Biz Buzz: Conflicts of interest? /

There is an aggressive push in media to move the Senate’s proposed 3,000-percent increase in the levy on coal forward under the Duterte administration’s tax reform program. Somewhat surprisingly, however, this has been met with a muted response from the large corporations whose power plants use coal to provide cheap electricity to their markets.

All that may be about to change. Whispers are starting to get louder among the procoal crowd about the supposedly inherent conflicts of interest among the personalities who have lobbied hard for the proposed coal tax increase (from P10 a ton to P3,000 under the current Senate version).

Of course, the first on the list of the procoal lobby is Sen. Loren Legarda, who has long been known for her environmental advocacies, including green energy. This advocacy is being carried on in the realm of business by her son, Leandro Leviste, who owns and runs Solar Philippines—billed as the country’s “number one solar energy provider” and the largest developer of solar rooftop power plants in the region.

As the critics of the tax point out, the higher coal tax will result in more expensive fuel for many of the country’s coal-fired power plants, which will, in turn, narrow the wide cost gap between conventionally produced electricity and the still expensive and subsidized renewable variety in which solar falls under.

“She’s very passionate about her advocacy,” said one official from a power generation firm. “She even lobbied among individual senators in tears, literally.” Talk about passion.

Incidentally, the Senate coal tax also received a boost some months ago when former Energy Secretary Vincent Perez Jr. testified during a committee hearing against the use of coal energy. It was during his testimony as a resource panelist when he advocated the imposition of a “coal tax.”

Unfortunately, as the coal lobby points out, Perez—who was invited for his expertise as a former Department of Energy chief—is also involved in renewable energy. Wind power, to be specific—an expensive and subsidized mode of RE that will also benefit economically from more expensive conventional fuels.

Finally, the coal lobby pointed out that—though he did not appear as a resource in Congress —a former economic official has supported the coal tax in his regular column in a local newspaper. So what’s the big deal? Well, the official is also a board director of the Lopez family-owned First Gen Corp. The natural gas firm has positioned itself staunchly in the anticoal camp for obvious economic (and, OK, maybe environmental) reasons.

Expect this debate to heat up in the coming days as both chambers of Congress continue to deliberate on the coal tax in the bicameral conference committee. Abangan. —DAXIML. LUCAS

Lawyers versus Etihad

So-called five-star airlines are known for their excellent quality and service—they certainly charge flyers for this privilege. But that doesn’t seem the case for a group of Filipinos who recently took a trip to Europe using Etihad Airways via its famed businessclass section.

What should have been a productive and relaxing partners’ meeting for lawyers Aileen Lerma, Lee Lerma, Ronaldo Ventu

ra and his wife Ruth in Germany and Spain ended in a temporary nightmare as Etihad apparently failed to take them home—a breach of contract.

Now, a lawsuit is in the works that involves compensating the four to the tune of $15,292 in ticket fares and 1 million Swiss francs in damages (the maximum is 250,000 Francs per passenger). In Philippine peso terms, that’s almost P51 million.

The case involved some unfortunate timing and the now defunct Air Berlin, whose single-largest shareholder was Etihad and with which it had a codeshare agreement.

A demand letter from the four obtained by Biz Buzz showed that their troubles started on the return leg, a flight from Barcelona to Dusseldorf. This would then connect to Etihad’s hub in Abu Dhabi and then to Manila by Nov. 1.

The four needed to be back home by that date to catch important meetings or other trips abroad.

Apparently, the passengers became aware of their unfortunate predicament while trying to check in for their flight online on Oct. 30, a day before the actual trip.

Etihad had issued their tickets, although that particular flight was operated by Air Berlin.

It turned out the flight was cancelled, since Air Berlin had ceased operations on Oct. 28 after filing for insolvency and after Etihad, which owns 30 percent, refused to pony up added capital. The passengers were not given advance notice from Etihad, their demand letter stated.

What happened next was a series of unfortunate events that highlighted the sometimes ugly side of flying. Rebooking with Etihad’s Manila office was a no go because it was Nov. 1 then—a nonworking holiday.

The passengers also recounted several hours of calls and attempts to rebook with Etihad’s Barcelona office. Each time, Etihad staff “flatly, simply and directly refused to be helpful and refused to rebook the undersigned.”

Moreover, Etihad insisted the passengers deal with Air Berlin, which, of course, was already permanently closed.

With time running out, apart from the fact that some in the group had not made alternative arrangements with caretakers of their children back home, they booked new tickets with another airline.

With things heading to court, we can’t help but wonder how this can be avoided in the future. First of all, it’s important to treat your passengers right. Second, don’t mess with a group of lawyers. —MIGUELR. CAMUS

The trouble with Bitcoins

As investors deliberate on the merits of cryptocurrencies as a new asset class/payments system, top banker Nestor Tan, president of the country’s largest lender BDO Unibank, thinks that to prevent this burgeoning system from falling prey to money launderers and organized crime syndicates whowill thrive under such an unregulated payments channel, it should be subjected to antimoney laundering regulations.

“Bitcoin in itself is agnostic, it’s neither good or bad, it’s just the currency that’s available through the internet,” Tan, who is also president of the Bankers Association of the Philippines, said in a recent chat with Biz Buzz.

Tan cited two issues that people must think of when it comes to dealing in cryptocurrencies: 1. This system does not have anything close to the definition of a banking practice, so there’s no protection against moral hazard. 2. Because of the inherent privacy and confidentiality, the supply and demand do not necessarily come from legitimate sources.

“People defend cryptocurrencies as a payment system, which is correct, because it’s agnostic, but it attracts the wrong crowd,” Tan said. The analogy offered is real estate, which is neither good nor bad as an investment, but spells trouble when it attracts more speculators than end-users.

Tan personally thinks that cryptocurrencies must thus be subject to the same stringent reporting requirements under the Anti-Money Laundering Act (AMLA) or otherwise become a financial shelter for the underworld.

Earlier this year, the Philippine AMLA was amended to include casino operations following the country’s bitter experience in 2016 when some $81 million stolen from the Bangladesh cen- tral bank by a cyberheist syndicate slipped through the cracks of Rizal Commercial Banking Corp. and laundered through local casinos.

“The moral hazard for BSP (Bangko Sentral ng Pilipinas) is you will have retail clients and unsuspecting clients buying into it, when it collapses, there will be possible systemic impact,” Tan said. —DORIS DUMLAO-ABADILLA AirSwift—the boutique airline owned and operated by a unit of Ayala Land to service its leisure estates in island destinations—will acquire a new twin-engine turbo-prop ATR72 aircraft to accommodate more passengers flying to its beach resorts in El Nido, Palawan. This will be the fourth in AirSwift’s fleet of small planes servicing Ayala Land’s master-planned tourism developments.

To date, AirSwift has three smaller aircraft of ATR50s servicing the Manila-to-El Nido, Cebu-to-El Nido and El Nidoto-Calictan routes.

In the coming year, AirSwift will add flights from Manila to Sicogon in Northern Iloilo. Ayala Land’s newest tourism estate offers an iconic mountain, warm sandy beaches, natural lagoon surrounded by mangroves, unique flora and fauna and multiple coves for travelers and adventure seekers.

“We’ll try first Manila-Sicogon (flights) and take it from there,” said Jose Emmanuel Ja

landoni, senior vice president and group head of commercial businesses at Ayala Land. In the future, he said AirSwift might even offer El Nido-Sicogon flights. The new ATR-72, however, will be used for the flagship Manila-El Nido route.

Sicogon is being pitched as a great jump-off point for island-hopping tourists. For instance, it is only an hour away by boat to Cebu’s Bantayan Island, which boasts of pristine white ( and sometimes pink) sand beaches. From Cebu mainland, it will take travellers about four hours—three by car plus one hour by boat—to reach Bantayan. Sicogon is also not too far from the Gigantes Islands, another fast-rising destination in Iloilo.

In the future, Jalandoni said the Ayala group would study the feasibility of AirSwift opening up flights to service the Cebu-Sicogon route.

Newwings