The state of the President's finances: Can Estrada explain his wealth? Part one

Part One

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MANILA, Philippines, July 23, 2000 — This two-part series was originally published on the website of the Philippine Center of Investigative Journalism (PCIJ) on July 23, 2000. It is reprinted here with permission.

Editor’s Note: 1 U.S. dollar is about 45 Philippine pesos.

President Estrada says his life is an open book. He does not deny the complications of his private life that he has several mistresses, and that he has sired children by them.

The President, however, has not exactly been forthright about the financial aspects of his private life and the complex ethical issues such as conflicts of interest posed by the many and varied business involvements of his various families.

In his statements of assets, for example, Estrada does not declare his participation in about a dozen companies in which he and his wife are major investors and board members. Neither do his asset declarations give an idea of the magnitude of the business interests that he and his families are engaged in.

In the course of several months, we obtained and examined 66 corporate records in which Estrada, his wives and his children are listed as incorporators or board members. Altogether, these companies 31 of which were set up during Estrada’s vice-presidential term and 11 since he assumed the presidency had an authorized capital of P893.4 million when they were registered. The President and his family members had shares of P121.5 million and paid up P58.6 million of these when the companies were formed.

It is difficult to estimate how much these businesses are now worth because of incomplete data at the Securities and Exchange Commission (SEC). But based on available 1998 and 1999 financial statements, 14 of the 66 companies alone have assets of over P600 million.

It is not clear from the President’s official asset declarations over the last 12 years where the funds to invest in so many corporations come from. Moreover, neither the President nor his immediate family members acknowledge that many of their businesses involve the government, either in the acquisition of permits and clearances or in the award of contracts.

Today, as the President gives an accounting of the state of the nation, he should also be making an accounting of the state, and the source, of his and his families’ finances.

This becomes an urgent issue because of the lavish lifestyles of the President’s various households. Two of Estrada’s women companions Laarni Enriquez and Joy Melendrez live in posh quarters in Wack-Wack, Mandaluyong City and Green Meadows, Quezon City. According to land records, none of these residences are registered in their names or the President’s.

Estrada’s wives and children have also been seen riding a fleet of imported expensive vehicles, including a Jaguar, a Range Rover and several Mercedes Benzes each of which costs millions of pesos. But neither the President’s statement of assets nor his most recent income tax declaration can explain where he got the wherewithal to support the extravagance of his loved ones. In 1999, Estrada declared in his statement of assets a net worth of P35.8 million and in his income tax return, a net income of P2.3 million.

In Wack-Wack, for example, land values are currently at P40,000 per square meter. Enriquez’s residence since the mid-1990s is at 771 Harvard Street; it is on property that covers more than 1,000 square meters and is listed under the name of Jacinto Ng Sr., one of the President’s closest friends. The land alone is worth over P40 million. Rentals for a typical Wack-Wack house would easily run to more than P100,000 a month or P1.2 million a year, about half of Estrada’s declared net income in 1999.

A recent visit to Wack-Wack revealed that the Enriquez house was being renovated. Earlier this year, Enriquez was reported to be building another Wack-Wack mansion at 796 Harvard Street, on a 5,000-square meter property registered, according to land records, under KB Space Holdings, a company owned by Ng.

It is obvious from this example that official declarations as contained in Estrada’s statement of assets and income tax return do not provide an accurate picture of the magnitude of the President’s and his families’ wealth.

At the same time, what Estrada declares are in themselves problematic. R.A. 6713 mandates that all public officials file every year the acquisition cost and the assessed and fair market values of their real property. In addition, they should also list other personal property as well as their investments, the cash they have on hand or in banks, their financial liabilities, and their business interests and financial connections.

Since his election to the Senate in 1987, Estrada has consistently declared interests in only four corporations: JELP Real Estate Development Corp., J. E. Inc., Feluisa Development Corp. and Felt Food Inc. The first three are real estate companies, with JELP appearing to be the biggest.

In a 1998 financial statement submitted to the Securities and Exchange Commission (SEC), JELP declared assets worth P194.2 million, mostly buildings and real estate valued at P147.2 million, or more than double its 1997 real estate assets of P58.8 million.

None of these assets, however, are listed in Estrada’s declaration, even if he and his wife jointly own 70 percent of JELP’s shares. Moreover, none of JELP’s liabilities of P188 million are declared in Estrada’s statements. Presumably, some of this money went to the acquisition of nearly P90 million worth of real property in 1998 alone. It would interest Filipinos which banks, institutions or individuals lent Estrada so much money in the year of his election.

Incorporated on November 18, 1992, a few months after he was elected vice president, JELP began operating with a paid-up capital of P14.4 million, only P3 million of which was in cash. It is difficult to determine how the company built up its asset base and how it funded its real estate purchases from 1993 to 1996 because it has not complied with SEC requirements to file annual financial statements.

It was only in 1997, a year before Estrada was to run for the presidency, that JELP suddenly filed its financial statements. By then, it reported assets of P116.3 million, of which P58.8 million was real property. In 1998, the year Estrada became president, JELP reported assets of P194.2 million, an increase of nearly P78 million despite the Asian crisis and the slump in real estate prices. Of these assets, P147.2 million was real property.

Estrada also did not include in any of his statements of assets since 1987 his and his wife’s shareholdings in 11 companies. A check with the SEC shows Estrada or his wife Luisa Pimentel were incorporators or shareholders of, among others, Millennium Cinema Inc., JE Films and Video One Corp., and JOI’s Food Corp., none of which were listed in the President’s asset declarations in the last 12 years.

Yet, when we queried Malacañang about these issues in late April this year, Press Secretary Ricardo Puno told us to wait until the President’s accountants and lawyers were available to provide answers. Subsequent follow-ups since then did not yield any answers. Puno also declined to say who these lawyers and accountants were.

The problem with R.A. 6713, which requires government officials to declare their assets every year, is that it asks these officials to make public the assets only of their spouses and children under 18. Framers of the law apparently never foresaw a president like Estrada who would openly acknowledge relationships with other women and children out of wedlock. The problem becomes even bigger when several of these extramarital liaisons yield mistresses and children who are actively involved in business.

Yet, other laws like the Anti-Graft and Corrupt Practices Act recognize the potential of people with family or otherwise “close personal relation” with any public official to take advantage of such a relation by “directly or indirectly requesting or receiving any present, gift or material or pecuniary advantage from any other person having some business, transaction, application, request or contract with the government, in which such public official has to intervene.”

The law includes such relationships as close personal, social and fraternal connections, and professional employment all giving rise to intimacy which assures free access to a public official. Presumably, mistresses and illegitimate children fall under this category.

The law on unlawfully acquired property, on the other hand, raises the possibility that ownership of property can be concealed by recording it in the name of, or held by, a public official’s spouse, crony or relatives.

These laws become pertinent particularly in the light of the multi-faceted business involvements particularly of Guia Gomez, with whom President Estrada has acknowledged having a long-term relationship, and her 31-year old son Jose Victor JV’ Ejercito.

Gomez, who admits to her entrepreneurial inclinations in newspaper interviews, appears to be the most business-minded among the President’s women companions. A check with the SEC shows that Gomez is listed as having shareholdings in 33 companies involved in real estate, food, office machinery, trading and semiconductors. Her son is a shareholder in 11 of these companies, although on his own, he is an incorporator and stockholder of eight other firms.

Also listed as shareholder in two of the Gomez companies is Joel O. Ejercito; his sister, Ma. Theresa O. Ejercito, is stockholder in five. Both are the President’s children with Peachy Osorio, a movie director’s daughter with whom he had a relationship before his marriage to the First Lady.

From the records, it appears that Gomez’s core businesses are real estate and trading. She owns at least seven real estate companies, with a combined authorized capitalization of over P200 million. It is, however, difficult to determine from SEC figures the real assets, including land and other property, of these corporations.

For example, EG Properties alone, formed on November 23, 1998, shortly after Estrada was elected president, has an authorized capital of P100 million, P25 million of which has been paid up, half by Gomez and the rest by JV, Joel and Ma. Theresa Ejercito, and one Joey G. Estrada.

Another real estate company, Meiji Inc., is developing a housing estate in Cavite. It has an authorized capital of P100 million, P7 million of which was paid up when it was established on June 24, 1992, the year Estrada became vice president. Gomez holds the biggest number of shares and had paid up P4 million of her P16-million subscribed capital when the firm was registered. Son JV is the next biggest shareholder after his mother.

Other real estate companies listed in Gomez’s name are Grandmeadows Properties Inc., El Pueblo Builders Inc., Apex Land Inc., All Time Realty Consultants and Managers Inc., and JV&G Inc.

There is, of course, no law that prevents presidential mistresses from engaging in business. What is worrisome is when these businesses engage in transactions that involve the government. For example, housing projects have to comply with zoning and environmental regulations. Real estate firms can also avail themselves of loans from government financial institutions.

In defense of his and his mother’s business practices, JV Ejercito has said, “We are businesspeople and we have been in the past 10 years. We never dealt with any government projects since my father is a public official, and we will continue avoiding deals with the government.”

This becomes a tricky statement considering that JV is the biggest shareholder in the now-inactive Best World Construction Corp., an affiliate of the controversial BW Resources Corp., which is currently involved in an insider trading scandal.

JV’s core business is real estate development. His Buildworth Development Corp. constructs houses and condominiums. As anyone who has done even minor construction work knows, construction involves obtaining a slew of government clearances and permits. JV also has a lending company, Foremost Credit Resources, in which he, too, is the biggest shareholder.

Gomez is also into trading of various products, including food, biological products, office equipment, semiconductor materials, machinery and chemicals. Her dozen trading companies include Xytox Corp., Bioconcepts International Inc., Personal Shopper Inc., Poongsan Precision Phils. Inc., Gazelle Distribution System Inc., Stallion Intertrades Center Inc., Paisa International Inc., Micro-Biomass International Inc., Rainbowman International (Manila) Inc., and Trumpet Marketing International.

Gomez is active in the labor recruitment business as well, having formed four job placement companies Monde Quality Services Inc., Job Employment Staffing Assistance and Allied Services Inc., Powerhouse Staffbuilders International Inc., and Gomez-Orozco Recruitment Agency Co.

Like the First Lady, Gomez has her share of restaurants that operate under GTWJ Food Corp., Paisa Champagne Bar Inc. and Gomez-Antonio Enterprises Inc.

Meanwhile, the President’s other woman companion, Laarni Enriquez, has six companies to her name, some of which include her brothers as incorporators. Star J Management Corp., which she formed in 1996 with the President’s brother Jesus, sister Pilarica and presidential buddy Jaime Dichaves, operates the Star J Plaza, a mall in Malabon whose ownership, according to a document displayed in the lobby of the mall, is under the name of Jacinto Ng. Enriquez also owns Star J Bingo and Star J Games, which operate the bingo parlor and bowling alley at the Malabon mall.

On the other hand, the First Lady and her children are mainly into real estate, restaurants and entertainment. Apart from JELP, Estrada, the First Lady and their children formed the Feluisa Development Corp. They have restaurants listed under five food companies: Felt Food Services, JOI’s Food Corp., 24K International Food Inc., ADE Food Inc. and All Hot Soup Inc.

In the entertainment business, the Estradas invested in Millennium Cinema Inc., formed in 1999, and which is reported to be the fastest-rising film production company these days, and JE Films and Video One Inc.

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