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Did Binay use Boy Scout funds for 2010 bid?

Bea Cupin
After a hiatus, Vice President Jejomar Binay's demons continue to haunt him. He is accused of getting close to P200 million in 2010 from a deal between Alphaland and BSP, of which he is national president.

MANILA, Philippines – There is a “rule” that Vice President Jejomar Binay follows when speaking to the media: whenever he’s wearing his Boy Scouts of the Philippines (BSP) uniform, he prefers not to discuss politics or recent allegations of corruption.

It appears that Binay, national president of the BSP for nearly two decades, would rather keep the BSP away from the dirty world of politics.

But if Ernesto Mercado, Binay’s estranged bosom body, former Makati vice mayor, and former BSP vice president is to be believed, the vice president does not have the organization’s best interests in mind.

On Thursday, January 22, Mercado is set to reveal during a Senate Blue Ribbon subcommittee hearing that Binay negotiated for the BSP a deal that resulted in millions of losses for the organization and millions in gains for him.

OVP file photo

Unaccounted for cash from the deal allegedly turned into kickbacks for those involved, and in Binay’s case, supposedly went to his piggy bank for his 2010 vice presidential campaign.

As early as 2008, Binay declared on his birthday that he wanted the presidency but chose to slide down when survey numbers indicated he had a better chance at the vice presidency.

Binay supposedly pocketed around P188.98 million (US$4.23 million), according to Mercado, the star whistleblower in the subcommittee’s probe into allegations that Binay, during his stint as Makati mayor, also earned from city coffers.

But in an interview with dzRH on Wednesday January 21, Binay’s spokesman for political affairs lawyer Rico Quicho downplayed Mercado’s scheduled testimony, accusing him of being the one who wanted to profit from the deal. 

On record sinabi ng Alphaland na ang transaksyon po nila with Boy Scouts of the Philippines ay maayos, above board at wala hong anomalya. Institusyon po kasi ang Alphaland. Hindi po ‘yan magpapagamit sa kalokohan po ni [former] vice mayor Mercado. Ito nga pong si [former] vice mayor Mercado, parang nanghihingi nga po siya, pero hindi po siya pinagbigyan ng Alphaland,” Quicho said. 

(Alphaland has said on record that their transaction with the BSP is clean and above board, free from anomaly. Alphaland is an institution. They won’t allow themselves to be used in Mercado’s foolishness. Turns out it was Mercado who was asking for kickbacks but Alphaland said no.) 

In another interview with Rappler on Thursday, Quicho challenged Mercado to come out with documents to prove his “lies” and not to rely on hazy conclusions. All transactions and deals were approved by the BSP’s national board, not just Binay. 

“That’s what they (Binay’s accusers) do – Vice President Binay builds and they destroy,” said Quicho, who also emphasized that the BSP was an apolotical organization that should be not dragged into the “circus-like” Senate probe. 

It was also Mercado who accused Binay of hiding his wealth through dummies and secret bank accounts.

The January 22 “revelation” is a first in the subcommittee’s 4-month-long history: it’s the first time a whistleblower has accused Binay of corruption beyond his nearly 20-year stay as Makati mayor.

Land, money lost

Mercado said Binay sourced the money through a web of deals and negotiations between the BSP and private companies – all of which were done under his reign.  

In 2004, Binay stepped in negotiations between BF Goodrich Philippines (now called Sime Darby) and the BSP over a one-hectare Makati property that was “donated” by the former back in 1976.

Based on the deal sealed by Binay in 2005, the BSP would get 60% of the property, while Sime Darby would get the remaining 40%. By this time, the land was already worth a whopping P1 billion. 

With the division of the property settled, the BSP moved into talks to develop the land. In 2007, the BSP began negotiations with former Marcos crony Roberto “Bobby” Ongpin of Alphaland Corporation for the project. (READ: Ongpin vs Ashmore: The real deal)

Alphaland, a controversial luxury property developer, was delisted by the Philippine Stock Exchange in September 2014 due to, among others, its repeated failure to submit full, fair, accurate and timely disclosures of material information. 

At the time of the BSP deal, Alphaland owned Silvertown (later renamed Alphaland Makati Place Inc), the local arm of Sime Darby, and along with it, the company’s shares in the BSP property. As a foreign company, Sime Darby was not allowed to own land, that is why it needed Silvertown.

Who is Mario Oreta?

  • President and CEO of Constrant Builders and Development Corporation
  • Allegedly bought a Tagaytay property from Binay in 2008
  • Donated some P2M to Senator Nancy Binay’s 2013 campaign
  • Close friend of Binay’s; the vice president was a principal sponsor during his 40th wedding anniversary

According to Mercado, Binay, the BSP’s Jose Rizal Pangilinan, and Silvertown/Alphaland Makati Place Inc (AMPI) President Mario Oreta were part of the negotiating panel.

Based on the deal forged between BSP and AMPI, the former would still own the land while the latter would be the “developer/investor” for a 15%-85& split between BSP and AMPI.

Mercado, then senior vice president of the BSP, said he opposed the deal because he wanted 20% for the BSP. 

It was Binay’s finance whiz and alleged bagman Gerry Limlingan who convinced Mercado to accept the deal. Limlingan, who has also been subpoenaed to the Senate, allegedly told Mercado 20% really went to the BSP but that 5% would “be for Binay” – in particular to fund his presidential campaign in 2010.

Benigno Aquino III, son of slain democracy icon Ninoy Aquino and Binay’s close ally former president Corazon Aquino, eventually ran and won as president in 2010.

Covering his tracks

In previous hearings, Mercado said Binay was a man who knew how to hide his anomalous deals. For instance, the supposed condominiums given to Binay in exchange for easier transactions at city hall were all named under friends and favored contractors.

Businesses, even a vast Batangas hacienda supposedly owned by the Vice President were owned by aides, friends, and their family members. (PHOTOS: Binay and wife tour guests in ‘Hacienda Binay’)

Mercado said the BSP deal was no different. This time, it was Mercado who signed the Joint Venture Agreement in June 2008, supposedly because Binay had to fly out of the country.

EVIDENCE? Former Makati vice mayor Ernesto Mercado unveils more tales of Binay's alleged corruption and says more are to come. File photo by Mark Cristino/Rappler

Hiding Binay’s supposed shares in the deal was trickier, and this was where Oreta stepped in. The AMPI president supposedly told Mercado they would hide and “clean” Binay’s cut in the deal through his company, Noble Care Management Corporation, which was incorporated in 2005.

A few months later, in August 2008, Alphaland “gave” Noble Care 5.88% of its shares in Silvertown or AMPI, when the company at the time had no income, Mercado said.

Some 2,031 shares were given at the cost of around P10 per share. Alphaland also lent Noble Care P100.4 million.

Two years later on November 11, 2010 (coincidentally, Binay’s birthday and months after the elections), Alphaland “bought back” Noble Cares’ 2,031 shares which were then already valued at P89 million. Noble Cares’ million-peso debt was also “erased,” said Mercado.

Based on his computations, Mercado said Binay’s supposed kickback from the BSP and AMPI deal stood at around P188.98 million.

Duped, twice over? 

The city of Makati also played a part in Binay’s alleged “prostitution” of the BSP, Mercado said. In 2008, when Binay was still mayor, the city reclassified the BSP land from industrial to commercial/mixed use, practically doubling the price of the land. 

In the lead-up to the 2010 elections, Mercado and Binay’s relationship soured. The Vice President broke earlier promises that Mercado would take over the mayorship of the city, instead fielding son Jejomar Erwin J. to run for mayor.

Mercado ran against the younger Binay and lost. Mercado and Binay have been estranged since. 

The former vice mayor said he would discover even more anomalies years later. “Dito na talaga niluto sa sariling mantika ang Boy Scouts of the Philippines (This is how the Boy Scouts of the Philippines was duped),” he told Rappler in an interview. 

First, Mercado said, the BSP ended up being the chief financier of Alphaland’s development project when the company used the land as collateral for a P1.7 billion Development Bank of the Philippines loan in 2010. 

A year later, the Joint Venture Agreement between Alphaland and the BSP was tweaked: the organization’s National Executive Board approved the sale of the land to Alphaland, at the same time injecting its P600-million from the deal back into the development project. 

Binay, the BSP and Alphaland supposedly acted swiftly. Mercado said all the documents – the amendment to the Joint Venture Agreement and the Deed of Absolute Sale for the land – were all signed quickly and signed on the same day, June 2, 2011. 

Receivables, COA 

In 1999, Binay waged war against the Commission on Audit (COA), which, through a resolution, insisted it should be auditing the BSP. Binay argued against this, insisting the BSP was not a Philippine government agency. 

It took 12 years but in 2011, the Supreme Court ruled the BSP was a “public corporation or a government instrumentality” and therefore subject to auditing by COA. (READ: COA to Boy Scouts: Produce records for P221M collections

COA noted in its first audit of the BSP in 2012 that it still had P600 million in receivables from its “Joint Venture Partner.”  

Artist's perspective of the Alphaland Makati place development. Screenshot from the Alphaland Makati website

The value of the project grew further in 2012 after Makati, under the mayorship of Jejomar Erwin Jr, upgraded the Alpahland development’s approved floor-area-ratio from 8 to 8. 

Habang binibigay na nila Binay at ng Makati sa Alphaland ang lahat ng mga concession para lalong pagkakitaan ang proyektong ito, ang Boy Scouts naman ay paliit nang paliit ang share sa proyekto,” said Mercado. (While Binay and the Makati city government gave Alphaland one concession after another to earn more from this project, the BSP’s share became smaller and smaller.) 

The modified version of the deal, Mercado discovered, effectively reduced the BSP’s 15% share from two towers and the development’s “Podium” to only one tower and the Podium. 

Mario Oreta of Silvertown and Alphaland last spoke with Mercado in December 2014. He told Mercado the BSP actually now owns P3 billion in shares in the project. But, Mercado asked, where are the documents to prove this? – Rappler.com

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Bea Cupin

Bea is a senior multimedia reporter who covers national politics. She's been a journalist since 2011 and has written about Congress, the national police, and the Liberal Party for Rappler.