CORRUPTION UNDER MARTIAL LAW | Marcos and his ‘temple of doom’
(Veteran journalist Joel C. Paredes wrote this piece to mark the 42nd anniversary of the declaration of martial law. Mr. Paredes was chief of reporters at Ang Pahayagang Malaya, the trailblazer in the Marcos-era Alternative Press, then published by world press freedom icon Jose G. Burgos Jr. during martial law)
MANILA – AT 75, former senator Rene A.V. Saguisag still wonders why old allies of the late strongman Ferdinand Marcos continue to harp on the need to operate the mothballed Philippine Nuclear Power Plant , or PNPP [also known as BNPP], in Bataan’s coastal town of Morong.
In a recent newspaper column, Saguisag took to task Dr. Gerardo Sicat, Mr. Marcos’ one-time economic minister, after the latter blamed the late President Corazon Aquino for not putting the Bataan plant onstream when so much had been spent for it and the country was staring at an energy crunch in her time.
The former senator said that the BNPP is not the solution for that crunch, for two main reasons: the technical issues; and the cost of trying to revive or re-purpose a plant that in truth had already bled Filipino taxpayers dry just to repay a behest loan — this, while the proponents of the project had received, per US court documents, multimillion-dollar commission from Westinghouse.
At the time the loan was approved in 1975, it accounted for nearly a quarter of the country’s foreign debt.
Truth to tell, Saguisag was crucial in Mrs. Aquino’s decision to shelve the 620-megawatt (MW) plant after she was swept to power in 1986. Saguisag was chief presidential legal counsel when he chaired the Cabinet committee that triggered Mrs. Aquino’s decision; and later as a member of the Senate committee that blocked its operation.
This, even as the President then had promised that government would repay the cost of US$2.3 billion, making it the government’s single largest infrastructure project in the country until now.
Most glaring symbol of corruption
To Mr. Marcos’ critics, it was also the most glaring monument of corruption during his 20 years in power.
Sicat, however, advanced a different view in his Philippine Star column last Sept. 3. He wrote that “if Cory Aquino had put to use the nuclear power plant, there would not have been a power crisis.” And her successor President Ramos need not have been distracted by that huge problem early on in his term and “could have embarked on a higher phase of economic development for the nation.”
For Mrs. Aquino’s “ill-advised failure,” Sicat ticked off the things that led the nation to pay, as follows:
1. the full cost of the nuclear power plant, with zero electricity.
2. All the overpricing that political partisans were saying was the cost of the project.
3. All interest payments related to long-term loans related to construction and machinery.
4. All the human capital invested in building an engineering project and scientific manpower designed to man the nuclear plant.
5. All the downtime and lost productivity to the nation during the power outages in those years.
Meanwhile, so-called Marcos loyalists have recently begun blasting social media networks with a renewed campaign to revive the PNPP.
They even quoted the late strongman as having supposedly said, while in exile in Hawaii after his downfall in the 1986 People Power revolt: ”Ang kabilin-bilinan ko kay Mrs. Corazon Aquino na ipatuloy ang Bataan Nuclear Plant kung maari. Sapagkat this is the solution in meeting the country’s energy demands and decreasing dependence on imported oil. Ngunit ayaw n’yang tanggapin ang aking mungkahi dahil maalala daw ng taong bayan si Marcos habang nandyan ang Nuclear Power Plant. Anong klaseng pag-iisip ‘yan? Iyan ay paghihiganti, huwag natin idamay ang sambayanang Pilipino. Balang araw makikita ninyo, 20 years from now bagsak na ang Pilipinas.”[My strict admonition to Cory Aquino was to operate the PNPP. Because this is the solution in meeting the country’s energy demands and decreasing dependence on imported oil. But she rejected my suggestion, supposedly because people will keep being reminded of Marcos whenever they see the Bataan nuclear plant. What kind of thinking is that? We should not make the people suffer for this kind of thinking. Someday, you’ll see, maybe 20 years from now, we will see the country’s downfall.]”
Saguisag maintained, however, that “what our experts told us was the plant was simply beyond repair and safety concerns remained unresolved.”
He also cited how Germany and Italy were phasing out their nuclear plants, and how California had looked at its last nuke plant in Diablo Canyon following its last earthquake.
Saguisag then suggested that Sicat read the Sept. 1, 2014 issue of Time Magazine on Fukushima, and its scary cover story on the Japanese tragedy, headlined, ‘Three and a half years after a catastrophic meltdown, Fukushima is far from fixed.”
The articulate Harvard-trained lawyer noted wryly, “This is sophisticated Japan of Lexus, not the puede na Philippines of dyips and trikes [jeepneys and tricycles].”
Sitting down recently for an interview, Saguisag insisted that even if he has retired from public service, he will never regret the policy advice he gave the President he served then, Sicat’s charges notwithstanding.
“Three decades later, ‘di ka pa ba nagsisisi [do you have any regrets about it]?” we asked.
He replied, “Look, we ‘re still able to talk today. If we had allowed it then, we may have had a Fukushima meltdown. How are you ever going to repair that mess?”
Looking back, one sees another phantom haunting Marcos’s favorite project, besides the technical issues: according to expert studies, the nuclear plant was already fraudulent – if not really doomed — from the start.
The most expensive ‘lemon’ in recorded history
In its 1992 report “Nuke Debt Fallout” the Freedom from Debt Coalition (FDC) asserted there was “little” wonder that the nuclear plant project would emerge as the “most expensive lemon in Philippine history.”
The FDC framed the project thus: it was an offshoot of the US-led global hype in the fifties where atomic power seemed to promise limitless energy. That was the time when the Philippines had yet to encounter a civil nuclear disaster to cast doubt on the whole nuclear enterprise, the FDC reported.
In 1955, the Philippine government had forged a cooperation agreement with the United States signed on the civil uses of atomic energy. Three years later, the Philippine Congress passed Republic Act 2067—or the Science Act , which created the Philippine Atomic Energy Commission (PAEC).
In its report, the FDC also noted how over the next decade the prospects for nuclear power in the country continued to be studied by various scientific groups, including the International Atomic Energy Agency.
By 1968, the first concrete step towards the building of a nuclear power plant was the signingby the two countries of a revised agreement, where the Philippines planned to acquire two 5000-MW reactors.
Three years later, the United Nations Development Programme (UNDP) financed an IAEA feasibility study on nuclear power in the Philippines. The FDC claimed this move was “encouraged” by the US government through its embassy in Manila.
President Marcos announced that the Philippines was finally building its own nuclear plant in July 1973 — 10 months after he declared martial law, which abolished Congress and eliminated any opposition to his decrees. Before that, the FDC said, the US Export Import Bank (Eximbank) president Harry Kearns had already begun discussing with the Philippine government the possibility of financing the nuclear power plant project.
Officially, the nuclear power plant project was the government’s response to the then crippling international oil crisis, triggered by the oil embargo in the Middle East that put a strain on the country’s economy. Mr. Marcos was convinced that only nuclear power was the solution to filling the country’s energy demands and decreasing dependence on imported oil.
The ExImbank, as the principal lending agency of the US government, had the authority to issue loans to foreign governments interested in importing American technology. The bank actually helped finance US exports, both of American goods and technical services, including the construction of nuclear reactors.
The National Power Corp. — which Mr. Marcos mandated as the sole agency responsible for electric power generation in the country — hired the American engineering firm Burns and Roe to prepare specifications for the first nuclear power plant. Eventually, General Electric and Westinghouse were listed as the two US companies that can handle the project.
Westinghouse grabs the contract
General Electric emerged as the leading candidate for supplier and builder of the Philippine Nuclear Power Plant, based on its impressive formal presentation. Four senior GE executives made a detailed presentation to the presidential committee, which was looking into the financing and acquisition of two nuclear power plants for the country. They also submitted a four-volume proposal containing detailed specifications and costing for two 600-MW plants with a cost of US$700.
To grab the contract, Westinghouse hired Herminio Disini, a golfing crony of the late strongman and founder of the Herdis Group of Companies, as its “special sales representative” (SSR) to lobby for the US-based company.
Disini’s wife, the former Paciencia Escolin, was the first cousin of Former First lady Imelda Marcos. She also served as the Marcos family’s personal physician.
Westinghouse later admitted in a US court to paying “considerable commissions” to Disini, who also got insurance, telecommunications and civil works subcontracts without competitive bidding.
Finally, on April 24, 1974, Westinghouse offered to supply the country with two 620-MW rectors, but valued at a base price of US$500 million. A standard advertising brochure was attached to the offer.
Two months later, Mr. Marcos ordered then Executive Secretary Alejandro Melchor and NPC General Manager Ramon Ravanzo to award the contract to Westinghouse without a bidding and a detailed engineering design for the project.
But in September 1974, Ravanzo complained that Westinghouse’s base price had already risen from US$500 million to US$695 million in a period of just four months. Mr. Marcos, however, merely ignored his complaint.
On March 5, 1975, Ravanzo again told Mr. Marcos that the terms and conditions of the contract with Westinghouse were “highly onerous and unacceptable.” The independent survey by an NPC consultant showed that Westinghouse’s quoted price was 17.6 per cent–or US$79 million–higher.
In November that year, then Solicitor General Estelito Mendoza also wrote a memorandum to Mr. Marcos refusing to favorably endorse the contract which he reviewed, because “the terms and conditions (were) unfavorable to the NPC.”
It was gathered that in case things went wrong, the Philippine government could recover only $25 million in damages, which was “ridiculously and unconscionably low” for a contract that cost the country US$2.3 billion. The damage cap was later increased to US$40 million, still puny.
Despite the reservations aired by all these responsible officials, the contract was finally signed on February 26, 1976, without any change. The signed contract called for the supply of just one 620-MW reactor for a total estimated price of US$1.1 billion, when the price was originally quoted for the price of two nuclear reactor plants.
The signed contract gave Westinghouse the “unusual freedom” to draw down on a letter of credit to be opened in its favor on a basis totally unrelated to, and without regard for, the progress in the physical completion of the plant. It did not even need an NPC approval for it.
The NPC wasn’t given any right to oversee the performance of the contract to ensure that the design and construction would meet necessary quality standards, or to monitor the costs that were customary in the industry.
Is it really ‘safe’ and ‘economical’?
Nevertheless, the government assured the public that if the PNPP were allowed to operate, the 620MW it generates would be enough to supply 15 per cent of the electricity needs of the main island of Luzon. Supposedly, it can also save the country every year about US$160 million–the amount of oil displaced.
Apart from being a “reliable source” of energy, the NPC promoted the nuclear plant as having an “excellent safety record” that had “been found to result in lower occupational and public risks than fossil fired (coal or oil) stations.”
A pamphlet entitled “Nuclear Power: Safe Clean Economical and Available” was submitted to the Supreme Court by the Philippine Atomic Energy Commission (PAEC), with the claim that since it had been working in other countries, “it should work for us too” because it is ‘safe’ and ‘economical.’
By then the case had gone up to the Supreme Coourt. Former Sen. Lorenzo Tañada, then known as the “Grand Old Man of the Philippine Opposition,” led the Nuclear-Free Philippines Coalition in a petition questioning the PAEC’s competence in passing judgment on the safety of the PNPP-1.
The PAEC, which was assigned to look into the safety of the project, noted that no one has ever been injured in the last 25 years that commercial nuclear reactors have been generating electricity.
“As is to be expected in any complex system as nuclear power plants, there have been failures of equipment and human errors. However, in every instance, the safety equipment designed into the nuclear reactor self-terminated the accident without injury to the operators or the public,” PAEC said.
“Serious as it was,” the Three Mile Island incident in Pennsylvania, “did not result in the loss of life nor did it result in the exposure of anyone beyond permissible limits,” PAEC pointed out.
It added that environmentally, a nuclear power plant “emits only insignificant amount of radioactivity to the environment” and “does not cause chemical pollution of air or water.”
It also “does not emit sulfur dioxide or nitrogen oxides like plants fired by fossil fuels such as coal and oil. Besides, even coal-fired plants may emit radioactive particles of uranium and thorium because these may be found naturally associated with coal deposits,” PAEC said.
It then concluded that comparatively therefore, a “nuclear power plant is the cleanest and the safest environmentally, and no other technology in modern times has been developed with so dominant a concern for public safety as nuclear power.”
Reopen hearings – SC
The High Court, nevertheless, ruled on February 11, 1986, that “at any rate, even if it be assumed that there are some doubts regarding the conclusion that there has been a prejudgment on the safety of the safety of PNPP-1,” such doubts should be resolved “in favor of a course of action that will assure an unquestionably objective inquiry, considering the circumstances thereof and the number of people vitally interested in it.”
The Supreme Court said the hearing on the PNPP should be reopened “in keeping with the requirements of due process in administrative proceedings.”
Dr. Roland Simbulan, a University of the Philippines professor who chairs the Nuclear Free Philippines Coalition (NFPC), said that US nuclear engineer Robert Pollard did his own inspection in the early 1980s after the Three Mile accident .
Simbulan recalled that Pollard had concluded that the BNPP was “not safe since it used an old design plagued with unresolved safety issues, making it a potential hazard to the safety and health of the public.”
Dr. Pollard, a member of the Union of Concerned Scientists – an elite group which included several Nobel prize winners for science – reportedly said the BNPP also failed to incorporate any of the new features that had become mandatory for US plants since the Three Mile Island accident in 1979.
That same year, Mr. Marcos, after an urgent communication with Senator Tanada, formed a presidential commission chaired by assemblyman Ricardo Puno to look into the plant’s safety.
The Puno commission later concluded,” The Bataan nuclear power plant as designed is not safe. Admittedly, it is an old design – plagued with unresolved safety issues, like other Westinghouse designs under review by the USNRC (US Nuclear Regulatory Commission).. Thus, it is a potential hazard to the health and safety of the public. The Bataan nuclear plant needs fundamental changes and additional safeguards.”
Westinghouse eventually entered into a renegotiated contract with the Philippines, which included changes in the specifications designed to address the safety questions.
The FDC said that after “more wrangling,” the USNRC eventually gave Westinghouse an export license in 1980.
But in its report, the FDC quoted Pollard (who had earlier worked at the UNRC as a nuclear safety engineer) as saying that a review of the modified design showed that, “in essence, the same safety questions remained.”
“For one, he (Pollard) said, the USNRC had not sent anyone among its technical experts to conduct a detailed independent review of the PNPP design,” the FDC said.
The protest movement
While Sen. Lorenzo Tanada was leading a snowballing campaign to pressure government to stop the building of the BNPP, the local residents in Morong had also begun organizing protest actions in the early eighties, after realizing the danger of the nuclear reactor once it becomes operational. The protest movement eventually spread throughout the entire province.
In 1982, Prof. Simbulan said they decided to organize the Nuclear Free Philippine Coalition to give their campaign a national scope. Tanada was elected its first chairman.
Simbulan admitted that at the start, their campaign was focused more on an anti-dictatorship stance. “It was kept under wraps. Then there was no venue in discussing nuclear energy and options,” he said.
But, Simbulan said, that wasn’t surprising. “We had no Congress. We had no (free) media,” he said.
After the assassination of opposition leader Benigno Aquino, the anti-nuke movement was also caught up in the surge of anti-Marcos protests across all sectors, which later forced the strongman to call for a snap election in 1986.
According to Simbulan, the slain opposition leader’s widow, then-candidate Corazon Aquino, committed to support their cause.
The nuclear plant mothballed
Ascending to the presidency in 1986, Mrs. Aquino mothballed the nuclear power plant that sits on a 357-hectare government property at Napot Point. Her decision was based on the recommendation of the Cabinet committee that looked into the BNPP chaired by Rene Saguisag, when she was swept to power in a largely peaceful people power revolt in 1986.
That same year, the Three Mile Accident was dwarfed by the Chernobyl nuclear disaster in the Soviet Union. It also confirmed that if an unsafe nuclear reactor goes wayward, its safety cannot be guaranteed, and it would need billions of dollars to make the plant operate again – and safely.
“Pumutok ang Chernobyl in April 1986. Kaya talaga ang buong mundo natakot sa nuclear power. Kaya napadali tuloy ang trabaho ko [The Chernobyl case broke in April 1986. So the whole world became apprehensive about nuclear power; this made my job easier], ” Saguisag told InterAksyon.com.
When he was elected senator, Saguisag again chaired the ad hoc committee that was triggered by a Senate resolution led by then Senate President Jovito Salonga on Oct. 21, 1988, to “express the sense of the Senate to suspend, avoid and disengage from, any further payments on the balance of the debt incurred in connection with the Philippine Nuclear Power Plant, pending the formulation of a national consensus on our foreign debt problem, and to seek the final condonation of, or definitive relief from the said balance.”
The resolution was unanimously approved, with only then Sen. Edgardo Angara abstaining since his law firm ACCRA was tapped by Westinghouse to represent its interests.
The resolution singled out the BNPP as the “biggest single and most notorious component of the country’s external debt,” noting that despite the substantial payments made to the country’s lenders, there still remains a balance of P25 billion, on which interest is tacked at $355,000 a day.
Senate resolution post 1986
Before the Senate resolution was passed, President Corazon Aquino had already declared in her State of the Nation Address on July 27, 1987, her “grave concern over the iniquitous and unconscionable terms of some of the worst impositions linked to the fake faces of foreign finance.”
By that time, the plant Westinghouse built in Brazil, which was similar to that in Bataan, was already the subject of a suit in New York and was dubbed a “firefly” plant for its erratic on-and-off operations.
It also turned out that Westinghouse was also convicted in a “price-fixing “case for bribing a Middle East official to secure a contract in his country. The payment was allegedly made through a numbered Swiss account.
When the Eximbank lent the Philippine government US$644 million in 1975, it had packaged the largest single sum on any project that time, despite the fact that the Filipino people had no capacity to repay the bank.
The senators, in their resolution, noted that there was hardly any consolation in the unsympathetic comment attributed to the then Eximbank chair: “If they (Westinghouse) charge too much, the Philippines has to pay for it…(T)hey have to protect themselves from being fleeced. We cannot nor would we do it for them.”
Eximbank’s support for exports by US nuclear power plant manufacturers actually came at a time when the nuclear industry in that country was experiencing serious problems.
The bank supported the BNPP even after knowing that the project, at the time the loan was approved in 1975, would make up almost 25 percent of the country’s foreign debt.
After approving the original loans and guarantee of US$644 million, Eximbank again guaranteed two loans totaling US$308 million following the upgrading and renegotiations required by the Puno Commission after the 1979 Three-Mile Island incident.
Eximbank knew that the price of the PNPP quadrupled while they were evaluating the loan proposal, but nevertheless failed to inquire reasonably and diligently into the matter and brushed aside the predictable consequences.
The PNPP was also the most expensive nuclear power plant of its kind the world.
When the Eximbank approved the PNPP financial package it authorized on Dec. 18, 1975, it was the also the day that Westinghouse was billing Spain for its nuclear loan of US$687 million for a 930-MW plant, in contrast to the US$1.1-billion cost of the 620-MW PNPP.
The cost was also more than triple that of a similar-sized plant built at about the same time by Westinghouse and financed by Eximbank in Pusan, South Korea.
The Eximbank supported the BNPP project even if the contract entered into between the NPC and Westinghouse Electric S.A. for the procurement of the nuclear power plant was tainted with fraud and corruption.
Martial law conditions prevented the people and even government regulators from satisfactorily resolving the safety and economic questions involved.
Getting US support
In 1978, the US Congress came out with a report on its investigation, saying no adequate study had been made that says the BNPP site is near several volcanoes.
Eximbank played down the dangers of volcanic hazards in the BNPP plant site by making the “incredible assertion, contrary to common sense, that it was merely a condition of ‘how much additional strengthening do you have to withstand volcanoes.’”
In their resolution, the post-1986 lawmakers blamed the “hopelessly defective” and “inoperable” nuclear plant on the “collusion of foreign interests and the regime of Mr. Marcos in the US nuclear export licensing proceedings.” As a result, serious safety questions surrounding the PNPP were never adequately resolved.
Eximbank was aware that the US National Environmental Policy Act of 1969 required an Environment Impact Statement (EIS), but it ignored the various biophysical and economic impacts of the power plant project on the Philippines’ physical and social environment.
The Philippine senators noted that the US Nuclear Regulatory Commission (USNRC) could have remedied this, but the latter merely preferred to look merely at the impact of the PNPP’s operation on fish in the ocean and not human lives.
Records also showed that the US State Department sought approval of the first additional US$104-million Eximbank guarantee in 1981 to, among others, “provide support to an ally that permits the use of key military facilities.”
Eximbank also extended an unrelated US$85-million loan to the Philippines through a special effort made by the US State Department “in an effort to ensure the best possible climate for the ongoing US base(s) negotiations.”
The conspiracy unresolved
The Freedom from Debt Coalition said “what remains clear is that up to now the unfortunate present, the complete details of the Westinghouse contract, as well as those between the Philippines and the lending institutions that financed the Philippine Nuclear Power Plant, remain hidden.”
As promised by then President Cory Aquino, the Philippines did not renege on its commitment to pay its foreign debts, even including behest loans like the BNPP. The Philippine government finally completed paying off its obligation in April 2007.
Yet for a while, the congressman-son of Marcos associate Eduardo “Danding” Cojuangco, had called on government to reconsider recommissioning the PNPP. Mark Cojuangco said it was the “only technology with a ‘real chance’ of lowering the price of electricity.” The BNPP can generate 620 MW of energy, but it will reportedly cost US$1 billion to recommission it.
Cojuangco filed House Bill 4631 or the Bataan Nuclear Power Plant Commissioning Act of 2008 in the 14th Congress. The measure was stalled after the 2011 disaster at the Fukushima Daiichi Nuclear plant.
In the 15h Congress, Cojuangco’s wife, Rep. Kimi Cojuangco filed HB1291 – the Bataan Nuclear Power Plant Act of 2010, which mandates the NPC to undertake the immediate validation of the power plant under the supervision of the Department of Energy.
NatGas-powered facility: Bongbong
It appears, however, that Mr. Marcos’s son Bongbong has realized that it would be futile to revive the nuclear plant. Instead, he welcomed a Malacanang initiative to revive the PNPP as a natural gas-powered facility to arrest the worsening power situation in the country,
Last month, Secretary Herminio Coloma of the Presidential Communications Operations Office said the government will study that proposal [natural gas-powered facility] carefully to determine its viability as a dependable source of energy.
When will it ever end?
Professor Simbulan sees another complication to tapping the white elephant of Morong: He reminded the pro-BNPP advocates that nuclear power plants only have on average a 30-year life span. “Is it really hard for some people to resist the temptation of a gargantuan contract in such an expensive project?” Simbulan asked aloud.
Last June, the family of the Herminio Disini announced that the Marcos crony had died due to organ failure. Until his death, the family insisted that everything about him be kept “ low-key”. Only family members and close friends attended the wake.
For all the controversy spawned by the project he championed, Disini was hardly talked about since he fled the country after the Marcoses’ downfall. He stayed in Austria and for a time was believed to have lived the life of “royalty” until he returned from self-exile in 2001.
Disini could have been instrumental in uncovering the unresolved conspiracy that continues to haunt the PNPP case. Cases were filed against Disini by the Presidential Commission on Good Government as an offshoot of government efforts to recover ill-gotten wealth amassed during the Marcos regime.
In 2012, the Sandiganbayan ordered Disini to return the “commission” he got for helping Westinghouse and Burns and Roe get the BNPP contract.
This decision may be traced to the events of 1988, when Westinghouse admitted before a US court that it gave US$17.3 million in cash to Disini through his network of companies. His first cousin, lawyer Jesus Disini, also told the same court that no less than Mr. Marcos received the payoff as co-owner of the companies.
According to Rene Saguisag, it is not surprising that there are groups now trying to lobby for the reactivation of the Bataan nuclear power. For one, the Supreme Court has not really made any final ruling on the BNPP.
It is also a fact that that until now, no one has been convicted or sent to jail for what has been considered the biggest corruption case during the martial law years.