Cusi, Dennis Uy face graft raps for Malampaya share sale to Udenna

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Energy Secretary Alfonso Cusi (L) and businessman Dennis Uy (R)

Metro Manila (CNN Philippines, October 19) — Three people filed a complaint against Energy Secretary Alfonso Cusi, Udenna Corp. chairman Dennis Uy and 24 others for an alleged questionable sale of shares in the Malampaya gas-to-power project.

Geologist Balgamel Domingo filed the complaint Monday with the Office of the Ombudsman in Iloilo City, his lawyer Rico Domingo said in a Tuesday media briefing.

The other complainants are lawyer Rodel Rodis and businesswoman Loida Nicolas Lewis, both based in the United States.

Billions lost

Eduardo Mañalac, former president of state-run Philippine National Oil Company (PNOC), said the government effectively forfeited billions of pesos in profits when it allowed Udenna to buy a 45% stake in the project from oil giant Chevron in 2019.

The government tapped private service contractors to explore waters off Palawan for gas deposits since 2001. The natural gas extracted from the project currently supplies over 20% of the country's power needs, with the government earning 60% from revenues and 40% for its private partners.

Shell Exploration BV and Chevron each owned a 45% stake in the project, with the remaining 10% maintained by the state through PNOC-Exploration Corporation. In the past two years, however, Chevron and Shell both sold their shares in the project to Uy's UC Malampaya, giving it a 90% controlling stake.

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"Kung gobyerno ang kumuha, pwedeng umabot sa ₱138 billion ang makukuha ng gobyerno. Dahil hindi kinuha at hindi rin kinuha ng PNOC, 'yun ang mga nawala [If the government acquired the shares, it could have taken up to ₱138 billion. Because neither government nor PNOC took the shares, we lost that amount]," Mañalac said.

He added that without Uy's buyout, the government could have received an additional ₱42 billion if it took control for the remaining three years of the Malampaya contract – and could be higher given the recent surge in global oil prices.

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The complaint stated that the Department of Energy (DOE) was remiss in its duties in reviewing Udenna's financial capacity, and in the process gave the company "unwarranted benefits" and caused "undue injury" to government.

"Despite knowledge of its right to match UC Malampaya’s offer and the anticipated good returns of the investment in Chevron’s share, PNOC-EC failed to exert any effort to purchase Chevron’s participating shares," the complaint read, adding that DOE under Cusi did not perform due diligence before clearing the deal.

"Sec. Cusi still proceeded to belatedly approve the questioned sale despite Udenna and UC Malampaya’s failure to meet the technical and financial qualifications of a Service Contractor," it added, pointing out that the newly-formed company did not have enough capital and was counting on loans to support the deal.

Cusi is also PNOC chairman.

Retired Supreme Court Senior Associate Justice Antonio Carpio said government should have stepped in, especially as the Malampaya facility's contract is expected to end in 2024 or when gas supply is expected to run out.

"We have people who can run that – Filipinos. Gagamitin lang ni Dennis Uy 'yun [Dennis Uy will only take advantage of that]," Carpio said. "This is the biggest presidential gift to a crony."

Based in Davao, Uy owns Phoenix Petroleum and was one of the biggest campaign donors of President Rodrigo Duterte in 2016.

Also charged are 10 other officials of PNOC, as well as executives of Udenna, Chevron, and Shell.

DOE reply

In a statement, Cusi dubbed the graft charges as a form of "harassment," saying it was politically motivated as the 2022 elections are heating up. He is also serving as president of one of the two warring factions of PDP Laban.

"The case is speculative, without basis and malicious. The questioned transaction is above-board," the Energy chief said, noting that the DOE will respond in the proper forum. "I have no doubt the truth will vindicate me and the innocent people dragged into this purported action obviously filed for the singular purpose of political propaganda."

"It should be noted that two of the alleged complainants are Filipino-Americans who were reportedly identified with the 'Oust Duterte' movement in the United States," Cusi added.

Meanwhile, the Udenna Group said it has yet to receive a copy of the complaint.

CNN Philippines is also trying to get the comment of Malacañang, Chevron and Shell.