Philippine President Rodrigo Duterte sees no point in Asean leaders addressing the South China Sea row at meetings this week. Photo: Reuters
Philippine President Rodrigo Duterte is creating a new class of oligarchs in the Philippines. Image: Agencies

MANILA – As the election campaign to determine Philippine President Rodrigo Duterte’s successor kicks off in earnest, the outgoing populist leader is busy awarding his business cronies eleventh-hour concessions and privileges, building a class of so-called “Dutertegarchs” that will outlast his rule.

In early January, the Duterte-controlled National Telecommunications Commission awarded prized broadcast frequencies to Advanced Media Broadcasting Systems Inc (ABMS), a relatively obscure media company that is backed by the powerful Villar clan, a top Duterte political ally.

Emmanuel “Manny” Villar, who became the Philippines’ richest man during Duterte’s tenure, is now set to take control of two TV channels previously held by one-time top broadcaster ABS-CBN, which is owned by the Lopez family, widely known to be opposed to the populist president.

Duterte’s government granted another broadcast frequency which also belonged to the ABS-CBN to the president’s controversial spiritual advisor, Pastor Apollo Quiboloy, owner of the Sonshine Media Network International (SMNI) under Swara Sug Media Corp. It was awarded Channel 43 by the national telecom authority.

When Duterte rose to power, the populist promised to punish even a “whiff of corruption” while vowing to uproot so-called “oligarchs”, family clans who own major business conglomerates that control the bulk of the national economy.

According to the World Bank, the Philippines’ 40 richest families account for three-fourths of newly-created wealth in the early 2010s, the highest level of wealth concertation in Asia. Some of those oligarchs are the remnants of the Ferdinand Marcos dictatorship, which relied on a few, mostly Chinese-Filipino businessmen, to run its kleptocratic regime.

Others date back to the colonial era, when a few mix-blooded families of Spanish and Chinese stocks took hold of large swaths of land and industries in the late-19th and early-20th centuries.

Manny Villar and Duterte are close allies. Photo: Facebook

But the aggressive privatization of near-bankrupt state assets in the 1990s, just years after the collapse of the Marcos regime, exacerbated the wealth concentration problem, leaving a few major conglomerates and a handful of newcomers to dominate critical sectors of the economy.

The upshot of aggressive state asset privatization is some of the most expensive electricity, gasoline, water and internet rates in the region. Only months into office, Duterte tried to tap into rising public discontent by going after former Marcos cronies such as property tycoon Roberto Ongpin, owner of Alphaland.

“The plan is to destroy the oligarchs that are embedded in government. I’ll give you an example, publicly – Ongpin, Roberto,” Duterte said in what proved to be his opening salvo against some of the country’s biggest businessmen that weren’t aligned with his political machine.

The populist’s real target proved to be the so-called “yellow” oligarchs, namely the more liberal-leaning billionaires who have been critical of Duterte’s authoritarian rule.

In particular, the populist president has gone after the Lopez family, which owns the ABS-CBN media network, the Ayala family, which owns the sprawling Ayala Corporation, Globe Telecom and Manila Water Company, and Emmanuel “Manny’ Pangilinan, who owns major stakes in the telecom, utility and media sectors.

After a  Singaporean arbitration body ruled in favor of the Ayala-owned Manila Water Group in 2019 amid a standoff with the Philippine government over water pricing, Duterte directly threatened the billionaires.

“If Ayala and Pangilinan are your friends, kindly tell them I don’t go out, but if someone invites me out…if we see each other, no matter how many bodyguards you have, I can ruin your face son of a bitch,” he warned.

“Look for Ayala, I’ll go to him. They do not pay corporate income tax,” the populist president claimed at the time, threatening legal action against the businessmen. The two sides only seemingly resolved the water pricing issue when Duterte-backed billionaire Enrique Razon bought a 25% stake in the company.

The following year, Duterte shifted his “anti-oligarch” campaign to the Lopez’s ABS-CBN media network, which he repeatedly accused of biased coverage and refusal to run his paid political ads in 2016.

Amid nationwide lockdowns in 2020, Duterte’s allies in Congress voted against the renewal of ABS-CBN’s state-granted broadcasting franchise, thus effectively shutting down the country’s largest independent media network.

Supporters and employees of ABS-CBN network, the Philippines’ biggest broadcaster, join a protest as they push for the renewal of the network’s franchise in Quezon City on February 28, 2020. Photo: AFP via Anadolu Agency / Dante Diosina Jr

Several presidential candidates including the Marcoses have indicated their willingness to negotiate the restoration of ABS-CBN’s franchise when Duterte leaves office. To circumvent that possibility, Duterte has now awarded ABS-CBN’s prized frequencies to top allies Villar and Quiboloy.

There could be legal challenges when Duterte leaves office. The Philippine Competition Commission (PCC), the country’s anti-trust body, recently emphasized the need for greater transparency in how broadcasting frequencies are allocated to ensure public welfare.

“The PCC recommends amending the rules to include it as approving body in the assignment of vacated or available frequencies,” the anti-trust body said in a statement in late January.

“This is a practice done by many jurisdictions across the world, in consideration of the impact on competition of players over scarce public goods like frequencies,” it added.

The biggest beneficiary of Duterte’s patronage, however, is arguably Chinese-Filipino businessman Dennis Uy, a former provincial businessman who has rocketed up Forbes’ richest list in recent years after winning major government concessions and deals.

Uy, a top Duterte campaign donor with wealth estimated at $650 million by Forbes in 2020, has won several controversial government bids including a multi-billion-dollar telecom deal with China Telecom’s backing.

One of his companies recently took a massive $565 million stake in the Malampaya gas plant, the backbone of the Philippines’ energy security. The UK’s Shell, which first started developing the project in 1991, divested its stake.

Dennis Uy (R), founder and chief executive officer of Philippines’ Phoenix petroleum company, rings the bell at the Philippine Stock Exchange in the financial district of Makati, suburban Manila on July 11, 2017, on the company’s tenth anniversary of its listing. Photo: AFP / Ted Aljibe

In response to a Senate investigation into the controversial Malampaya plant deal, which was ultimately approved by Duterte’s Energy Secretary Alfonso Cusi, Duterte lashed out at the legislators for their supposed “political antics” and “innuendos.”

“I view with grave concern an apparent effort at the Senate to put in bad light recent developments involving the Malampaya gas field,” Duterte said, calling for a halt into the investigation.

“I am convinced that this was a private transaction between private entities that must be respected. I am likewise convinced that, in this case, the national interest has been protected and the rights of the government remain intact,” he added.