Press Release
August 15, 2006


Senator Miriam Defensor Santiago today urged the Senate to focus its ongoing OWWA fund scam inquiry on the culpability of former President Fidel V. Ramos and so-called Ramos Boys, former OWWA Administrator Wilhelm Soriano and R-II Builders owner Reghis Romero II.

In a Resolution filed today, Santiago said the Senate committee on labor and employment should focus on the criminal and civil culpability of Ramos, Soriano, and Romero who, in 1995, with malicious intent and in evident bad faith, facilitated the disastrous OWWA investment in the Smokey Mountain Project.

The Smokey Mountain Project was a joint venture of the National Housing Authority and R-II Builders to develop the Tondo garbage dump into a residential and commercial complex. To finance the project, Asset Participation Certificates (APCs) with 8.5% annual interest were issued, fully guaranteed by the Home Guaranty Corporation (HGC).

In December 1995, OWWA reportedly invested P459.47 million, with a face value of P500 million, in the project. In 2000, R-II Builders reportedly defaulted when the APCs had matured and amounted to P835 million.

After R-II Builders defaulted in its obligations, OWWA sought payment from HGC, which agreed to pay P500 million and to issue debenture bonds worth P335 million, plus interest of 8.5% annually.

In January 2003, HGC paid OWWA P500 million in cash and only P72 million in bonds. In June 2005, HGC promised to release P300 million worth of bonds. However, the 2005 Report of the Commission on Audit states that HGC issued only P100 million worth of bonds in October 2005.

According to Santiago, although on paper, OWWA should have earned P40.5 million when HGC paid the P500 million, the payment was made only after seven years, and was reportedly much lower than what OWWA could have earned if only R-II Builders had paid its obligations.

Santiago said the Smokey Mountain investment was contrary to the legal policy of the OWWA to ensure the efficiency of collection and the viability and sustainability of the fund through sound judicious investment and fund management policies.

She also called on the Senate to inquire into the alleged lack of approval of the investment by the then OWWA Board of Trustees.

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