Supreme Court Associate Justice Reynato Puno has urged the government to consider stopping payments for loans that the late strongman Ferdinand Marcos borrowed to build the mothballed Bataan Nuclear Power Plant.
Vincent Cabreza, Philippine Daily Inquirer
April 21, 2005
Baguio City, Banguet: Supreme Court Associate Justice Reynato Puno has urged the government to consider stopping payments for loans that the late strongman Ferdinand Marcos borrowed to build the mothballed Bataan Nuclear Power Plant.
Speaking at the Integrated Bar of the Philippines’ 10th national convention here Tuesday night, Puno said international experts had taken the position that foreign bankers, who knowingly lent to corrupt governments, were liable for graft.
“[Several foreign creditors] knew or had no reason not to know that the loans will be used for some illegitimate purpose like supporting notoriously brazen and kleptocratic military regimes,” Puno said at the convention whose theme is “Alleviating Poverty and Resolving the Fiscal Crisis.”
Puno said these creditors need not be paid because they were parties to the crime. Citing Noreen Hertz, an economist at the University of Cambridge, Puno said “there are debts which should be considered illegitimate and therefore should not be paid.”
“Nearer home, the finger points to the Bataan Nuclear Power Plant, which was built in 1976 and which cost us $1.9 billion in loans,” he said. [Some reports placed the total cost of the plant at $2.3 billion.]
Puno noted that the Philippines was shelling out $170,000 daily (P9.35 million a day or P3.4 billion a year) for the BNPP loans and that the payments would continue until 2018.
Servicing the country’s debts now accounts for the largest government expenditure, overtaking salaries of government workers in the national budget of P907.56 billion for 2005, according to Puno.
The tragedy is that Filipinos have not benefited from a single watt of electricity from the nuclear plant, which was constructed on a known earthquake fault, according to former National Treasurer Leonor Briones.
Puno said debt repudiation was nothing new.
The United States repudiated Cuba’s debts to Spain in 1898 at about the time it acquired the Philippines from Spain at the end of the Spanish-American War, according to the justice.
Today, he said South Africa, which is under black majority rule, had started questioning its obligation to repay loans acquired during the apartheid government.
He also said activists in the Iraqi government were questioning their foreign debts, which were secured by Saddam Hussein “to buy the knives that slaughtered them.”
Making accountable businessmen, who were parties to a crime, also has a precedent, according to Puno.
He said the Nuremberg Trials at the end of World War II, which tried Nazi leaders for war crimes, also convicted businessmen who knowingly collaborated with the Nazis and were therefore as guilty as the people who brutalized the Jews in gas chambers.
Puno suggested that the government seek either a payment scheme similar to the Section 11 clause in the United States for bankrupt taxpayers, or a federal debt protection scheme covering American towns.
He said these schemes shield bankrupt individuals or entities from the forfeiture of their assets, protect their ability to earn, and in the case of the Philippines, its ability to continue supplying public services.
A federal law grants American municipal towns protection from creditors, enabling them to continue restructuring debts without sacrificing the quality of public service.
But Puno points out that the US law bars the towns from issuing new taxes to pay for their debts.
Puno said Hertz’s proposal to put up a system patterned after the US bankruptcy laws to help developing countries could be applicable to most Asian nations burdened by debts, which were obtained by graft-ridden governments.
He said government should seek international support for an independent “ad hoc intermediary group” that would assist heavily indebted Third World countries.
Three Mile Island
It was another Puno who stopped the BNPP project. Former Justice Secretary Ricardo Puno was tasked by Marcos with assessing the condition of the plant in light of the 1979 breakdown at the Three Mile Island nuclear plant in Pennsylvania.
International experts have listed the BNPP’s safety violations, including its susceptibility to an earthquake-induced damage. The Puno Commission eventually declared the plant unsafe.
But despite its mothballing, the administration of former President Corazon Aquino decided to continue paying the loans after the 1986 EDSA Revolution.