds (P396,838 and P20,000, respectively), according to their respective SOCEs. De los Reyes of Ang Kapatiran Party said he did not incur any campaign expenses.

Three of the 12 parties behind the new senators have also been similarly blessed. The Liberal Party (LP) realized excess donations of P671,806; the United Nationalist Alliance (UNA), P388,628; and the Nationalist People’s Coalition (NPC), P169,354.

But elections could be a curse as well. Some candidates who ran on tight budgets had to beg or borrow to raise campaign funds.

Two are now deep in debt, based on documents they submitted to Comelec. Akbayan party-list group's Ana Theresia "Risa" Hontiveros-Baraquel had to take out loans of P8.86 million from friends, while Makabayan party's Teodoro Casiño had to get a "personal loan" of P3.5 million from a certain Antonio Chua of Nueva Ecija, to cover some of their campaign costs. (See Sidebar: Risa & Teddy: Elections a debt trap)

Families of donors

Elections, at core, are about money moving political ads and machines to deliver the votes, after all. And because it is such an expensive enterprise, families matter and rule.

The members of the Villar, Araneta-Roxas, Angara, Aguirre-Aquino, Poe-Llamanzares, and Gomez-Ejercito families were among the top donors of their respective candidate-relatives in the May 2013 elections.

These clans shelled out from P20 million at least to P88 million at most in campaign donations. Net of these amounts, their family-owned corporations also extended similarly big donations to their candidates.

Former senator Manuel "Manny" B. Villar Jr., his brother Virgilio, and sons Mark and Paolo donated a total of P87.7 million to the Nacionalista Party (NP) and its re-electionist candidate Alan Peter Cayetano.

This is aside from the millions of pesos that Villar’s wife Cynthia said she drew from their conjugal purse in her run for the Senate. She reported spending P133.9 million in the last elections, including P131.6 million from her personal funds and only P2.6 million from other donors.

Altogether, the Villar family donated to the campaigns of Cynthia Villar, Alan Peter Cayetano, and the NP a total of P219.3 million, or about 15 percent of the total funds raised from all 2,100 individual donors by all the 12 senators who won in the last elections.

The Roxases and Aranetas, meanwhile, contributed P72.7 million to the Liberal Party chaired by President Benigno Simeon C. Aquino III. The bearer of the Roxas political dynasty, Interior and Local Government secretary Manuel "Mar" A. Roxas II, is currently on leave as LP president.

The Angaras of Aurora led by former senator Edgardo "Ed" J. Angara donated P62.6 million in all to the campaign of Angara’s son Sonny and the Laban ng Demokrattikong Piipino (LDP).

The Aguirres and Aquinos led by Paul A. Aquino, the President’s uncle, gave a total of P32.7 million to finance the election of Paul’s son, Bam Aquino.

Two of Grace Poe’s closest relatives, husband Teodoro "Neil" V. Llamanzares and stepmother Jesusa S. Poe (also known as Susan Roces), donated P21.4 million to her campaign.

Guia goes JV

Re-elected San Juan City Mayor Guia G. Gomez is not far behind in showering a loved one’s campaign with millions of pesos. She donated P20 million in cash to JV Ejercito, her only child by ousted president and now Manila Mayor Joseph Estrada.

Gomez also donated P386,044.00 to Partido Magdiwang, the party that nominated her in the last elections. But she apparently was not about to forget her own campaign in San Juan City, donating P238,898.00 of her personal funds for her re-election bid as mayor there.

Smaller donations ranging from P90,000 to P3.5 million each came from the relatives of Senators Trillanes, Legarda, Cayetano, Pimentel, Honasan, and Binay.
 
PCIJ found no immediate relatives who donated to Escudero last May.

Like Villar and Gomez, some of the senatorial winners reported that they also co-financed their campaigns with their own money.

Legarda said she forked out P15.7 million of her own funds; Sonny Angara, P6.8 million; JV Ejercito, P2.2 million; Honasan, P1 million; Pimentel, P899,102.39; Cayetano, P619,318; and Trillanes, P555,014.

Liquidity is key

Bureau of Internal Revenue (BIR) Commissioner Kim S. Jacinto Henares says that one may want to look at the cash asset of such candidates because they would have had to be financially liquid to use personal funds in an election campaign.

"The cash asset is more important than other types of assets,” says Henares. “Unless, of course, the candidate sells a property and converts that to cash to fund his/her campaign,” she says.

If this is the case, Henares adds that it would be best to compare the Statements of Assets, Liabilities and Net Worth (SALNs) filed by an official before and after running in the elections to determine if he or she had sold property or any other substantial assets.

This week, the BIR released a revenue memorandum circular reminding candidates who participated in the recent polls to pay the appropriate taxes at certain deadlines depending on one's employment status.

Candidates who gained from excess donations, however, may be happy to know that another BIR issuance says they may now keep these personal funds, provided they report the amounts in their income tax return for 2013 – and pay the right taxes.

No law at all

Election laws themselves are silent about what candidates and political parties should do when they are left with excess donations to their campaigns.

Comelec Commissioner Christian Robert S. Lim, head of the poll body’s Campaign Finance Unit (CFU), acknowledges that no law exists prescribing how candidates and parties should dispose of unused campaign funds. The only thing that comes close is a revenue regulation that BIR issued in 2009, which requires candidates to pay income tax on excess donations.

In Lim’s view, it would be better if the candidates were to return the money to donors, even as it could be a tricky process. “For example, you receive about P100 million in donation and you were left with P5 million, how would you return the money?” he asks. “Would you choose just one donor or give it back to all of your donors proportionate to what they gave you? That might be difficult.”

He concedes that Filipinos in general wouldn’t return something that has already been given to them so as not to offend the donor. “That’s why if you look at the candidates, it seems like they don’t really need it (money) in the first place, but they keep it,” says Lim. “Then eventually it gets used.”

“It’s really up to the candidate, that’s their right,” says BIR Commissioner Henares. She says candidates could return the excess funds to the donor, donate it to charity or an accredited exempt entity, or keep it as one’s own. “If the candidate wants to keep it, that’s not a problem,” Henares says, “but he/she has to pay income tax.”

It’s winner’s call

Assistant Commissioner Ariel G. Ronquillo of the Civil Service Commission (CSC) shares this view. “If such excess funds can be treated as private property, then it’s up to the recipients on how best to dispose of the funds,” he says.

Ronquillo, who also heads the CSC’s Office for Legal Affairs, notes that the donation was given to a particular candidate, and not to a government office.

PCIJ sent letters to Binay, Aquino, Escudero, Enrile, and Poe-Llamanzares, and the LP, UNA, and NPC parties to ask how they plan to dispose of their excess donations.

Of the four that responded, only NPC said it would return its excess funds of P169,354 to its donor. Janet Vicente of NPC secretariat said the party will return the money to just one donor but it has yet to discuss which donor will get the money. She said NPC will also have the donor acknowledge receipt of the money once the return takes place. Vicente also prepared NPC’s SOCE.

Former House deputy speaker Raul A. Daza, the Liberal Party (LP)’s general counsel, says that requiring parties to pay income tax may raise a precursor question of whether a political party like the LP, which is supposedly a non-profit organization, should pay such taxes. Daza says LP will likely write a query to the BIR to verify this requirement.

He adds that a part of the excess fund had already been used up because it has been more than a month now since the campaign period closed.

In his reply to PCIJ, Aquino said: “We are using this amount primarily for post-elections operating expenses of our office specifically for the period after the elections and before the Senate term starts.”

Aquino’s P1.17 million in excess donations is slightly less than the P1.3 million net worth that he reported in his SALN for 2006, the last year he served as chairperson of the National Youth Commission under then President Gloria Macapagal-Arroyo.

Foundation gets it

Neil Llamanzares, Grace Poe’s husband, said that since excess donations are “considered by the BIR as earned income, we will be paying 30 percent in taxes for this” while “the net amount will remain in the foundation (Friends of Grace Poe Foundation, Inc.).” Llamanzares headed his wife’s campaign finance team in the last elections.

The Friends of Grace Poe Foundation registered with the Securities and Exchange Commission just three days after the official campaign period began on Feb. 12, 2013, with Llamanzares contributing nearly all or P1.99 million of its P2-million capital.

According to its articles of incorporation and by-laws, the purpose of the foundation is to serve as a vehicle for promoting the advocacies of Mary Grace Poe, to help those who are much in need by providing aid and assistance, to undertake medical missions and other projects to alleviate poverty and uplift education and to exercise all powers provided under Section 36 of the Corporation Code.

The Foundation has apparently not conducted any of these medical missions. Instead, in the last elections, it paid over P80 million for Grace Poe’s political advertisements on television, according to advertising contracts.

Citing another scenario, CSC’s Ronquillo says that once a candidate wins, assumes public office, and appropriates excess donations as his or her own money, the amount should henceforth be enrolled in the SALN.

“They have to declare that (excess funds) because it will become their personal property,” Ronquillo says. He adds that the revised SALN form that the CSC issued in 2011 would have been useful in cases like this. In the form, the CSC is requiring government officials to declare all amounts and sources of their gross income. Gross income, explains Ronquillo, should include all kinds of money coming from any source.

Any source may include donations that would eventually become an official’s personal property. In the 2011 form, officials who receives and keeps such donation must indicate the amount, name of donor, and date of receipt. But Ronquillo says the form was opposed by many legislators from both houses of Congress and across party lines.

No donations

In contrast to some winners who gained extra cash, two candidates who lost did not realize excess donations at all: Marwil Llasos and Baldomero ‘Bal’ C. Falcone.

Even worse, five other defeated candidates are clearly the poorer now because they bankrolled their campaign at their own and full expense: Ma. Ana Consuelo ‘Jamby’ A.S. Madrigal who spent P39.1 million; Edward S. Hagedorn, P23.8 million; Ricardo ‘Dick’ L. Penson, P19.7 million; Samson S. Alcantara, P344,459; and Christian M. Señeres, P338,205.

All five, in their SOCEs, said they did not receive any contributions and shouldered all of their campaign expenses.

Also among those who took out considerable sums from their own pockets to spend on their senatorial campaigns but failed is former senator Ernesto M. Maceda who said he funded 80 percent of his campaign expenses using P24.6 million of his own money, and P6.2 million from donors.

Former senator Ramon ‘Jun’ Magsaysay Jr., for his part, spent P67.2 million, using P16 million of his own funds.

In their separate SOCEs, Hontiveros, Casiño, Juan Miguel ‘Migs’ F. Zubiri, Eduardo ‘Brother Eddie’ C. Villanueva, Margarita ‘Tingting’ R. Cojuangco, Richard ‘Dick’ J. Gordon, Ramon E. Montaño, Ma. Milagros ‘Mitos’ H. Magsaysay, Greco B. Belgica, and Rizalito Y. David reported that they all spent below P10 million using their own money. – With additional research and reporting by Miguel Gamara, Fernando Cabigao Jr., Charmaine Lirio, Charmaine Manay, and Rosemarie Corpin, PCIJ, July 2013