Wednesday, February 25, 2015

ABCD: Alphaland–BSP Controversial Deal


The Boy Scouts of the Philippines (BSP) - Alphaland deal is basically a Joint Venture Agreement involving a real estate owner and a developer.  BSP contributes the land while Alphaland will handle all the Construction, Financial and Marketing costs.  BSP retains ownership of the land.

BSP's contribution was initially valued at P600 million while alleged cost of the total project is P5 billion. With this valuation, the split became 15-85. 

Why 15-85? The standard is from low 20-80 to high of 30-70.  As my barber says, “naLUGI sa MaLUGI property ang BSP.”

BSP’s land was used as a collateral to secure the mortgage of P1.7 billion incurred by Alphaland.  Didn’t Ongpin and Oreta say that Alphaland would absorb all the financial risks? Suppose Alphaland fails to pay. The land will be foreclosed and BSP will end up with nothing.

Oreta asserts that it gave a corporate guarantee amounting to P600 million. Why only P600 million? The land could be worth more by then. If Alphaland’s corporate guarantee is so strong, why not guarantee the P1.7 billion directly instead of risking BSP’s land?

Under its charter, the power to mortgage BSP property is supposed to be with the National Executive Board. Did the mortgage approval include that of the Secretary of Education, Culture, and Sports who is a member of the NEB? How about the President of the Girl Scouts of the Philippines? I am curious.

Later on, the Joint Venture Agreement was amended to authorize the sale of BSP’s land to Alphaland for P600 million. Remember, this is the same land that was used to secure a P1.7 billion loan. It should have been worth more.

What did BSP do with the proceeds of the sale? It invested back to the project. What did it get? The same – 15-85 split. What? It was 15-85 split when BSP retained ownership of the land, and the same sharing but lose ownership?

Under its charter, the National Executive Board has the power “to dispose in any manner a part or the whole property of the corporation with the CONSENT IN WRITING and pursuant to an affirmative vote of two-thirds (2/3) of the members of the National Council.” Remember, this is not just by VOICE or SILENCE. It should be expressed in writing.

Questions: Was the CONSENT IN WRITING obtained from at least two-thirds (2/3) members of the National Council? Did the CONSENT IN WRITING include that of the Secretary of Education, Culture, and Sports? How about the President of the Girl Scouts of the Philippines?

The BSP land was reclassified from industrial to commercial (FAR 8) and later on FAR 12. Its original floor area of 10,000 sq. meters became 80,000 sq. meters and increased to 120,000 sq. meters. What did BSP get from it? Still the same – 15-85 split.

The Project (Alpha Makati Place), is pre-selling and collecting P500,000 as down payment. What is BSP getting? ZERO.



Alphaland is renting monthly from BSP starting from January 2014 to the present.  In a place where rental payments are usually made in advance, Alphaland paid the rents on January 23, 2015 – one day after the January Senate hearing and one year from start of occupancy.

How can a deal like this happen?  Let us look at the players. The entities involved are BSP, Alphaland, Makati City Council and Noble Care. The personalities are Bobby Ongpin, Babes Oreta, Gerry Limlingan, Atty. Avisado, Ernesto Mercado, and VP Jojo Binay.

Bobby Ongpin of Alphaland could not put this deal together alone. He hired Babes Oreta as an employee and partner to help him do it. The latter admitted paying him a salary and shares of stocks that is turning out to be worth over P500 million.  Babes could not do it alone either. They both needed somebody who could deliver both BSP and the Makati City Council.

For BSP, Ernesto Mercado and Atty Avisado would be good prospects. But Oreta did not know them personally and they do not have the clout and following to deliver BSP with its National Executive Board and National Council. For the Makati City Council, Ernesto Mercado did not have sufficient political support to take the lead. Gerry Limlingan is not connected with BSP and only works for VP Binay.

This leaves only VP Jojo Binay. First, he is a close friend of Oreta and known to Ongpin. Second, he is the National President of the BSP and got his people that initially included Ernesto Mercado, Atty Avisado and many of his fraternity brothers elected to the National Executive Board. Third, he controls the Makati City Council and the Makati government bureaucracy. Fourth, he has his loyal assistant and "financial wizard" Gerry Limlingan.

Ernesto Mercado has personal knowledge of the deal and the surrounding circumstances. He is now acting as a whistleblower. He was Binay’s Vice Mayor, BSP Senior Vice President and the signing front man. He is pointing to VP Binay as the actual and logical dealmaker. He accuses Binay of receiving a substantial amount of money that was used for his 2010 national campaign



Oreta owns Noble Care. The latter received all the 8.9 million shares worth over P500 million that Ongpin gave to Oreta admittedly as supposed compensation. He did not deliver the deal alone. According to Mercado, he had the help of VP Binay and company. They most likely shared but this time the split could be different.

Boy Scouts should watch out. “Laging Handa” (Be Prepared) for Scout Reforms. This could be your chance to “do a good turn daily”.

Be "brave, cheerful, clean, courteous, friendly, helpful, kind, loyal, obedient, reverent, thrifty, and trustworthy!"




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