PNoy’s business interests are all in the family

How rich is President Noynoy Aquino? Based on public records, Aquino is a multimillionaire. But what is a million pesos worth these days? A scion of the nation’s leading political clan, he is not nearly as wealthy as other, less well-connected politicians. Of all the presidential candidates, he had the lowest net worth, according to their 2008 Statements of Assets and Liabilities (SALNs), the latest available for all of them.

In 1998, as a neophyte congressman, Aquino declared a net worth of P8.4 million. A decade later, his bottom line was at P14.4 Million. In contrast, one of his main rivals for the presidency, Manuel Villar, has assets worth $380 million, or P19 billion pesos, according to a recent report by Forbes magazine. An examination by GMA News Research of his business interests reveals that much of his wealth was inherited, which the president himself acknowledged during the campaign. “Most of my holdings came from either my mom or my dad or both. Kung lumaki man, basically it’s the appreciation of the asset over time," he told GMA News’ Votebook. The main issue raised against Aquino during the campaign was the Cojuangco clan’s control of Hacienda Luisita, a vast tract of land in Tarlac bought from Spaniards in the late 1950s and then administered by the late senator Ninoy Aquino, the President’s father. The land was bought by Ninoy’s father-in-law Jose Cojuangco Sr. with government loans facilitated by President Ramon Magsaysay with the condition that it would be distributed to farmers within ten years. Critics say the hacienda, even after more than 50 years, has not been subjected to agrarian reform because of the Cojuangcos’ political influence. President Aquino claims that he and sisters now personally own less than one percent each of the family’s crown jewel, with the majority of Luisita shares owned by other members of the clan. Net losses Most of Aquino’s business interests revolve around companies owned by the Cojuangcos, his mother’s side of the family. A few of the firms have nearly the same sets of officers and stockholders, and even the same business address. At least six of the companies registered net losses in their latest financial statements. Pedro Cojuangco is the omnipresent name in the businesses connected to the President. The oldest of the siblings of President Noynoy’s mother, the former President Cory Aquino, the 83-year old Pedro is chairman of the board and president of at least seven companies connected to the President: Central Azucarera de Tarlac, Jose Cojuangco and Sons Inc., Hacienda Luisita Inc., Tarlac Development Corp., Luisita Golf and Country Club, Liberty Insurance Corp. and Paniqui Sugar Corp. The other siblings of Aquino’s mother also appear prominently in the management of the Cojuangco businesses as board members and officers: Josephine C. Reyes and Jose Cojuangco Jr. Ernesto Teopaco, husband of Cory’s sister, Paz, is also identified. The President and his sisters have not been known to be as active as their cousins in the Cojuangco business empire. The only investment Aquino seems to have made himself is in Best Security Agency, a business he co-incorporated in 1986 with his uncle Antolin Oreta Jr., husband of former senator Tessie Aquino-Oreta. It is his only known business interest affiliated with the Aquino side of his family. Family interests versus national interest A president with such an emphatic anti-corruption platform is virtually asking to be held to higher standards by the public than most politicians. The credibility of his government may hinge on how Aquino manages the potential conflicts between his vows of an even playing field and the business interests of his family and of those who supported his campaign. “Family can exert pressure on decision-making. It is difficult to make a decision that will adversely affect one’s family. You have to be a super patriot. Or your credo all your life is to do what is right," says Dr. Milwida Guevara, former finance undersecretary and co-convenor of the Movement for Good Governance. For Prof. Leonor Briones, lead convenor of Social Watch Philippines and professor at the UP National College of Public Administration and Governance, argues that the President has no choice but to divest. "It doesn’t matter whether family business siya or ibang klaseng business. Kailangan mag-divest," Briones says. “Magkakaron yan ng conflict of interest. Unless it can be proven that they will not benefit. " That is the ideal, the Office of the Ombudsman says: to have no business interests and therefore nothing to declare. The law, Republic Act 6713 or the Code of Conduct and Ethical Standards for Public Officials and Employees, requires the public official or employee to divest if there is a conflict of interest. The Constitution specifically warns the executive department, from the President and his Cabinet down to their assistants, to avoid conflicts of interest. Article VII, Section 13 says, “They shall not, during said tenure, directly or indirectly, practice any other profession, participate in any business, or be financially interested in any contract with, or in any franchise, or special privilege granted by the Government or any subdivision, agency, or instrumentality thereof, including government-owned or controlled corporations or their subsidiaries." Economist Solita Monsod, chair of the Movement for Good Governance, says that having business interests does not automatically equal a conflict of interest. “It depends on what the businesses are and whether they have many transactions with government," Monsod says. But dealing with government is inevitable because government is everywhere, Briones says. "Mahirap sabihin na walang conflict of interest," she says, noting that companies in which the President has a stake will inevitably deal with labor issues, taxation, export rules and, at least for Hacienda Luisita, land reform. GMA News Research sent a questionnaire to the President through his staff asking if he intends to divest himself of interests in the businesses he declared. The President’s staff sent word that they would respond as soon as they can. As of press time, GMA News Research has yet to receive a reply. But Aquino himself has argued in the past that the shares he owns do not exactly enable him to control the family businesses he is connected with. As President, however, he now has the power to enforce the law, including the agrarian reform law. In the event that Aquino divests, his family—the Cojuangcos—will remain in control of these companies, including the controversial Hacienda Luisita. The law, after all, does not require his family to divest themselves of their business interests. Says Briones, “It’s not a matter of law, but a matter of delicadeza… hindi ibig sabihin na kung legal ay tama. Marami sa mga bagay-bagay ay matters of delicadeza." In his more than a decade in government, Aquino has consistently declared his business interests in the following companies: o Central Azucarera de Tarlac o Tarlac Development Corp. (TDC) o Jose Cojuangco & Sons Inc. o Luisita Marketing Corp. o Tarlac Distillery Corp. o Paniqui Sugar Corp. o Liberty Insurance Corp. o Luisita Golf and Country Club Inc. o Pedro Cojuangco, et al. Conspicuously absent from his statements is Hacienda Luisita Inc. (HLI). GMA News Research provides these thumbnail descriptions of the President’s primary business interests, based on his own declarations and admissions. Hacienda Luisita Inc. (HLI) The issue of the ownership of Hacienda Luisita has been a thorn in the side of Aquino, especially during the campaign. It has been a contentious issue since the time of his mother, or especially during the administration of President Cory who made agrarian reform the centerpiece of her government. In an interview with GMA News’ Kandidato, Aquino said, "Yung share ko sa percentage wise I think is .004 something of the total. Yung pamilya ho namin controls 66% of HLI, yung common na goal namin po diyan ay mai-transfer yung ownership of the asset debt free ho." Last year, HLI declared a net loss of P39.8 million in its June financial statement submitted to the Securities and Exchange Commission. It has been declaring losses for at least seven straight years since 2003 based on available SEC records. Its agri-business operations came to a virtual halt in 2005 when the Supreme Court issued a Temporary Restraining Order (TRO) while it deliberated a legal challenge by HLI to a Department of Agrarian Reform decision to distribute the land to farmers. In February this year, in the thick of the presidential campaign, Aquino announced that the hacienda will be distributed to farmer-beneficiaries within five years, or before his term ends if he won. At a press conference on July 7, the President declared that the timetable will be “substantially less than five years." Days after the May elections, with Aquino as the apparent winner in the presidential race, GMA News’ Jessica Soho asked Aquino how he planned to distribute the land given that his minuscule shares in the hacienda do not grant him control over management. Aquino’s reply was short and enigmatic: “The presidency has vast powers." Months after the Comprehensive Agrarian Reform Program (CARP) became a law in 1988, Luisita was placed under the CARP’s stock distribution option (SDO). Through this arrangement, more than 6,000 workers became “co-owners" of the hacienda through shares of stock. Among landowners who availed of the SDO, HLI is the biggest in terms of land area and number of beneficiaries. HLI was the first SDO application approved by the Department of Agrarian Reform in 1989. The HLI covers an area of 4,916 hectares with 6,296 beneficiaries. Hacienda Luisita’s land area is four times larger than the next biggest company availing of the SDO – Ledesma Hermanos Agricultural Corp. in Negros Occidental, with 1,024 hectares and 747 beneficiaries. DAR approved its SDO application in 1991. DAR has allowed 13 corporations to use the SDO as of April 2009. All except one produce sugarcane. Nearly all are located in Negros Occidental; HLI is in Tarlac while another is in Davao del Sur. Tarlac Development Corp. (TDC) owns 66.15 percent of HLI, with shares of stock worth Php235,181,459.00 as of 2009. Pedro Cojuangco, eldest sibling of former President Cory, heads TDC as chairman of the board and president. The rest of the officers are his siblings and a brother-in-law. The authorized capital of HLI is Php 400,000,000. The shares are divided into class A and B. TDC and the officers of HLI own class B shares. The amended articles of Incorporation of HLI adopted in 1988 states that the 250 million class B shares are unrestricted common shares that can be issued to any stockholder of the corporation. The 150 million class A shares are issued only to qualified and registered beneficiaries. The A shares are subject to restrictions as per the incorporation papers: These shares “cannot be sold, transferred or conveyed in 10 years after distribution unless by hereditary succession or in favor of qualified and registered beneficiaries" and only with DAR approval. The TDC and HLI have almost the exact same set of board members and officers with Pedro Cojuangco as the chairman of the board and president and Ernesto G. Teopaco as member of the board and vice president. Josephine C. Reyes and Jose “Peping" Cojuangco Jr, are members of the board of both companies, with Reyes serving as vice president of the hacienda and Cojuangco Jr. also serving as vice president of TDC. According to Comelec records, Reyes shelled out P5 million for Aquino’s senatorial bid in 2007 and another P5 million for the 2010 presidential race. Paz Teopaco, aunt of Aquino and wife of Ernesto who is vice president of HLI, contributed P2.5 million to her nephew’s 2007 campaign kitty. Central Azucarera de Tarlac Among the businesses with which Aquino is connected, the oldest is Central Azucarera de Tarlac (CAT), established in July 1927 based on its SEC records. Aquino’s biodata says he worked as CAT’s executive assistant for administration from 1993 to 1996. And from 1996 to June 30, 1998, or just before he became representative of the 2nd District of Tarlac, he was manager of the field services department of the sugar mill. CAT is a publicly listed company. According to its records at the Philippine Stock Exchange, it runs a sugar mill and refinery, and a distillery. Its main products include raw and refined sugar. Aquino and his sisters are listed in the Top 20 stockholders of the Azucarera as of March 2010. Their combined shares amount to a little more than 5 percent of the company. Aquino has 301,792 shares worth Php3,017,920.00 or 1-percent ownership of the company. His sisters each own a 1-percent stake in the company. Though a publicly listed company, the top stockholders of CAT are still the Cojuangcos and the Cojuangco-owned companies. Only three companies own more than 5 percent of CAT’s common shares as of January 2010: Jose Cojuangco and Sons Inc. (27.8 percent), Luisita Trust Fund (16.76 percent) and Tarlac Distillery Corp. (5.61 percent). Jose Cojuangco and Sons Inc. is the general manager of CAT. It is entitled to management fees and a certain percentage of the net profit of the sugar mill. The Luisita Trust Fund is the retirement fund of the employees of CAT and its affiliates. Tarlac Distillery Corp. is the marketing arm of CAT. CAT ranks 12th in terms of sugar mill production among the affiliates of the Philippine Sugar Millers Association (PSMA). The PSMA accounts for 84 percent of the mill production for crop year 2008 to 2009, based on records of the Sugar Regulatory Administration. The board of directors and officers of the company are mostly Cojunagco clan members. As of April, PSE records show Pedro Cojuangco is chairman of the board and president. Cory siblings Josephine C. Reyes, Jose Cojuangco Jr. and brother-in-law Ernesto Teopaco are also on the board. Fernando C. Cojuancgo, first cousin of Aquino and son of Pedro, is chief operating officer of CAT. During the 2010 campaign, Fernando fueled the acrimonious debate about Luisita’s future when he was quoted by the New York Times as denying any plan to distribute the land. “I think it would be irresponsible," Cojunagco said, “because I feel that continuing what we have here is the way to go. Sugar farming has to be; it’s the kind of business that has to be done plantation-style." PSE records show HLI is an affiliate company of the Azucarera. The hacienda is a source of about 33 percent of the mill’s cane requirements. Some of the companies declared in Aquino’s SALN are affiliated with CAT: Jose Cojuangco and Sons Inc., Tarlac Development Corp., Luisita Golf and Country Club Inc., and Luisita Marketing Corp. Hacienda Luisita has been declaring losses for at least seven straight years since 2003 based on available records. Its 2009 financial statement declared a net loss of P39.8 million. In contrast, the Azucarera, which gets 33 percent of its cane requirement from the Hacienda, has declared four good years out of the seven since 2003. The Azucarera has declared net profits in the past two consecutive years: P34.6 million in 2008 and P16.2 million in 2009. The officers and most of the members of the board of the HLI and the Azucarera are almost the same set, led by Pedro Cojuangco as chairman of the board and president. Tarlac Development Corp. (TDC) Aquino has declared consistently for a decade in his SALN his financial connection with Tarlac Development Corp. SEC records list the nature of TDC as an “agricultural investment." Pedro Cojuangco is board chairman and president. Jose Cojuangco Jr., also Aquino’s uncle, and Ernesto Teopaco, husband of Aquino’s aunt Paz , are both board members and vice presidents. 2008 SEC records list Aquino’s mother a 4.3-percent stake in TDC. She owns 4,833 shares worth Php 483,300.00. Aquino’s oldest sister Maria Elena Aquino-Cruz has 1,240 shares worth Php124,000.00. TDC is an active stakeholder in at least four other family businesses connected to Aquino: Luisita Realty Corp., Liberty Insurance Corp., Luisita Golf and Country Club Inc. and Tarlac Distillery Corp. Its last financial statement filed at the SEC reflects a whopping net loss of P 439,550,574 as of June 30, 2005. Liberty Insurance Corp. Liberty Insurance Corp. was registered in 1953. Jose Cojuangco, grandfather of Aquino, was among its founders. Today Pedro Cojuangco is board chairman, president and executive committee president. This insurance company has been consistently declared in Aquino’s SALN since he started public office. TDC owns 25 percent of Liberty Insurance, or P18,503,908.09 worth of shares as of 2009. The company has an authorized capital worth P75 million. Among those listed as stockholders in SEC records as of 2009 is the late former President Corazon Aquino with a 2-percent ownership or P1,498,504 worth of shares of stock. The company declared a net income of P 2,877,817 as of December 31, 2008. Luisita Golf and Country Club Inc. The Luisita Golf and Country Club Inc. was a fixture in Aquino’s SALNs since he became a congressman in 1998. The estate of former President Cory owns 10 shares or less than 1 percent. Incorporated in 1977, the 18-hole golf course inside Luisita was registered as a non-profit stock corporation. It has a total subscribed capital of P310,505,830. The total number of shares of the golf club is 2,500. TDC owns 22.48 percent of the golf club. The golf club is also an affiliate of Central Azucarera de Tarlac which owns 27.8 percent of the club’s shares of stock. According to records filed with the SEC, the Azucarera uses the golf club “to settle its obligations with the banks via dacion en pago (payment in kind)." The golf club declared a net loss of Php 13,451,240 as of June 30, 2009. Tarlac Distillery Corp. (Tadisco) Aquino’s business interest in Tarlac Distillery Corp. has been consistently declared. Tadisco was registered in 1964 as a stock corporation; among its incorporators are Pedro Cojuangco and Jose Cojuangco Jr., both uncles of Aquino. The parents of Aquino are among those listed as stockholders with less than a 5-percent stake in the company: the former President owns 2.6 percent worth P223,958 while the estate of the former senator owns 1.56 percent worth P134,375. TDC is the biggest stockholder, owning 75 percent of Tadisco. Tadisco is an affiliate of the Central Azucarera de Tarlac. It is the marketing arm of CAT for alcohol. It also provides CAT properties to settle obligations with the banks. As of its June 2009 financial statement, Tadisco declared a net loss of P38, 336. It has been declaring losses in the past five years, except in 2007 when it declared a net income of P60 million. Jose Cojuangco and Sons Inc. (JCSI) Aquino’s family, including his parents and sisters, owns 16.85 percent of Jose Cojuangco and Sons Inc. as of 2009. The estates of his mother and father own more than 10 percent while each of the Aquino siblings has a 1.3-percent stake in the company. JCSI, registered in 1964, is a holding company involved in both agriculture and industrial businesses. Pedro Cojuancgco leads the board and officers. JCSI is the general manager of the CAT. It is entitled to management fees and a certain percentage of the net profit of the sugar mill. Its June 2009 financial statement declares a net loss of P46.7 million. Luisita Marketing Corp. Luisita Marketing Corp., a general merchandising company registered in 1964, has 25 stockholders based on SEC records. All those listed in the company’s 2009 general information sheet (GIS) are from the Cojuangco clan. The authorized capital of the company is P5 million with a subscribed capital of P2 million. The holdings company Jose Cojuangco and Sons Inc. owns 95 percent of the company with 19,038 shares worth P1,903,800 as of 2009. The family of Aquino owns less than 1 percent of Luisita Marketing. Aquino has 12 shares worth P1,200, or .06 percent of the company. His four sisters have the same amount of shares. His mother has 40 shares worth P4,000. The estate of his father, Benigno Aquino Jr., has 60 shares worth P6,000. Luisita Marketing declared a net income of P 23,666,385 as of June 30, 2009. Paniqui Sugar Corp. Paniqui Sugar Corp., a stock corporation established in 1979, has been in Aquino’s SALN from the start. The combined shares held by Aquino, his sisters and his mother amount to a 6.18-percent ownership of the sugar mill. Company records filed at the SEC show Aquino has 680 shares worth P68,000. Oldest sister Maria Elena Cruz holds 681 shares worth P68,100. His other three sisters, like himself, hold 680 shares each. His mother has 678 shares worth P67,800 as of 2003. The biggest stockholder is Eduardo M. Cojuangco Jr., et al., with 8,225 shares worth P822, 500. In its 2008 financial statement, the company declared a net loss of P 1,380,999 as of September 2008. Pedro Cojuangco, et al. Aquino declared his business involvement with Pedro Cojuangco, et al. from 2006 to 2008. GMA News Research did not find any records of this company. Luisita Realty Corp. Like the Hacienda Luisita Inc., Luisita Realty Corp. did not figure in the declarations of the President. GMA News Research included this company as among those connected to Aquino because TDC, a family business consistently declared by Aquino, is one of the major stockholders. As of 2009company records, TDC owns 40 percent worth P13, 996,000 of the shares of Luisita Realty Corp., a Cojuangco- owned and controlled real-estate company registered in 1977. J.C. Enterpsises Inc., another Cojuangco company, owns another 40 percent. The estate of Aquino’s mother has a 3.33-percent share in the company and eldest child Maria Elena Cruz has less than 1 percent. She is a member of the board as of 2009. Pedro Cojuangco is board chairman. President Aquino’s aunts Josephine Reyes and Paz Teopaco are officers with Reyes as president and chief operating officer and Teopaco as vice president. Luisita Realty Corp. declared a net loss of P64 million in 2005, its latest financial statement filed at the SEC. Best Security Agency, Inc. Almost all family businesses connected to Aquino are on the Cojuangco side of the family. GMA News Research found only one on the Aquino side—his affiliation with Best Security Agency Inc., which was registered in 1986 when his mother was president and whose name came from Benigno Simeon Aquino III’s initials (B,S,A). According to his own bio-data, Aquino was vice president and treasurer of the security agency from 1986 to 1993, even after he divested his shares in 1987. SEC records show Aquino was among the incorporators of the company in 1986, along with Antolin M. Oreta Jr., husband of Aquino’s aunt Tessie Aquino-Oreta. Aquino had 50 shares worth P50,000 in the company in 1987, the same period his mother was serving as President. During the presidential campaign, Manny Villar’s camp raised Aquino’s involvement in the security agency as a conflict of interest issue, with reports of contracts with government corporations. Aquino denied that he ever used his mother’s position to do business. His spokesperson, Edwin Lacierda, later showed GMA News the SEC records stating that Aquino had divested in 1987. Lacierda did admit that Best Security secured a contract with the Philippine National Construction Corp. but said that it went through the standard bidding process. From available SEC records, Best Security has been declaring profits from 1994-1996. Its last financial statement declared a net profit of Php 57,739.00 as of December 31, 2009. The President’s income Based on public records, the President has not been very successful in business. Most of the companies he has shares in have reported net losses in their most recent financial statements, while he owns a tiny fraction of the firms that have turned a profit. What wealth he has was mostly inherited. His 2009 Statement of Assets, Liabilities, and Net Worth (SALN) shows that he owns only one house and lot, the famous Times Street property that he inherited from his parents. His one conspicuous luxury is a BMW 6501 Coupe worth nearly five million pesos. So far, he has not announced that he will divest from any of the companies mentioned above, meaning he can still earn from his shares. The danger for the President is if any of the family businesses begin to turn spectacular profits while he is in office. No matter the circumstances, the improvement in their fortunes could raise suspicions of a conflict of interest. If President Aquino will be as honest as he promises, he will not be earning anything in office beyond his government salary, which is P95,000 gross per month. But the President’s living expenses will be mostly shouldered by the government. During her nine-year term, then-President Gloria Arroyo signed several executive orders effecting salary increases for government personnel, including the increase in Salary Grade 33 for the President. Arroyo, however, could not benefit from the increases in the President’s salary which she herself approved. Thus, Arroyo received a gross pay of P693,000, or a monthly salary of P57,750, from 2004 until 2010 her last year in office. Under the same rules, President Aquino is stuck at P95,000 per month for the next six years. Only his successor can benefit from any salary increases he approves. That may be extra motivation for him to keep inflation in check. -- With reports from Jamaica Jane Pascual and Jake Soriano, GMA News Research, GMANews.TV