The sovereign guarantee for the $470 million project, embodied in an opinion issued by then Justice Secretary Hernani Perez, was issued on Gloria Arroyo’s fourth day in Malacañang. It was only the second day of Perez as justice secretary.

Guingona revealed in his book that will be launched today at 6 p.m. at the Manila Hotel that in a cabinet meeting, Perez whispered to him. "Alam mo tinawagan ako niyan sa hatinggabi (referring to Arroyo) at inutusan ako aprubahan yung Impsa."

Guingona wrote, "I sat immobile, then looked at him as if for confirmation. He gazed back and nodded his head."

This is a good time to recall the IMPSA deal. A paper trail provided by international anti-money laundering agencies traced $2 million dollars in Perez’ bank account in Switzerland. Former President Estrada alleged that the $2 million could be part of the $14 million that was also offered to him through businessman Mark Jimenez who helped broker the IMPSA deal.

Rumors about how the $14 million was divided say that a few million dollars was given "to the boys" and a hefty portion was given to the "Big Boy."

The minimum amount involved for a person to be charged with plunder is P50 million. The $2 million is equivalent is almost P100 million. Yet Perez, rumored then as Arroyo’s favorite cabinet member, was charged only with extortion.

In 2001, Luz Rimban, in an article she wrote for the Philippine Center for Investigative Journalism, exposed how IMPSA got the sovereign guarantee which it failed to get from the Estrada administration, which had adopted a policy not to guarantee loans by private companies. That policy was reversed with Arroyo’s favor to IMPSA.

Here’s a portion of Rimban’s article:

"Four days after it assumed office, the government of President Gloria Macapagal-Arroyo gave the final approval to the most controversial power project in the country: a $470-million hydroelectric power contract that was awarded to the Argentine firm IMPSA (Industrias Metalurgicas Pescarmona Sociedad Anonima).

For eight years, the project to rehabilitate and operate the 750-megawatt Caliraya-Botocan-Kalayaan (CBK) power complex in Laguna was in limbo because various state agencies and rival private companies objected to what they said was the favorable treatment IMPSA was seeking from the government.

But in an opinion dated January 24, Justice Secretary Hernando Perez, who was then just two days in his post, set aside these objections and removed the legal obstacles to the turnover of the CBK complex to the Argentine firm. Two weeks later, on February 7, the government-owned National Power Corporation (NPC) formally handed to IMPSA the most strategic power facility in Luzon....

What Perez signed soon after he became justice secretary was the document IMPSA had been waiting for. That opinion deviated from the norm: It was not numbered unlike other justice department rulings, and had not yet been published, reflecting the lack of transparency surrounding its release.

After it was issued, 19 banks led by BNP Paribas, the Dai-ichi Kangyo Bank, the Industrial Bank of Japan and Societe Generale agreed to put their money into the CBK project.

What could have convinced lenders to invest in the project was a line in the Perez ruling that said "the Republic of the Philippines has validly and effectively consented to the transfer and assignment to the Lenders of all of CBK’s rights under the Government Undertaking."

Former finance department officials said the statement commits the government to agreements entered into by IMPSA and its creditors.

"It’s a dangerous statement to make," said a former finance assistant secretary. "It’s an additional defense for IMPSA against the NPC. It could put the Republic in a very precarious situation."

Perez defended his decision. "There is nothing illegal in the contract," he said, adding that the IMPSA opinion was just one of the standard rulings justice secretaries are made to sign. "To begin with, I didn’t know it was controversial… My staff looked into it and if there’s any impropriety, it should have been discussed at other levels." (For the complete article, see http://www.pcij.org/stories/2001/power.html )