Lucio Tan is part of our corrupt ecosystem, Romulo Neri told whistle blower Jun Lozada

What’s happening now with Philippine Airlines (PAL) is not mere labor trouble. It is actually part of a political power struggle between the Aquino presidency and an entrenched kingmaker, whom the former economic planning agency chief once named as a key player in the Philippines’ corrupt ecosystem.

The nation’s other power players are closely watching who will win. And Filipinos who voted overwhelmingly to stamp out corruption and level the playing field should be closely watching too.

Romulo Neri’s web of corruption theory

The embattled Romulo Neri unwittingly predicted something like this could happen during a secret dinner meeting with whistle blower Rodolfo “Jun” Lozada, Senator Panfilo Lacson, Senator Jamby Madrigal and Angelito Banayo (now the National Food Authority chairman) on December 7, 2007.

Neri was at that time the director-general of the National Economic Development Authority (NEDA).

Details of that secret meeting were later bared by Jun Lozada in his February 18, 2008 testimony before a Senate probe on the allegedly anomalous telecoms broadband deal between the Arroyo government and ZTE Corporation of China.

Cringing, cowering and weeping during the probe that was telecast nationwide, Jun Lozada said that during that meeting, his friend Romulo Neri had called their boss, President Gloria Macapagal-Arroyo, “evil” several times because she was the center of a corrupt political ecosystem that was controlled by a handful of the nation’s oligarchs who influenced and benefited from corruption.

Jun Lozada said Romulo Neri specifically named Philippine Airlines (PAL) owner Lucio Tan as one of those oligarchs in control of the corrupt ecosystem. Romulo Neri even showed a diagram of his web-of-corruption political theory. Lucio Tan was designated in that drawing by the letters “LT”. See the diagram below. (The three other “oligarchs” named were Enrique Razon, chairman and president of International Container Terminal Services, Inc.; a “Tommy” Alcantara and one of the “Aboitizes” (which one, Romulo Neri did not say).

Romulo Neri prepared this diagram to explain his web of
corruption theory. This was submitted to the Senate Blue Ribbon Committee probe
on the NBN-ZTE telecoms deal
On the very day Jun Lozada testified, Romulo Neri suddenly had amnesia . He told reporters he was unsure whether he had called Gloria Arroyo “evil” several times:
I know Jun is very sincere with me and cares for me but I really cannot recall
that statement. I don’t remember. I cannot up to now.
However, the former Asian Institute of Management professor could remember in detail the rest of his dinner lecture.
That’s very little thing to do with ZTE. That meeting was more on the discussing
the political economy. I gave my usual lecture on political economy and to
shorten it I just put one brief framework and I think we all agreed that this is
the nature of the Philippine state and the oligarchic state, the players
We had to map the whole players in the political system and of course everybody
has a role to play in the whole system. And my conclusion is that in this whole
system, we are all victims of the whole oligarchic structure of the Philippine
To watch the video of one of Romulo Neri’s ambush interviews at that time, click on this.
Romulo Neri did not deny naming Lucio Tan, Razon, Alcantara and Aboitiz as key players in that corrupt eco system.
Now I myself wonder why Romulo Neri named Lucio Tan.
In an earlier entry I wrote entitled Why does world billionaire Lucio Tan have such a troubled airline? , I provided a timeline of how Lucio Tan broke off the profitable units of PAL to make completely different companies that are now quite profitable to this day, while PAL continues to lose heavily.
My Facebook friend Reyn Barnido reacted to my timeline by pointing out it was incomplete. He said,
So what happened between 2000 and 2010? There is a a full decade gap in the
He’s right. This decade covers Gloria Macapagal-Arroyo’s administration. And so I started digging and that was how I rediscovered Romulo Neri and Jun Lozada.
And then I dug some more and found reports saying President Gloria Macapagal-Arroyo dined with tobacco and beer magnate Lucio Tan and shortly afterward, a planned hike on cigarette and beer taxes was reduced, while there was a higher increase in our Value Added Tax (VAT). The justifying argument used then was that a steep rise in tobacco and liquor taxes would harm sales, which would eventually lead to lower tax collection.
In this instance, rather than tax cigarettes and beer owned by Lucio Tan, everyone bore the brunt of higher VAT on basic necessities such as food, medicine, water, electricity.

Romulo Neri proposed solution for sweeping away web of corruption
Before he joined the executive department, Romulo Neri was one of my favorite sources. He headed the Congressional Planning and Budget Office (CPBO). He was always frank in his views and I could always expect choice quotes from him on how the national budget was skewed toward military and anti-insurgency spending at the expense of education and social services.
I was therefore not surprised that he said all that during his “secret” dinner with Jun Lozada and the senators.
He’s very proud of his web-of-corruption theory. On Valentine’s Day, four days before Jun Lozada testified, Romulo Neri told reporters in an ambush interview that “the truth is deeper than what you think.” He said the nation’s problems were quite deep and could not be solved by people power rallies alone because the Philippines was an oligarchic state where in reality, a handful of families and personalities dictated government action.
Today, Romulo Neri is in serious trouble, facing a corruption case that could land him in jail. The charge stemmed from his having told Gloria Macapagal-Arroyo that then Commission on Elections chairman Benjamin Abalos had offered him a hefty bribe –“Sec, my 200 ka dito” – which he interpreted as 200 million pesos.
Neri said in his own testimony before the Senate that Arroyo told him to ignore Abalos’ offer but still go through with the recommendation process for the ZTE project.
The bribe was allegedly for his facilitating NEDA’s approval of ZTE Corporation’s $329-million national broadband network (NBN) contract with the government.
Romulo Neri may be the first Filipino academic to put forth a theory on political economy and become the very example of how this theory actually works.
For me, he made two interesting statements that are very relevant today.
First, Romulo Neri said that replacing Gloria Arroyo as President would not correct the situation since the ecosystem would remain.
Second, he said reforms in the political economy could only be brought about by the President with the help of all sectors of society.
What do you think?

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