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CENTER FOR STRATEGY, ENTERPRISE & INTELLIGENCE
Holy Father, can you omit the ‘shedding of your blood’ when you present me with the biretta? Of course not! We are but ‘scarlet audio-visual aids’ for all of our brothers and sisters also called to be ready to suffer and die for Jesus ~ New York Archbishop Timothy Dolan, seen as a possible future pope, after receiving the red biretta hat, among 22 new cardinals of the Catholic Church His mother thinks so ~ Cardinal Edwin O’Brien, retiring Baltimore archbishop, in deadpan reply to media asking if Dolan was papal material

Report

Volume 2 - Number 7 • February 20-26, 2012

4 The Big Business of Beauty

The hit products and hip firms that make the enterprise of looking good so lucrative • Eye of the shareholder: Hot trends to capitalize on in the pulchritude trade • Going under the knife: The top cosmetic procedures around the world • All the president’s ladies: President Aquino’s standards of beauty

NATION

12 Digital Pirate Nation

Bootleg movies, music and apps offer fun on the cheap, but what’s the real cost to the country? • No cameras please: Will the law banning ‘camcording’ in cinemas finally pass? • Downfall of the downloads: Shutting down the file-sharing sites • Watch list and priority watch list status: What does it mean to be ‘watched?’ • Congress blinks: An Internet blackout shelves a U.S. anti-piracy bill • ‘Piracy is the new radio’: Facebook and YouTube posts plug music. Is that bad?

22 45 Titles, 10 Accounts and One ‘Small Lady’

For five weeks the impeachment prosecution uses Senate subpoenas to gather evidence of allegedly undeclared or misdeclared assets, including dozens of property titles and several multimillion-peso deposits. But some of its own witnesses cast doubt the prosecution’s accusations. A Special Impeachment Report

WORLD

32 The World According to Davos

In the last week of January at the ski resort of Davos in the Swiss Alps, the annual World Economic Forum gathered leaders of government, business, social and international bodies to deliberate and collaborate in creating a better world. Key issues: China and America, the world economy, and top global risks in 2012

POINT & CLICK You can access online research via the Internet by clicking phrases in blue

TECHNOLOGY

40 For Facebook and Google, Your PC
Google’s new privacy policy and Facebook’s coming public share offering are stirring up concerns over the commercial use of Internet browsing data, all the way to what you type and click. What exactly are businesses keeping tabs on, and how can you hide from the data mining snoops?

Is Just One Big Two-Way Mirror

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Center for Strategy, Enterprise & Intelligence provides expertise in strategy and management, enterprise development, intelligence, Internet and media. For subscriptions, research, and advisory services, please e-mail report@censeisolutions.com or call/fax +63-2-5311182. Links to online material on public websites are current as of the week prior to the publication date, but might be removed without warning. Publishers of linked content should e-mail us or contact us by fax if they do not wish their websites to be linked to our material in the future. 

The cenSEI Selection: Engage, Educate and Edify

In our information age inundated by words and numbers, sounds and images just clicks away online, the real challenge is not in getting enough data, but in sorting, analyzing, selecting, discarding, and otherwise extracting meaningful and useful knowledge from the oceans of bits, bytes and “bull.” In this daily sifting through print, broadcast and broadband, The cenSEI Report always seeks strategic import as well as diversity and breadth of coverage, eschewing the easy grab-bag of headline topics for what truly has wide and significant impact. That often means searching for below-the-radar issues and developments to alert our readers ahead of the crowd, and provide them expert insight and data from both in-house staff and online studies. Take the current issue’s crop of five articles. Our lead report on the beauty business takes the universal quest for youth and looks, and turns it into a package of material with increasing bottom-line impact for the foreseeable future. After all, as Asia’s billions get richer, high on their spending list would be the products, procedures and services which enhance shape, skin, smile and style. Our Technology story on Facebook and Google may seem just another paean to today’s hottest ventures, riding on the news of the former’s public share offering and the latter’s new privacy rules. In fact, the article zeroes in on the lesser known gold mine in both these online behemoths: data mining. Sure, there are billions of dollars to be made in online ads. But the data gathering and crunching that tailors and channels messages for greatest sales impact — that's the real prize — and peril. Even after defining the strategic aspects of an issue or event, the work gets no easier, for the Internet now yields material in tons on any topic. The Corona impeachment coverage offers video clips, legal doccuments and commentary, plus blogs and tweets. For this week’s recap of the first five weeks, evidence and legal issues are the focus, for they are the starting point of the quest for justice. The digital piracy story is another that recent news has ignited a bit. But what’s newsy is often not what’s important. Our report tackles a question often taken for granted: What exactly does the country get from fighting piracy, besides pleasing Big Brother America? The same questioning of dominant Western perspectives animates the World Economic Forum roundup, culling the choice cuts most relevant to Asians from the rich buffet of big names and bigger ideas at the conference in Davos. That’s the cenSEI selection this week. We hope our choices engage, educate and edify. 

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The Big Business of Beauty
Our obsession with beauty translates into big bucks all over the world
By Marishka Noelle M. Cabrera

STRATEGY POINTS
Even while international firms continue to dominate and an emphasis on Western ideals persists, accommodating local standards will become increasingly important in order to compete in emerging markets
Since the time of the ancient Romans, Egyptians, and Greeks, mankind has put a premium on beauty, as evidenced by archeological finds that point to the use of cosmetics and perfumes thousands of years ago. Oftentimes, women would go through great pains to look attractive depending on what the ideals were at the time, e.g., the bygone practice of foot-binding in China. All this for the sake of beauty. Present-day Philippine society is no exception. The country’s beauty industry has shown steady growth over the years, in An article on the Cosmetic Business website, “Southeast Asia – strength in diversity,” cites Euromonitor International in reporting that all sectors of the local no small part because of the Filipino’s love of beauty. Judging from rows upon rows of skin creams, body wash, hair products, cosmetics, whitening lotions, supplements promising a leaner body or glowing skin, and perfumes in retail stores, together with the proliferation of hair and nail salons, spas, and aesthetic clinics in almost every nook and cranny of the city, the local industry is thriving.

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cosmetic industry posted growth from 2008 to 2009. Beauty and personal-care product sales totaled $2.26 billion, a 2% rise. Moreover, international firms dominate the local health and beauty landscape, with Avon, Colgate-Palmolive Co., Johnson & Johnson Inc., and Unilever leading the way. The article also reported that between January 2009 and January 2010, 511 new cosmetics products were launched in the Philippines, according to market research group Mintel, with the highest number of products (176) being in skin care, followed by soap and bath products (131) and hair products (108). Because of tight competition from global brands, local company Splash Corporation targets market niches instead. According to its 2010 annual report as filed with the Securities & Exchange Commission, skin whitening and exfoliants remain the top revenue contributors. The company cites AC Nielsen in saying that Splash Corporation remains the leading local

personal-care company, fifth behind Unilever and Procter & Gamble. The globalization of beauty. Geoffrey G. Jones’ “Globalization and Beauty: A Historical and Firm Perspective” chronicles the history of the modern beauty industry from its 19th-century beginnings – when industrialization made mass production possible – to the multi-billiondollar (more than $330 billion in 2008) industry it is today – from a $2-billion industry dominated by Europe and the U.S. to a $330-billion industry where nonWestern countries (Japan, Brazil, Russia, India, and China) account for 33% of the market. In recent decades, the Isidor Straus Professor of Business History at Harvard Business School says, the sale of beauty products in both “emerging and transition markets has been phenomenal.” The markets of Brazil, Russia, India, and China themselves now account for about one-fifth of the entire beauty market.

SEEING POTENTIAL IN ASIA AND LATIN AMERICA
Global Beauty Market (today’s $ billion)

45% 29% 26% 32% 31% 22% 38% 14%

45% 56% 57%
9 15

13% 57 19% 330

Source: “The Evolution of the Global Beauty Industry,” a presentation by Geoffrey Jones at the Universidade Nova de Lisboa

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It should be noted, nonetheless, that while globalization has greatly contributed to the homogenization of beauty ideals and practices, local standards for beauty and practices remain resilient, according to Jones. “Certainly, as trends in cosmetic surgery illustrate, the legacy of the first wave of globalization and its emphasis on the Western beauty ideal, persists. But the leading firms in the beauty industry certainly now find themselves struggling with the challenge of how to respond to consumers who require increasingly nuanced mixtures of the global and the local in the brands they buy,” he explains. Asia and Latin America to dominate cosmetics sales by 2015? “The Global Post-Recession Beauty Industry: A Survival Guide,” a presentation by Carrie Lennard of Euromonitor International, discusses the recent performance of the industry and its prospects. It is predicted that Asia and Latin America will dominate beauty and personal care sales by 2015, as shown in the chart below. Mass cosmetics, meanwhile, will drive future growth as the share of global premium cosmetics declines, as shown in the following chart. In a nutshell, firms now have to garner a profound understanding of the rituals and behavior of a particular culture like that of Asians if they want to be relevant in the market. “A deep and lasting engagement with the Asian consumer in beauty will require a fundamentally broadened notion of its value and its role across the world,” according to Nazia Hussain, in her report, “Not just a pretty face: the cultural concepts of beauty in Asia.” Hussain, who is Director of Cultural Strategy at advertising giant Ogilvy & Mather, observes that while Westernized ideals of beauty have been exported wholesale to other parts of the world over the last few decades in recent history, global brands and companies now understand they need to “connect more empathetically with the cultural traditions that pre-dated their arrival, and as consumers themselves begin to demand

THE BILLION-DOLLAR MARKET
Asia and Latin America to Dominate Beauty and Persona Care Sales by 2015

M

Sales in US$ billion Source: “The Global Post-Recession Beauty Industry: A Survival Guide,” presentation by Carrie Lennard, Euromonitor International, April 2011, in London Source: “The Global

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notions of beauty that are closer in essence to their needs and values.” According to Hussain, ideals of beauty and femininity in Asia have developed differently from those in Europe and America, for a variety of socio-political and historical reasons. Even if feminism was an issue that struck a chord around the world, in Asia, “beauty was never deliberately forced into a narrative of emancipation.” The Asian concept of beauty, for instance, celebrates “very feminine physical beauty” and “both external beauty and internal worth being seen as equally valid and necessary parts of being a whole woman.” The Western concept of beauty, meanwhile, has been wrapped in a philosophical and moral debate over whether physical beauty is an indication of spiritual beauty, and conversely, whether ugliness was “a sign of the bad, mad and the dangerous.” The pressure to be beautiful is more intense. In any case, the pressure to be beautiful and look younger appears to be more intense than ever. Last year, Vogue

Trends in the beauty industry
As in fashion, beauty fads come and go. But here are some deeper trends that will be shaping the industry in the near future. • Mass cosmetics Cosmetic companies, Carrie Lennard says in her article in Skin Inc., will be focusing more on the mass market, as in Latin America and even in premium-dominated markets like Japan. There is a growing perception that mass cosmetics can offer similar quality as their high-end counterparts. • Au Naturel A shift toward the natural and organic can be observed with the rise of natural personal care product sales. The Brazilian market for these products, Natural Cosmetic News reports, “has ballooned at a 20% compound average growth rate (CAGR) since 2005.” Asia will remain a large market for such products because of the continent’s tradition and belief in natural remedies. • Teen and tween crowd In a new study by market intelligence firm, Mintel, 61% of girls aged 9-11 “would like to wear makeup more than their parents allow.” Kat Fay, Mintel’s senior beauty analyst suggests, “In order to attract this group and get support from parents, products must be subtle in appearance and emphasize that ingredients are safe for young skin...” • China In an article in Women’s Wear Daily, more and more brands are turning their attention to China and creating products specifically for the Chinese consumer because of the wealth of potential in the country’s lesser-developed and youth-oriented markets.

MASS COSMETICS DRIVE GROWTH

Post-Recession Beauty Industry: A Survival Guide,” presentation by Carrie Lennard, Euromonitor International, April 2011, in London

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Paris came under fire for its fashion editorial featuring 10-year-old French model Thylane Loubry Blondeau striking poses normally reserved for much older models. “We’re perpetuating a cradle-tograve expectation of hotness,” an article from Time reads. The pressure to be physically attractive, the article argues, is “starting earlier and lasting longer.” All too often, the media reinforces a certain standard of beauty by bombarding audiences with images of, say, the pretty, svelte, and young girl with lush hair and smooth skin who seems to have it all. “By presenting an ideal difficult to achieve and maintain, the cosmetic and diet product industries are assured of growth and profits,” argues the Canada-based Media Awareness Network in the article, “Beauty and Body Image in the Media.” Thus, it is no accident, the article posits, that youth and thinness are propagated as the essential criteria for beauty, since few can attain them. Interestingly, merely looking at advertisements can make a woman feel worse about herself, as The New York Times reports. Featured in the report is a study published in The Journal of Consumer Research, “The SelfActivation Effect of Advertisements: Ads Can Affect Whether and How Consumers Think About the Self.” It says that when products are placed in an advertisement context, they can become more desirable, and can, thus, “exert self-evaluative effects on consumers.” Culled from the study, the report notes a deflated sense of self could “lead to lower buying intentions” or it may also be the “true basis for ‘shopping therapy.’”

Going under the knife: A look at cosmetic surgery procedures
Based on the survey by the International Society of Aesthetic Plastic Surgery, the top surgical and nonsurgical procedures performed across the globe include: - Lipoplasty or liposuction is the number one surgical procedure in the world. It “slims and reshapes specific areas of the body by removing excess fat deposits,” according to the American Society of Plastic Surgeons. - Breast augmentation. Though one of the most popular cosmetic surgeries, breast augmentation is not without at least a dozen possible complications. The U.S. Food and Drug Administration lists breast pain, sagging, uneven appearance, hematoma or the collection of blood near the surgical site, and seroma or the collection of fluid around the implant as among the adverse effects that can occur in “one percent or more of patients at any time after breast implant surgery.” - Blepharoplasty is the “surgical modification of the eyelid” and is a common among Asians. CNN follows a patient’s journey in getting the eyes she has always wanted. - Buttock augmentation. In 2009, doctor-to-the-stars Dr. Vicki Belo faced raps (and was acquitted) over a hydrogel butt augmentation procedure on a patient that led to an infection. Buttock augmentation involves using silicone implants or fat from the patient’s body. - Botox is injected into an area in order to relax the contraction of the muscle, thereby minimizing the appearance of wrinkles. Singer Charice Pempengco reportedly got Botox injections before her 2010 debut on the teen series “Glee.” - Laser-assisted Lipoplasty. To get her knockout figure, Maria Geraldine “Jinkee” Pacquiao, wife of world champion boxer and Congressman Emmanuel “Manny” Pacquiao, underwent, among other procedures, laserassisted liposuction, a non-surgical procedure, which “melts unwanted fat before it is taken out of the body,” according to an ABS-CBN report.

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And so it goes, beauty is both a blessing and a curse. The beauty industry thrives and grows at a steady pace because of mankind’s obsession with beauty and the societal pressure that goes with it. For consumers, beauty-enhancing products and treatments are the answer to their prayers, and companies are more than willing to oblige. On the flip side, the endless quest for an unattainable ideal has led to depression, eating disorders, low self-esteem, and even Body dysmorphic disorder, a mental illness wherein the patient is overly concerned with body image, manifested by a preoccupation with a perceived defect in his/her physical attributes. The economics of being pretty. Then again, the quest for beauty may be as much about economics as about vanity. In a report from 20|20 Skills, the human resources assessment firm suggests that physically attractive people generally receive more benefits—getting hired, earning more, persuading others—than less attractive people. “The natural tendency to ascribe all sorts of positive traits to beautiful people also means that we give them more breaks in life,” the report notes. Moreover, a Newsweek poll (under the direction of Princeton Survey Research Associates International) indicates that 64% of Americans regard physical appearance as essential in their “ability to get ahead in the workplace.” Americans also rate “appearance somewhat higher as a factor in landing a job,” while 78% say that “very overweight people have a harder time getting ahead at work.” Meanwhile, a 2002 article from Time, “Changing Faces,” tells of the life-changing

procedures individuals from Asia had to undergo to land a job, keep a job, or find confidence. In Asia’s booming cosmetic surgery market, getting liposuction, breast implants, nose jobs, blepharoplasty, a procedure in which “a crease is created above the eye by scalpel or by needle and thread,” and “lifts” are increasingly becoming commonplace. And with tight competition, workers can only set themselves apart by looking more attractive. Moreover, the article says, “The culturally loaded issue today is the number of Asians looking to remake themselves to look more Caucasian.” Thanks to the bombardment of images of Hollywood celebrities and gorgeous supermodels from the West, the region’s aesthetic ideals are shifting. “Asians are increasingly asking their surgeons for wider eyes, longer noses and fuller breasts, features not typical of the race,” the article notes. In a survey conducted by the International Society of Aesthetic Plastic Surgery, Asia ranked number one in terms of the number of surgeons and procedures performed in 2010, with over 9,512 plastic surgeons and over 5.8 million procedures. North America ranked number two, followed by Europe and South America. The United States, however, has the most number of plastic surgeons and procedures performed, with Brazil and China trailing behind.

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The big business of beauty

All the President’s women
Before dating radio and TV personality Grace Lee, these beauties caught the eye of President Benigno Aquino III. Does the president stick to a particular type? You be the judge. 1. Korina Sanchez According to Spot.ph, the romance with Korina, married to Sec. Mar Roxas since 2010, must have happened between the late 1980s to early 1990s. 2. Barbara Milano Unknown to many, this sexy actress dated Aquino during one election.
Grace Lee

The potential in beauty. According to Geoffrey Jones, “Beauty emerges as an industry which was easy to enter, but hard to succeed at.” In a Q&A for Harvard Business School’s Working Knowledge, Jones explained that in entering the beauty business, not “a great deal” of capital and technological know-how is needed. Being a highly competitive industry, one must have “high levels of imagination and creativity” and the ability to adapt quickly to fast-changing trends in order to succeed in the business. As with most businesses these days, innovation is vital in capturing the discerning consumer. Lennard suggests the use of online marketing (increasing online presence, blog or “vlog” (video blog) sponsorships, beauty apps, and infomercials) and enriching in-store customer experience. Opportunities for both new and existing markets in this continually evolving industry will emerge. New players are most welcome, given the industry’s low barrier to entry. In Inc.com’s Best Industries for Starting a Business 2011, the beauty industry, which includes barbers, cosmetology schools, and nail salons, was among the 17 most promising industries that year, along with online dating and matchmaking, real estate appraisal, language schools, environmental consulting, and financial planning, advice, and investment. Call it a blessing or a curse, or both, and regardless of whether we’re discussing Western ideals or local standards, beauty has become big business all over the world.

3. Bernadette Sembrano The broadcast journalist admitted she and Aquino broke up because they were “too Korina Sanchez busy” with their careers. 4. Shalani Soledad Newly married to Pasig Representative Roman Romulo, the Valenzuela councilor started dating Aquino in 2008. The couple broke up sometime in 2010, the year he became president. 5. Liz Uy Aquino confessed to dating the fashion stylist in late 2010. 6. Bunny Calica The two were spotted at the Hotdog reunion concert in May 2011.

Barbara Milano

Bernadette Sembrano

Bunny Calica

Liz Uy

Shalani Soledad

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NEWS ON THE NET
Business
Samsung boss sued by brother over father's inheritance
Samsung group chairman Lee Kun-Hee, 70, is being sued by his brother over a multi-million dollar dispute involving the inheritance of eight million company shares in Samsung Life Insurance and 20 shares in Samsung Electronics, all from their father. The 80 year old brother, Lee Maeng-Hee, is accusing his brother of keeping the shares for himself, and is asking for 700 billion Korean won ($623 million). Samsung has released a statement, stating that "this is a civil suit and therefore the company has no official comment." Lee Kyun-Hee became chairman of the Samsung group in 1987, the year their father and the company's founder died. However, he resigned in disgrace in April 2008 in the midst of a tax evasion and breach of trust scandal. Though he was convicted of the tax charges, a presidential pardon in 2009 had him back to work leading Samsung in 2010. million) over the last nine months of 2011. In comparison, Olympus had posted a profit of 5.84 billion yen over the same time period in 2010. The company has admitted to hiding losses of $1.7 billion for as long as 20 years. Olympus is preparing to question former board members in April, in connection with accounting irregularities former chief executive Michael Woodford uncovered and made public last year. The scandal has caused the company's share prices to fall by almost 50% in October 2011; and a full scale investigation to be mounted by a rare joint venture by Tokyo prosecutors, police and financial regulators. This resulted in raids of 20 sites, starting with Olympus subsidiary office buildings in December 2011. will also make it possible for the stored value cards to be used for other services and purchases aside from train rides. “We will bid out a Common Ticketing System Project, a design-build-operate-and-maintain project, under the BOT (Build Operate Transfer) Law. The official invitation to bid will happen before the middle of the year,” DOTC Secretary Manuel Roxas said to reporters during a briefing.

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DTI sees surge in shipbuilding
Shipbuilding is among the industries being eyed by the Department of Trade and Industry (DTI) to potentially boost exports and economic growth. Two of the major shipbuilders in the country, Tsuneishi and Hanjin, are said to be looking into further expansion of their operations locally. In conjunction with this, the government is aiming to promote shipbuilding industry investments and focusing on the Japanese and Korean markets. As a result, investments in this industry are expected to grow to P93 billion by 2014. Shipbuilding in the Philippines, along with other export winners -- the BPO industry, tourism, electronics, agribusiness, minerals, motor vehicle parts, garment and furniture -- is where the DTI is pinning its expectations to hopefully double exports to $120 billion by 2016.

DOTC to bid single ticket system
As part of the agency's big push for its transport programs this 2012, and in line with President Aquino's "Matuwid na Daan" program, the Department of Transportation and Communications (DOTC) has stated that it would bid out a single ticketing system connected to an e-banking component for the mass rail transit systems of Metro manila. The project will eventually make it easier for commuters to use the Light Rail Transit Line 1 and 2, and the Metro Rail Transit Line 3. The e-banking component

Olympus reports $426-million loss
Japanese camera and medical device giant Olympus reported a loss of 33.09 billion yen ($426

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Digital Pirate Nation
Pirated movies, music, and software are cheap, but they will still cost the Philippines big
By Joanne Angela B. Marzan

STRATEGY POINTS
The Philippine movie industry loses ₧3 billion in revenues annually due to piracy while music piracy accounts for 10%-15% of total piracy in the country Internet piracy is on the upswing and is emerging as the biggest contributor to piracy, at the same time that it threatens even the conventional digital pirates

Gone are the days when one had to go to the cinema in order to watch the latest movies of cinema royalty, e.g., the late Fernando Poe, Jr., Dolphy, Nora Aunor, Vilma Santos, and Sharon Cuneta. Nowadays, if you look hard enough, you can probably find some of their films online, alongside the latest features of John Lloyd Cruz, Anne Curtis, and Vice Ganda, and enjoy them in the confines of your own homes, and for less than the cost of a trip to the moviehouse. The moviegoing public has film pirates to thank for their bounty while the local film industry picks up a tab that includes more than the cost of producing the films in the first place. A ‘dying’ local film industry. If one gauges the health of the local movie industry on the basis of the number of local movies shown every year, then the Philippine movie industry is “dying.” According to the February 14 column “Statistically Speaking,” by National Statistics Coordinating Board (NSCB)

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LOCAL FILMS SHOWN IN THE PHILIPPINES BY DECADE
Number of Local Films Shown in the Philippines by Decade
YEAR 1960-1969 1970-1979 1980-1989 1990-1999 2000-2009 NUMBER OF FILMS 1,490 1,657 1,427 1,366 732 PERCENTAGE 22.3 24.8 21.4 20.5 11.0
Source: National Statistics Coordinating Board

Secretary General Dr. Romulo A. Virola, an NSCB study shows a significant decline in the number of local films shown in the country since 2000, as shown in the table below. “(D)uring the past decade, only 732 local films were shown for an average of 73 films per year, half the average in the preceding four decades, ” Virola observed. Furthermore, NSCB statistical coordination officer Gerald Clarino, in a February 15 Agence France Presse (AFP) article posted on the MSN Philippines website said, “There are many factors causing the fall. There is piracy and competition from foreign movies. Local movies are also not given as much support from the public.” In a June 2011 BusinessWorld online report, Motion Picture Anti-Film Piracy Council President Dominic Y. Du said that the industry loses P3 billion in revenues every year due to piracy. “Piracy has an unlimited effect. Not only does it affect the producers, but more so, artists, technical people and workers of the industry,” he continued.

“Piracy has crippled our industry to a point that most of the players have already stopped their businesses due to losses,” Philippine Motion Pictures Producers Association President Orlando Ilacad said, in a May 2010 press release lauding the enactment of an anti-camcording law. Piracy hits the local music industry hard. Philippine Association of the Record Industry (PARI) Chairman Anabelle R. Borja said that music piracy accounts for 10% to 15% of total piracy in the country. According to Danny Yson’s sprawling “The Recording Industry at a Glance,” as posted on the PARI website in January 2010, from P400 million in sales in 1990, the local music business became a P2-billion industry, before music piracy “choked it to near collapse” starting in 2000, when sales dropped by 25%. In 2001, sales dropped by another 42.5% because of piracy, and at least 30 big music outlets in Metro Manila, Cebu, Davao, Iloilo and Cagayan de Oro closed shop “because

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pirate vendors were selling pirate CDs right beside or in front of them.” According to him, the music piracy business itself is a P1-billion industry now. Yson also reported that pirated materials reach the country through Mindanao while some are manufactured locally. “It is also estimated that around 50% of pirate CDs and VCDs enter the backdoor through General Santos City and Osamis City, where even now rice and sugar are smuggled and flood the South, an open secret in Mindanao. The other 50% are locally manufactured mostly in Luzon,” he elaborated. In addition, the availability of cheap VCD, CD, mp3 and Playstation players, beginning in 2000, also contributed to the further proliferation of piracy in the country. Internet piracy on the rise. About the only threat to film and audio-compact-disc counterfeiters these days seems to be Internet piracy. With the prevalence of new technology, anyone who

Camcording not as much fun in the Philippines anymore
In a December 28 abs-cbnnews.com report, the Makati Philippine National Police apprehended one James Ong for allegedly recording the local film Panday 2 inside a movie theater in Makati using a pair of sunglasses with a built-in camera. Ong denied that allegation saying that the sunglasses were only for protecting his eyes. But under Republic Act 10088, the Anti-Camcording Act of 2010, mere possession of a camcording device in a movie theater is already considered an offense. For his part, senior vice president for Content Protection and Chief Operations of the Motion Picture Association of America Michael Robinson stressed the significance of the passage of anti-camcording legislation in the country, as reported in an August 2010 Manila Bulletin news story. “This is an important law not only to the Philippines but for the entire film industry around the world... This law sends an important message that says the Philippines is serious about protecting intellectual property,” he said. According to Robinson, based on 2009 figures, 90% of pirated films were due to camcording, 9% of which were camcorded in Southeast Asia but mostly from theaters in the Philippines. “Movies which have been camcorded in the Philippines have been forensically matched to copies of the film that we have found in virtually every country of the world. We found them in North America, in South America, Europe and Africa,” added Robinson. According to the 2011 report of the International Intellectual Property Alliance, based on 2010 data, 20 (19 video and one audio) camcorded materials found in other countries were “forensically matched to the Philippines.”

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The rise and fall of file-sharing websites
According to the October 27 article Limewire, Napster, The Pirate Bay: A brief history of file sharing, found on geek.com, Napster started the file-sharing revolution in 1999. History.com called Napster a “music-fans utopia- a world in which nearly every song ever recorded was instantly available on your home computerfor free.” This free-for-all mechanism of sharing copyrighted music via the Internet caught the ire of the Recording Industry Association of America, resulting in the filing of a lawsuit against Napster, which caused the demise of the “music-fans utopia” only two years after its launch. Napster was relaunched as a legitimate music subscription website, but failed to attract users. In 2002, Napster filed for bankruptcy. By this time, however, alternatives to Napster were already available. In 2000, file-sharing websites Gnutella and Limewire were launched, followed by Kazaa in 2001. In the same year, BitTorrent became available and made The Pirate Bay and Isohunt household names for pirates. In 2006, Kazaa was ordered to pay $100 million in damages to the record industry and was relaunched as a legitimate service. In 2010, Limewire also closed down after an injunction from a U.S. court.

has a computer and an Internet connection can now download copyrighted material for free. In a September 7 Manila Standard Today online report, then-Optical Media Board Acting Executive Director Cyrus Paul Valenzuela said Internet piracy has resulted in the drop in demand for pirated DVDs. According to Valenzuela, Filipinos now choose downloading over buying pirated DVDs. “People now would rather download movies from the Internet, using their media players, rather than buy pirated DVDs,” he asserted. According to the 2011 International Intellectual Property Alliance (IIPA) Report, “Internet piracy has worsened in the country and should be dealt with as a high priority by the Philippine Government.”

IIPA blames the upsurge of Internet users in the Philippines as well as the availability of affordable broadband connections for the increase in Internet piracy. On the Watch List since 2006. Amid the backdrop of local digital piracy, the Philippines made the United States Trade Representative (USTR) Watch List for 2011, its sixth straight year on the list. This is something of a letdown, considering that in the 2011 Special 301 Report, prepared by the USTR, the passage of Republic Act 10088, or the AntiCamcording Act of 2010, was listed as one of the positive developments in the global fight against Intellectual Property Rights protection. “The United States recognizes that in 2010 the Philippines took the important step of enacting legislation to address

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unauthorized camcording of motion pictures in theaters and encourages the Philippines to enforce this new law effectively in order to deter the theft of motion pictures,” the 2011 Special 301 report said. Unfortunately, the continued proliferation of “pirated and counterfeit goods” in the Philippines resulted in the country’s unchanged status. The Philippines has been on the USTR Watch List since the first Special 301 Report in 1989. The Knowledge Ecology International website has a complete catalogue of USTR’s Special 301 Reports since the first release in 1989. Quiapo tagged ‘Notorious Market.’ According to the November 2011 Out of Cycle Review of Notorious Markets, Quiapo Shopping District in Manila is the best place to find pirated merchandise in the country. Quiapo has consistently landed a spot in the notorious markets list since 2007. The list of Notorious Markets is compiled annually by USTR and includes physical markets that sell pirated materials as well

Watch list and priority watch list status
Based on IT Law Wiki, countries under Watch List have “intellectual property protection inadequacies that are less severe than those on the Priority Watch List, but still attract U.S. attention.” On the other hand, countries are placed under Priority Watch List “when the country lacks proper intellectual property protection and has a market of significant U.S. interest” and “those whose acts, policies, and practices warrant concern,” the page added. Based on Annex 1 of the aforementioned USTR 2011 Special 301 Report, sanctions may be given to a country placed under USTR’s priority watch list or watch list category. “Additionally, under Section 306, USTR monitors a trading partner’s compliance with measures that are the basis for resolving an investigation under Section 301. USTR may apply sanctions if a country fails to satisfactorily implement such measures,” the report said. “If the USTR finds we are not doing well and there is not enough effort to combat piracy we would be placed in the priority watchlist. This has serious effects, in terms of general systems references, trade perks and benefits enjoyed by exporters, particularly on tariffs,” Allan Gepty, deputy director general of Intellectual Property Philippines added in a September 7 Manila Bulletin article. The 2011 list includes 12 trading partners of the United States under its Priority Watch List while another 29 countries, including the Philippines, are under the Watch List category. Priority Watch List: Algeria, Argentina, Canada, Chile, China, India, Israel, Indonesia, Pakistan, Russia, Thailand, Venezuela. Watch List: Belarus, Bolivia, Brazil, Brunei, Colombia, Costa Rica, Dominican Republic, Ecuador, Egypt, Finland, Greece, Guatemala, Italy, Jamaica, Kuwait, Lebanon, Malaysia, Mexico, Norway, Peru, Philippines, Romania, Spain, Tajikistan, Turkey, Turkmenistan, Ukraine, Uzbekistan, Vietnam.

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as websites that illegally sell or distribute for free copyrighted materials.

“Quiapo is just one example of several locations and neighborhoods, especially in Pirated DVDs selling like hotcakes TCR photo metropolitan In the Manila, known 2010 IIPA to deal in counterfeit and pirated goods report, the coalition again urged the such as clothing, shoes, watches, handbags, U.S. government to downgrade the trade and software,” the report said. standing of the Philippines due to the “continuing, and mounting, problems faced In 2008, Binondo, Greenhills, Makati by other copyright industries,” even as it Cinema Square, and Metrowalk were acknowledged the country’s efforts also identified as notorious markets against software piracy. in the country. The 2011 IIPA report cited above echoes IIPA weighs in. If it had been up to the same recommendation, and said that the International Intellectual Property the government has failed to accomplish Alliance, however, the Philippines should the following: 1. Prosecute a case under have been put back on the Priority Watch the Anti-Camcording Act; 2. Lower List in 2009. The Philippines was already Internet-based violations; and 3. Conduct on USTR’s Priority Watch List in 1992 and unannounced inspections on all optical disc from the years 2001 until 2005. plants and CD-R burning operations. Cited as reason for the recommended downgrade was the perceived escalating piracy problem in the country, beginning in 2009. “In general, the piracy situation in the Philippines worsened in 2008. In addition to physical piracy (CDs, DVDs, CDROMs, photocopies and book reprints), the legitimate market for foreign and local Philippine copyright material was decimated by Internet piracy (mainly Furthermore, IIPA also recommended that the Philippine government take a “proactive approach” when dealing with the Internet piracy problem. “A proactive approach including takedowns and blocking of sites engaged in blatant and serious piracy activities should be employed, and action must be taken against commercial pirates who advertise hard goods or downloading onto devices,” the report said.

peer-topeer), mobile device piracy, camcording piracy, retail piracy, optical disc production, and pay TV theft,” the 2009 IIPA report said.

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Local version of SOPA? Meanwhile, in a January 20 article posted on InterAksyon.com Universal Records executive vice-president Ramon Chuaying said that the local music, film and software industries are urging legislators to pass a local version of U.S.’ Stop Online Piracy Act (SOPA) or the Protect Intellectual Property Act (PIPA). “We are lobbying for Congress to pass an Internet piracy bill, quite similar to US and some parts of Europe. In other words, if this law passes, we can require the Internet [service] provider to block off websites hosting illegal content,” Chuaying said. According to him, lawmakers supporting such a bill include Cagayan de Oro Representative Rufus Rodriguez and Senators Edgardo Angara and Loren Legarda. Senator Legarda has also called for the passage of Senate Bill 2628, which would amend the provisions of Republic Act No. 8293 or the Intellectual Property Code of the Philippines, which up to now, did not include the protection of copyrighted materials published in the Internet. “In this modern age when the Internet has become a necessity to access, send, spread, download and upload almost all kinds of information, the protection from piracy of copyrighted data and other literary and artistic works has become more challenging,” Legarda said in a January 23 Manila Bulletin report. Government to blame? According to the 2009 paper, Why Intellectual Property Rights Infringement Remains Entrenched in the Philippines, written by

SOPA and PIPA and the Web blackout
On January 20, the U.S. Congress postponed voting on two controversial anti-Internet piracy bills: Stop Online Piracy Act (SOPA) of the U.S. House of Representatives and the Protect Intellectual Property Act (PIPA) of the U.S. Senate. This development came on the heels of a January 18 Web blackout participated by a thousand websites, including, most notably, online encyclopedia Wikipedia and news-sharing website Reddit.

For its part, Google posted a black bar across its logo on its search homepage (below left), while Mozilla turned its website black and posted “stop censorship” on its search homepage logo (below right).

“Wednesday, January 18th was a big day for the Web. Americans stood up in opposition to PIPA and SOPA – bills that would censor the Web and impose harmful regulations on U.S. businesses,” Google posted on its website. According to a January 19 Huffington Post article, the House version, SOPA, and its Senate counterpart, PIPA, would “allow copyright holders and the Justice Department to seek court orders against websites associated with copyright infringement,” be they domestic or foreign. In addition, a court order can be issued even without a trial, and once the court order is issued, the entire website would be shut down. Texas Representative Lamar S. Smith introduced the House version while the Senate version’s principal author is Senator Patrick Leahy of Vermont.

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Andrew Jaynes in November 2009, one of the reasons why copyright infringement remains a problem in the Philippines is because IPR protection and enforcement are not priorities by the Philippine government. “For a variety of reasons, the political will necessary to address IPR infringement effectively does not exist. People in power either do not understand or respect IPR, believe the resources would be better spent on other, more pressing, issues such as poverty or education, or fear that stronger IPR protection and enforcement would jeopardize their wealth and influence,” the paper said. Incidentally, when President Benigno Aquino III was asked about a widely publicized incident involving Presidential Adviser on Political Affairs Ronald Llamas getting caught on camera purchasing pirated DVDs, he downplayed the encounter. “That DVD (piracy) is perhaps somewhere below in our priority list. We have so many other problems like the spiraling prices of oil and the tensions in Iran,” Aquino told TV5 in a January 25 report. Presidential spokesperson Edwin Lacierda clarified in a January 27 Tempo article that the president’s statement “was not with respect to the fight against intellectual piracy.” “No one should have any doubt that this administration is committed to upholding the law and international commitments to protect intellectual property rights. The Optical Media Board (OMB) and other agencies tasked with implementing our

laws and regulations in this regard have been active,“ Lacierda added. Cheapest alternative, or something else going on? Does local piracy persist because it’s the cheapest and most convenient alternative? (A pirated DVD containing one movie cost around P35 while a DVD sampler composed of eight movies in one DVD cost around P85. Downloading, on the other hand, does not cost a single centavo and is relatively simple to do.)

UP Dean of the College of Mass Communications and professor of Film Rolando B. Tolentino, in his sociopolitical blog post Media Piracy and Philippine Cosmopolitanisms, seems to support the idea that the low cost of pirated products is a factor for its popularity, especially among the poor. “Movie-going used to be a popular national pastime, but its cost has skyrocketed to make it only accessible to the middle and upper class’ experience of leisure. The

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underclass will have to shell out one-third of their minimum daily wage in order to afford a movie ticket in a cinemaplex. As a result, the underclass relies on the DVD pirated market — complemented by the generic “made in China” or the pirated “choose-your-own brand” of DVD player— to gain access to global popular culture,” Tolentino says. He also regards local raids on mediapiracy hubs as symbolic of the dominance of big business and the private sector in even governance and public service, and observes that such raids have not shut down media piracy. According to him, “There are just too many of these smalltime businesses that the government and police, even the global brands, cannot fully control.” His conclusion: Media piracy businesses exist and proliferate primarily because of the middle-class demand for global cultural goods (an offshoot of neo-liberalism) and of the highly numerous small-venture businesses involved in this trade. Just no legal alternative? Others say that people engage in piracy because there is just no legal alternative. “Some users acquire digital content illegally because comparable content is not available by legal means,” according to the 2009 paper, Steal These Policies: Strategies for Reducing Digital Piracy by Daniel Castro, Richard Bennett and Scott Andes, as published on the Information Technology & Innovation Foundation website. The paper added that “pirated content is particularly appealing for people who are seeking sources of entertainment that are not available where they live in licensed and legal forms.” It cited British and American television series that have become very popular around the world but are not licensed for distribution in other countries. Also according to the paper, there is a market for selling copyrighted content legally online and that producers should take notice of “new patterns of consumption” and “capitalize on the revenue opportunities they offer.” “For example, once music was easily available legally online, through stores such as iTunes or Amazon, it became much easier for many consumers to buy music rather than steal it. Although most music is widely available online for free, purchases of digital music continue to grow—as of the first half of 2009, paid digital down- loads accounted for 35 percent of total music sales,” the paper added. Affordable way to access entertainment. Whatever the reason may be for the flourishing piracy industry in the country, whether it’s one or all of the reasons mentioned above, one thing is for sure: there is a huge demand for the newest movies, songs, games, and software in the country and piracy has allowed everyone, rich or poor, an easy and affordable way to access these entertainment. In the eyes of the producers and copyright owners, piracy has caused dwindling sales and income, shrinking their piece of the

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entertainment pie. But, in the eyes of the consumers, piracy has allowed them to enjoy the latest George Clooney movie, listen to the newest single of Adele, and relive Manny Pacquiao’s greatest fights, all in the comfort of their own home, in the company of family and friends. It’s cheap entertainment at its finest. Digital product – music and movies – is all over the place, and technology has brought the cost of reproduction, and the ubiquity of digital product has overwhelmed traditional distribution

channels. So how do you compete with zero, or failing that, how do you convince people to pay a little something to cover the costs of origination? Conversely, how do you reward or encourage distribution channels to offer wider product selections at stillreasonable prices? Until the copyright holders and media outlets figure out those efficient pricepoints and selection mixes, look for piracy to continue and flourish, and not just in the Philippines.

‘Piracy is the new radio’
Canadian singer-songwriter and rock music legend Neil Young created a little stir in January, when he said, in an interview, that “I look at the Internet as the new radio. … Piracy is the new radio. That’s how music gets around.” He actually made that statement in the context that he was actually more concerned about the low audio quality of mp3 files than the means of their distribution, but that statement overshadowed the context, and started up another discussion about piracy. On the gigaom site, Mathew Ingram says that comparing piracy to radio is a pretty smart way of looking at the issue, and reminds readers that radio was also regarded as a form of piracy in the days when the music business made money from live performances and record sales, until the music business learned to see it as a publicity engine for music. On the other hand, Matt Peckham, writing in Time’s Techland section, takes another view, saying that in what he called the “radio-as-radio” model, people still paid for music, whereas in the current “piracy-as-radio” model, whatever sales there might be of digital music haven’t been enough to cover the losses in sales of physical product. He cites a statistic from global market research firm NPD saying that U.S. consumers paid for only 37% of music acquired in 2009, and concludes that, “We may want information to be free, but that doesn’t mean it can be when we live in a world where so many take, and so few give back.” .
Mathew Ingram

Neil Young

Matt Peckham

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After 5 Weeks: 45 Titles, 10 Accounts and One ‘Small Lady’

The Corona impeachment trial tackles the accusation of undeclared wealth
By John Carlo Gil M. Sadian While it took 188 congressmen just hours to sign the eight Articles of Impeachment against Chief Justice Renato Corona, it has taken all of five weeks for their prosecution team of 11 representatives and more than 50 private lawyers to present their case on just one charge. And they’re not even finished yet. Upon adjournment on February 16, the trial was still stuck with the prosecution’s presentation of evidence for the Second Article alleging that Corona “committed culpable violation of the Constitution and/ or betrayed the public trust when he failed to disclose to the public his Statement of Assets, Liabilities, and Net worth (SALN) as required under Sec. 17, Art. XI of the 1987 Constitution.” Article XI, Section 17 of the Constitution stipulates: “A public officer or employee shall, upon assumption of office and as often thereafter as may be required by law, submit a declaration under oath of his assets, liabilities, and net worth. In the case of the President, the Vice-President, the Members of the Cabinet, the Congress, the Supreme Court, the Constitutional Commissions and other constitutional offices, and officers of the armed forces with general or flag rank, the declaration shall be disclosed to the public in the manner provided by law.” Thus, the issue in the Second Article is clear and simple: Whether or not the Chief Justice disclosed his SALN to the public as required by law.

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Issues in the Second Article. After The CenSEI Report’s exhaustive breakdown of the Impeachment Complaint and Corona’s Verified Answer, this recapitulation and analysis, far more extensive than most published reports, focuses on issues and findings relating to the Second Article, including relations between the Supreme Court and the impeachment court presided by Senate President Juan Ponce Enrile. Among major legal issues are: • Preliminary objections on the validity of the complaint. • Request to subpoena Corona and members of his family. • Sequence of presentation by the prosecution. • Failure to disclose SALNs and accumulation of ill-gotten wealth. • Discounted Bellagio and McKinley Hill properties. • Corona’s P11 million loan from Basa Guidote Enterprises, Inc. • Whether errors in the SALNs constitute an impeachable offense. • Discrepancies in Corona’s ITR. • Subpoena of Corona’s bank accounts. • Supreme Court restraining subpoena of dollar accounts. • Divided Senate recognizing the Supreme Court’s restraining order. The prosecution’s first order of business for the Second Article was to present as evidence Corona’s SALNs from 1992 to 2002, when he served under the Ramos and Arroyo Administrations; and for 2003-2011, during his incumbency as High Court magistrate. Although the allegation involves failure to disclose the SALNs, the evidence presented were the very Statements supposedly kept from public access.

After convincing the Senate to admit the SALNs as evidence, the prosecution turned to Corona’s allegedly undeclared or misdeclared assets, like posh condominium units titled in his name or those of his immediate family. Plus land titles and testimonies of registers of deeds in cities where properties were situated. Also subpoenaed were two bank accounts of the chief justice currently subject of a controversial Supreme Court ruling. Is the impeachment valid? At the outset, the defense pressed for outright dismissal of the impeachment complaint for insufficiency of substance and form, due to the prosecution’s “failure to comply with the requirement of verification.” Section 4, Rule 7 of the Rules of Court requires that a complaint be “verified by an affidavit that the affiant has read the pleading and that the allegations therein are true and correct of his knowledge and belief.” The assertion that the complaint was not read by most of the 188 congressmensignatories has basis in public admissions by some congressmen themselves. Rep. Rodolfo Farinas sarcastically admitted to the Senate that he did not sign because he was “not a speed-reader” as most of his colleagues were. Nonetheless, Senate President Enrile issued a ruling denying the defense panel’s motion for preliminary hearing regarding improper verification for “lack of merit.” No subpoena for Corona and his family. The prosecution asked the Senate to issue subpoenas against Chief Justice Corona, his wife Cristina, their children, and a son-in-law. Enrile ruled against it, noting: (1) Corona cannot be compelled to testify against himself (Section 17, Article III of the

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Constitution); (2) Cristina Corona may not Second Article of Impeachment. Lead be compelled to testify against her husband defense counsel Justice Serafin Cuevas under Section 22, Rule 130 of the Rules of objected, arguing that the defense prepared Court; (3) Corona’s children may not be for the First Article. Senate President Enrile compelled to testify against their parents adjourned the session to let the defense under Section prepare for 25, Rule 130 the Second of the Rules Article. The of Court; and court also (4) Corona’s adopted son-in-law is Senator Joker also covered Arroyo’s by parental suggestion and filial that the privilege by prosecution necessary disclose the implication.   order in Senator which they On Day 16 of the Impeachment trial, Senate President Alan Peter will tackle the Juan Ponce Enrile announced that the Senate has decided “to respect the temporary restraining order Cayetano eight Articles. issued by the Supreme Court in the case filed by objected the PSBank in so far as the foreign currency deposit to Enrile’s The next accounts are concerned” ABS-CBN video ruling and day, the called for prosecution a vote. listed the first Fourteen supported the ruling: Senate three articles they will tackle: (1) Article II President Pro Tempore Jinggoy Estrada, on Corona’s failure to disclose his SALNs; Senate Majority Floor Leader Vicente (2) Article I on Corona’s partiality and Sotto III, Senators Edgardo Angara, Joker subservience to the Arroyo Administration; Arroyo, Franklin Drilon, Francis Escudero, and (3) Article VII on the Supreme Court’s Gregorio Honasan, Ferdinand Marcos Jr., issuance of a temporary restraining order Panfilo Lacson, Lito Lapid, Sergio Osmena against Circular No. 41 of the Department III, Francis Pangilinan, Ralph Recto, and of Justice, which issued a watch-list order Ramon Revilla Jr. preventing former president Gloria Arroyo and her husband from traveling abroad. Six voted against it: Alan Peter Cayetano, Pia Cayetano, Aquilino Pimentel III, But on Day 8, Enrile granted the Teofisto Guingona III, Antonio Trillanes IV, prosecution’s request to further reorder the and Manuel Villar. sequence so that by Day 13, the prosecution already started presenting a witness in Sequence of charges. On Day 2, Rep. Article III in relation to the Supreme Elpidio Barzaga of the prosecution said Court’s recall of the PAL Flight he was ready to present evidence on the Attendants case.

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SALNs and ill-gotten wealth. On Day 3, the prosecution presented Atty. Enriqueta Esguerra-Vidal, Clerk-of-Court of the Supreme Court, who initially refused to surrender Corona’s 2003 to 2011 SALNs without prior clearance from the Court en banc. She later on surrendered them after Enrile ruled that there was no need for clearance, since the documents were subpoenaed by the Senate. Vidal testified that all justices of the Court submitted SALNs every year, and documents were kept in a filing cabinet that only she and the Deputy Clerk-of-Court can access. As to Corona’s SALNs for 1992-2002, the prosecution presented Malacañang Records Office chief Marianito Dimaandal, who surrendered the SALNs without defiance. On cross-examination by Justice Cuevas, he admitted that he cannot attest to the accuracy of the SALN contents. After the SALNs were admitted as evidence, the defense pointed out that while the Second Article only alleges failure to disclose the SALN, the prosecution tried to use the Statements to show that Corona violated the Anti-graft and Corrupt Practices Act (RA 3019) and accumulated of ill-gotten wealth. Enrile agreed and issued a ruling not to admit any evidence concerning paragraph 2.4 of the Second Article because it had improperly alleged ill-gotten wealth. Tax returns and the tax lady. The Senate subpoenaed Internal Revenue Commissioner Kim Henares to testify on the income tax returns (ITRs) of Corona and his family, to which the defense objected. Enrile agreed and stressed that the prosecution must first

show the connection of the ITRs to the Second Article. He also reminded the prosecution that their “buckshot approach” in requesting subpoenas for all pertinent records constitutes “fishing,” and that any request must be specificity. This reminder was repeated by Enrile on Day 11 after the prosecution sought to subpoena High Court documents. When the prosecution explained that the ITRs would show that the couple’s incomes cannot support their acquisition of expensive properties, Enrile pointed out that the trial dealt with Corona’s SALNs, and did not concern whatever Corona did before becoming Chief Justice. He added that the evidence to be presented must be those that show properties not declared in Corona’s SALNs.

Bellagio and McKinley Hill condos. On Day 8, the prosecution presented Megaworld finance director Giovanni Ng to prove that Corona failed to disclose in his 2009 SALN transactions involving properties in McKinley Hill and in The Bellagio Tower, both situated in Taguig. The witness produced the deed of absolute sale covering the P6.2-million McKinley

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property under the Pimentel III urged the Bank papers name of Corona’s prosecution to “let go” were presented daughter Charina. of the discount issue as with the proviso According to Ng, irrelevant to Article II. the transaction was Enrile explained that from Presiding paid for by the chief he allowed testimonies Senator-Judge justice and his wife, regarding the discount Enrile that they with a discount “out of liberality.” might not be of P2.3 million. Nonetheless, Hernandez Upon examination, revealed that Megaworld accepted as Ng revealed that actually lost cases in the evidence later Megaworld actually Supreme Court, with offers a 15% discount Corona voting against it. to clients who pay on shorter terms. There are also reductions Basa Guidote Enterprises loan. for damaged units. (Note that under Article On Day 10, the prosecution presented 1448 of the Civil Code, when property Securities and Exchange Commission purchased by a parent is titled in the name (SEC) director for company registration of a child, such property is disputably Benito Cataran to establish that the SEC presumed to be a gift.) revoked the articles of incorporation of Basa Guidote Enterprises Inc. (BGEI) in The next day Megaworld marketing 2003, a year before Corona declared in his executive Noli Hernandez confirmed a P52004 SALN an P11-million “cash advance” million price reduction for a P24-million from the firm. Rep. Reynaldo Umali argued Bellagio penthouse, because of typhoon that the loan was fictitious. “Because the damage and leaks. Hernandez added that corporation’s franchise has already been when Corona paid “almost in cash,” the dissolved or revoked,” he argued, “the only cost was further cut by around P3 million. action that can be taken being to liquidate, Responding to Senator Escudero’s query, wind up and distribute the shares.” That the witness admitted that despite the led some lawyer senators lecture on laws discounts, Megaworld still made “a little covering company dissolution. profit.” Senator Villar, himself a realtor, confirmed that developers grant huge Senate President Enrile explained that discounts for various reasons, noting that a BGEI’s dissolution is not its end because major developer cut prices by 40% last year. it still has to undergo liquidation. Senator Escudero added that after dissolution, The prosecution said the huge discounts incorporators become co-owners in an might have affected Corona’s independence association which can still do business. in cases involving Megaworld. But Senators Senator Alan Peter Cayetano said revocation Ferdinand Marcos Jr. and Pia Cayetano of BGEI’s license is irrelevant since a firm questioned the materiality of the discounts in dissolution can still lend money. Senator on the Second Article, which only alleges Angara agreed, stating that Cataran’s failure to disclose SALNs. Senator Aquilino testimony was “much ado about nothing,”

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and Senator Pia Cayetano added that it was a “futile exercise.” Are SALN errors impeachable? The standard SALN form has a column each for acquisition cost, fair market value, and assessed value. The prosecution claims that Corona’s failure to state acquisition costs in all his SALNs from 2002 to 2011 constitutes “false entries” amounting to “perjury” and the “highest betrayal of public trust.” When Enrile asked Rep. Barzaga whether he views perjury as a high crime, the prosecutor said he did not. Notably, under the rule of ejusdem generis, if the ground for impeachment is not among those listed under Section 2, Article XI of the Constitution, such ground must be a “high crime” similar to culpable violation of the Constitution, treason, bribery, or graft and corruption. Lead defense counsel Justice Cuevas admitted that the acquisition cost, fair market value, and assessed value all have to be stated in SALNs. But he said officials may make corrections after filing with no criminal liability for unintentional inaccuracies. Tax discrepancies. Commissioner Henares testified on Day 12 that after comparing SALNs, ITRs, and certificates authorizing registration, the Bureau of Internal Revenue presented a list of what BIR contended were “under-declarations” in Corona’s SALNs: 2002: Nine properties not in SALN 2003: Nine properties undeclared. The La Vista propert was valued at P3 million instead of P11 million; another

property worth ₧2.5 million was declared as ₧821,080. Corona’s net worth was ₧7 million when it should have been ₧14 million 2004: Same discrepancies noted. Plus: a Diliman, Quezon City, property was not included. Net worth was reported at ₧7 million instead of ₧21 million 2005: Same discrepancies as 2004. Declared net worth was ₧8.3 million when it should be ₧31.2 million 2007: Net worth should be ₧24 million, not ₧11 million declared 2008: Net worth should be ₧25 million, not P12 million declared 2009: Net worth should be ₧52 million with Bellagio property, not ₧14.5 million declared. It may be worth noting that there is no law empowering the BIR to assess the accuracy of SALNs, which are normally under the jurisdiction of an official’s agency, the Ombudsman, or a court if it is the subject of litigation.

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Corona’s bank accounts. After a lengthy debate on relevance to the Second Article, the Senate granted the prosecution’s request to subpoena Corona’s bank records in Philippine Savings Bank and Bank of the Philippine Islands, with a strong reminder from Senate President Enrile that the subpoenaed records would not necessarily be admitted as evidence since these are protected by the very strict Bank Secrecy Law (RA 1405) and Foreign Currency Deposit Act (RA 6426).

did not intend to deceive the Senate with fabricated evidence. Senator Santiago stressed that lawyers should not present papers from an unknown source without verification. She lambasted prosecutors: “If you bring this before any court, you will be cited for contempt!”

Meanwhile, upon questioning of Senator Legarda, Tiongson disclosed that she saw a document that looked like the fake bank record when Quezon City Rep. Jorge “Bolet” Banal approached her on January Asked by Senator Escudero how copies 31 — days before the “small lady” allegedly of bank records were attached to the handed papers to Umali. Banal, at the prosecution’s Senate last request Thursday, even before admitted they were approaching subpoenaed, Tiongson to Congressman ask about Umali said a “$700K” the copies was notation handed to him on a bank by a “small document lady” outside apparently   the Senate. named under When asked by the Senator Enrile on the authenticity But none of Renato of several bank documents presented by the prosecutors, PSBank branch manager Anabelle the security Corona. Tiongson revealed that “they’re fake documents. cameras in He claimed These did not come from our bank” ABS-CBN video the building he found it showed any inserted in lady giving documents to Umali. Later on, his gate the night before he saw Tiongson. when asked about the authenticity of the Banal was ordered to clarify this matter annexed papers, PSBank branch manager when the trial resumed on Feb. 20. Anabelle Tiongson said “they’re fake documents” and “did not come from [their] Supreme Court TRO on dollar bank.” accounts. On Day 14, PSBank president Pascual Garcia III appeared to testify The prosecution’s reliance on documents despite a pending PSBank petition in the purportedly from a “small lady” drew flak Supreme Court seeking a TRO against the from senators. Senate President Enrile Senate’s subpoena. Garcia testified about required the prosecution to prove they peso accounts, but not dollar deposits.

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His lawyers said the exemption from the Bank Secrecy Law in impeachment cases does not cover foreign currency accounts. Senator Drilon suggested that Garcia be cited in contempt, but Senate President Enrile instead ordered Garcia to submit a written explanation for his refusal. The next day the Supreme Court, presided by Senior Associate Justice Antonio Carpio, voted 8-5 to issue a temporary restraining order while the Court deliberates the case filed by PSBank against the subpoena. Favoring the TRO were Justices Teresita Leonardo-De Castro, Arturo Brion, Lucas Bersamin, Roberto Abad, Martin Villarama, Jose Perez, Jose Mendoza, and Bienvenido Reyes, an Aquino-appointee who was vice president of Aquino’s erstwhile security agency. Opposing the TRO were Justices Antonio Carpio, Diosdado Peralta, Mariano Del Castillo, Lourdes Sereno, and Estela Perlas-Bernabe. Chief Justice Corona and Justice Presbiterio Velasco inhibited. Justices Carpio and Sereno had earlier denied requests for them to inhibit due to alleged partiality against Corona. Notably, the House Committee on Justice just approved an impeachment complaint against del Castillo. Immediately after being told about the TRO, Senate President Enrile declared: “In deference to the Supreme Court, the interpreter of the Constitution and the guardian of our basic rights guaranteed by the Bill of Rights, this chair would suggest and recommend to this impeachment court and the two sides of the case and the panel to take heed.” Thus, he added, the

impeachment court and the parties must “discuss issues other than foreign currency deposits because of the presence of the TRO.”

DIVISION OF THE COURT

 
The magistrates who voted to issue a temporary restraining order against the opening of Corona’s dollar deposits in accordance with the Foreign Currency Deposit Act: (L-R top row) Associate Justices Teresita Leonardo-De Castro, Arturo Brion, Lucas Bersamin, Roberto Abad, (L-R second row) Martin Villarama, Jose Perez, Jose Mendoza, and Bienvenido Reyes. Note that Aquino-appointee Reyes, who served as vice president of President Aquino’s erstwhile security agency, was among those who voted in favor of the TRO. (Philippine Savings Bank and Pascual M. Garcia III vs. Senate Impeachment Court) Photos: Supreme Court

The magistrates who voted to deny the TRO: (L-R) Senior Associate Justice Antonio Carpio and Associate Justices Diosdado Peralta, Mariano Del Castillo, Lourdes Sereno, and Estela Perlas-Bernabe. Note that the House Committee on Justice recently voted to impeach Justice Del Castillo. (Philippine Savings Bank and Pascual M. Garcia III vs. Senate Impeachment Court) Photos: Supreme Court

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After 5 weeks: 45 titles, 10 accounts and one ‘small lady’

Divided Senate respects TRO. After a Until Day 19 on Feb. 17, Senate President morning caucus on Day 16, Senate President Enrile had repeatedly blocked attempts Enrile announced that senators voted 13-10 by the prosecution and some senators to to “respect the temporary restraining order question witnesses on dollar accounts. In issued by the Supreme Court in the case filed one of his most notable pronouncements by PSBank in so far as the foreign currency the presiding senator-judge, 88 on Feb. deposit accounts are concerned,” with a 14, declared that while it is his “humble reservation view that the that the Supreme Court impeachment cannot assume court is jurisdiction “prepared to over the sole argue its case power of the on the merits Senate to try and to defend and decide this the legal impeachment and public case,” it is policy basis still his “duty   underlying as presiding Explaining her vote against opening Corona’s dollar its ruling officer to accounts without the latter’s consent, Senator Miriam Defensor-Santiago asserted that “the impeachment about the said respect the court is not almighty, not absolute, not illimitable, and subpoenas.” Supreme not more supreme than the Supreme Court.” ANC video Court’s Senators who authority to voted to obey were Enrile, Arroyo, review acts of the impeachment court in Santiago, Escudero, Estrada, Honasan, interlocutory matters or how this court Legarda, Marcos, Pimentel, Recto, conducts trial.” Revilla, Sotto, and Villar. In explaining her vote to abide by the TRO, Senator Even as the trial wound its way through Santiago argued that the “impeachment legalities and pieces of evidence in the court is not almighty, not absolute, not Second Article, the word war between the illimitable, and not more supreme Palace and the Chief Justice escalated. than the Supreme Court.” Corona contended that President Aquino committed an impeachable offense in Those who voted to defy the TRO, under allegedly trying to influence senators to the view that impeachment is solely under defy the TRO. Days later Aquino blasted the Senate’s prerogative, were Angara, the magistrate in speech and slides at Alan Peter Cayetano, Pia Cayetano, the celebration of the 1986 People Power Drilon, Guingona, Lacson, Lapid, Osmena, uprising, prompting his adversary to Pangilinan, and Trillanes. question his mental state.

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NEWS ON THE NET
Nation
Estrada bats for amendment of foreign currency deposit law
Senator Jose “Jinggoy” Estrada filed Senate Bill 3120, proposing an amendment to Republic Act 6426 or the Foreign Currency Deposit System Act, wherein he seeks to add exceptions to the confidentiality clause of the law. He proposes that orders of an impeachment court or any other court on cases involving public officials charged with violation of Republic Act 3019, or the AntiGraft and Corrupt Practices Act, be added as exceptions. On Monday the Senate decided by a 13-10 vote to abide by the Supreme Court ruling on the petition of Philippine Savings Bank for a temporary restraining order on a subpoena for records of Chief Justice Renato Corona's dollar accounts. The Foreign Currency Deposit Act is strict about non-disclosure of bank account records without the consent of the depositor. However, the Department of Foreign Affairs refused to heed the Senate’s call to recall Carandang saying that they need to wait for the Argentinian government’s response to the Philippine protest. Filipino boxer Johnriel Casimero was attacked right after his victory in the boxing bout against Argentinian Luis Alberto Lazarte. Lazarte and the bout promoter, Osvaldo Rivero, reportedly went to Casimero's dressing room to apologize. Constitution and Section 8 of Republic Act 6713 or the Code of Conduct and Ethical Standards of Public Officials and Employees requires the submission under oath of their assets, liabilities and net worth.

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Aquino gov’t allocates P19.6B Lawmakers oppose for PPP new SALN format
The new format of the Statement of Assets Liabilities and Networth proves to be unacceptable for government officials and employees required to fill it up. Under the new SALN to be implemented by the Civil Service Commission, public officials and employees are now required to disclose the sources and amount of their gross income, personal and family expenses, and amount of total income tax paid. Reps. Rufus Rodriguez, Philip Pichay, and Danilo Suarez were among the lawmakers who registered their respective objections, which are based on grounds that it could violate basic personal rights protected by the Constitution and other laws. The SALN has been the center of public scrutiny following the allegations against Chief Justice Renato Corona that he failed to publicly disclose his own SALN. Section 17, Article XI of the 1987

Outraged senators demand recall of PHL envoy to Argentina after attack on boxer
The Philippine Senate has demanded that Philippine ambassador to Argentina Rey Carandang be recalled after an attack on a Filipino boxer following his victory over an Argentinian boxer in Buenos Aires.

The Aquino administration has allocated P19.6 billion in counterpart funds for its Public-Private Partnership (PPP) programs for 2012. Of the total amount, P8.6 billion is marked for PPP initiatives of the Department of Transportation and Communications, such as development programs for the Panglao Airport in Bohol, the Puerto Princesa Airport in Palawan, and the New Legazpi Airport in Albay, LRT Line 1 South Extension and Privatization and the DOTC Project Development Fund. The Departments of Education, Agriculture and Public Works will also receive funding for their respective PPP initiatives. President Aquino launched PPP through Executive Order No. 8 in his first year as chief executive. The Department of Budget and management has listed the “PPP” projects for 2012 as the Pre sident continues to achieve the goals of his medium-term development plan.

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The World According to Davos
Money, power, food, water, and other global concerns at the 2012 World Economic Forum
By Ricardo Saludo

Low temperatures and high-powered discussions mix in the Alpine resort enclave on January 25-29: Big names and even bigger ideas Photo: Switzerland-trips.com

STRATEGY POINTS
At the annual meeting, as Europe seeks help, Asia urges the 1997 crisis measures the West told it to take From financial contagion to volatile supplies and costs of edibles, top global risks will hurt the poor most In the struggle to buttress and reform systems and institutions, don’t forget people — they’re the key to recovery

Davos, Switzerland, in late January never conjures the warmth that normally spurs engaging exchange on all manner of interests. Yet yearly the snowbound canton nestled in the towering Alps hosts global leaders of government, politics, business, society and culture in a week of speeches, panel discussions, networking, and other interaction known as the World Economic Forum. This year’s WEF gabfest on January 25-29 ranged across such topics as “Prospects for Peace in the New Middle East Context” and “People Power” to the economic outlook for East Asia, America and Europe. Plus: “The Future of Democracy” moderated by the American news agency Associated Press. The Forum also launched the Partnership for Cyber-Resilience, a multinational effort to address growing risks and threats to the world’s information and communications technology (ICT) infrastructure. Among the bigwigs in town over the five days were Singapore Prime Minister Lee Hsien Loong, who spoke about Asia and America (see page 34), and his counterparts David Cameron of Britain and Angela Merkel of Germany, who opened the Forum. United Nations Secretary General Ban Ki Moon extolled global efforts promoting sustainable energy

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and addressing climate change, along with democratization challenges in the Middle East and North Africa. “People everywhere are demanding change,” said the former South Korean foreign minister. “They call out for dignity. They demand justice and a better deal. They want jobs, opportunities, global markets.” Just so the Forum didn’t miss the immense magnitude of those demands, Secretary General Ban noted that there are now 7 billion people, with another half a billion coming in five years. His agenda for the U.N. in coming years: sustainable development, prevention and action on conflict, rights abuses and disasters; peace, security and democracy initiatives; support for countries in transition to democracy; and assistance to women and children. European Central Bank (ECB) president Mario Draghi, now in the eye of the euro crisis, expounded on the continent’s challenges, while U.S. Treasury Secretary Timothy Geithner reprised the same theme for his country’s economy and the world’s largest. And a 1 1/2-hour panel including the heads of the World Bank, the International Monetary Fund, the Hong Kong government, and the British and Canadian central banks,

discussed the world economic outlook (see page 35). Speaking by video, Nobel Peace laureate and Myanmar democracy icon Aung San Suu Kyi addressed the session titled “The Great Transformation: Shaping New Models,” saying of her country’s reforms, “the possibility of a “great transformation” is in sight.” Also via TV link, Japanese Prime Minister Yoshihiko Noda opened a discussion on coping with crises spawned by natural calamities, which also included his country’s economy and trade minister, Thailand’s deputy PM and finance minister, and the CEOs of French carmaker Renault and U.S. risk and strategy advisors Marsh & McLennan. Also from Japan, actor Ken Watanabe (The Last Samurai, 2003, among many other films) spoke about his relief efforts during the Tohoku earthquake and tsunami last March, while American billionaire Bill Gates announced a $750-million donation from the Bill and Melinda Gates Foundation to The Global Fund To Fight AIDS, Tuberculosis and Malaria, adding to its previous contribution of $650 million. China, America and Asia. In the East Asia session, leading global affairs thinker Fareed

U.N. Secretary General Ban Ki Moon; Nobel Peace laureate and Myanmar democrat Aung San Suu Kyi; German PM Angela Merkel; IMF Managing Director Christine Lagarde: Wide-ranging WEF videos

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Zakaria interviewed Prime Minister Lee for half an hour, starting with China. Citing the country’s burgeoning infrastructure and the rising demand for it, the Singapore leader said “there may be a rough landing, but they will get through it.” However, Lee advised, the Chinese leadership must address “problems put off over the last couple of years.” During the 90th anniversary of the Communist Party of China, Lee recalled, President Hu Jintao acknowledged these problems: “moral lassitude, corruption, disconnect from the people, which really goes to the heart of the right of the Communist Party to govern. They know the problems; they must now find the solutions.” Zakaria asked about the “flurry of diplomatic and political activity” by the U.S. in recent months, including a possible Australian base and more troops in the Philippines. Lee’s response on America’s involvement in Asia: “Their presence since the Second World War has been a tremendous benign influence. It has generated peace, stability, predictability, and enabled all countries to prosper — including China. ... The United States after 60-plus years in the Pacific since the war, is still welcomed ... and that is an example the Chinese should seek to emulate.” His caveat: “It’s good that America continues to take an interest in the region ... in a broad range of areas. But it cannot be for a few months at a time in a spasmodic style. It has to sustained over a long period, really over many administrations and decades. America has many preoccupations around the world, and we hope on your busy plate Asia doesn’t fall off the edge.” On a U.S. military base in Singapore, Lee said that there are docking facilities, but “a naval base would be twice as big as Singapore.” As for Beijing’s reaction to Washington’s latest initiatives in Asia, it has officially welcomed more outside participants in the East Asia Summit, while privately being cautious and watchful, especially about some

Time/CNN’s Fareed Zakaria and Singapore PM Lee Hsien Loong: ‘Most important is America’s relationship with China‘ WEF video

On the need to reduce dependence on exports and boost domestic demand, “they get it,” Lee said. “The mantra is quite pervasive.” But to actually boost private consumption, he saw the need for Beijing to restructure social safety nets, “so people have confidence to spend,” and to tidy up state enterprises, “so profits are distributed and properly utilized.” Bottom line: “the right balance between investment and consumption ... this will be work for the years to come.” The Prime Minister expected “continuity between the present generation of leaders and the next ... very capable people and very cautious.” The tradition of collective leadership, he added, would stay and not allow a return to Maoist-era one-man cult.

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“people in America who do not want China to succeed. So there is cooperation and also watchfulness on both sides.” Of the many issues in Asia, Lee stressed, “the most important thing to manage is America’s relationship with China. It hasn’t come to blows, although there have been tensions — and that’s a positive.”

The world economy. In the panel discussion on the world economy IMF Managing Director Lagarde said about Europe’s woes: “It’s not just euro zone crisis. It could have collateral effects, spillover effects around the world. No country is immune, and everybody has an interest in making sure this crisis is resolved adequately.” She urged action

WHAT WORRIES THE WORLD
Economic Enviroment Geopolitical Societal Technological

Top 5 Global Risks in Terms of Likelihood 1st
Breakdown of critical information infrastructure Chronic disease in developed countries Oil price shock Asset price collapse Asset price collapse Slowing Chinese economy (<6%) Asset price collapse Slowing Chinese economy (<6%) Meteorological catastrophes Severre income disparity Chronic fical imbalances Rising greenhouse gas

2nd Ranking

Middle East instability Failed and falling states Oil and gas price spike

Hydrological catastrophes

3rd

Chronic disease

Chronic disease

Corruption

4th

China economic hard landing Asset price collapse

Global governance gaps

Fiscal crisis

Biodiversity loss

Cyber attacks

5th

Retrenchment Chronic disease, Gobal governance developed world from globalization gaps (emerging)

Climatologival catastrophes

Water supply crises

2007

2008

2009

2010

2011

2012

Top 5 Global Risks in Terms of Impact 1st
Asset price collapse Asset price collapse Asset price collapse Asset price collapse Fiscal crisis Major systematic financial failure Water supply crises Food shortage crises Chronic fiscal imbalances Extreme volatility in energy and agriculture prices

2nd Ranking

Retrenchment Retrenchment Retrenchment Retrenchment from globalization from globalization from globalization from globalization (developed) (developed) (developed) Interstate and civil wars Pandemics Slowing Chinese economy (6%) Oil and gas price spike Oil and gas price spike Oil price spikes

Climatologival catastrophes Geopolitical conflict

3rd

4th
Oil price shock

Chronic disease

Chronic disease

Asset price collapse Extreme energy price volatility

Pandemic

Fiscal crises

Fiscal crises

5th

2007

2008

2009

2010

2011

2012

Charts from Global Risk 2012, by World Economic Forum and Risk Response Network

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now, and spelled out a “toolkit” of needed measures. Her prescriptions involve initiatives not just for Europe but other regions too. She highlighted the need for economic growth critical for jobs, fiscal consolidation, and value creation. And to spur European economies what’s needed, she explained, are appropriate monetary policy, adequate liquidity for banks, and “a clear, simple firewall ... to limit the contagion and to provide this act of trust in the euro zone so president, felt the global economy is also moving on: “Whatever we see in the world in the next year or so, the world is never going to go back to the way it was.” In particular, the division of money and power in the world has decidedly changed. At the G20 summit of major developed and emerging economies in Cannes last November, leaders of emerging markets looked with confusion, frustration and disdain toward European Union heads of government in turmoil over the EU debacle.

Hong Kong Chief Executive Donald Tsang: ‘Help the poor’ WEF video

that the financing needs can be met.” Another major need for Lagarde is competitiveness tailored to specific countries, just as fiscal policies should be adjusted to each economy’s situation. Third on her must-do list for Europe is further integration. As for the U.S. and Japan, where there are also mammoth and increasing public debt, there is need for medium-term measures to pare down the r ed ink. As for emerging markets, those able to boost consumption and imports should do so to help address global imbalances. Robert Zoellick, who recently indicated his wish to leave his post as World Bank

“This has got to have effects on influence, perceptions of power in the world that are going to be quite significant for years to come,” said Zoellick. Translation: the rich world can’t lord it over the upstarts the way they did in decades past. Indeed, adds the Bank chief, the emerging economies may have the upper hand in one crucial respect. At a recent G20 deputies meeting he recounted that developing nations told developed ones in so many words: “We encountered this [debt] problem before. Many developed countries urged us to take difficult reforms. We took

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difficult reforms. They’re painful. They need political will. Now it’s your turn. Get on with it.” Lessons from Asia’s crisis. Sharing lessons from the 1997 Asian financial crisis, Hong Kong Chief Executive Donald Tsang called for “overkill” in dealing with current rich-world debt woes. He recalled how he was criticized as financial secretary when the government bought stocks to “stop the fire” consuming market confidence one and a half decades ago. Yet that

values, leaving people with more debt than their mortgaged property was worth. During the 2008 global crisis, Hong Kong supported not just the banks, but also small and medium enterprises. “We maintained jobs, we secured the firms, because we underwrote all their loans ,” the perennially bow-tied Chief Executive recounted. He told banks to “continue lending to your SMEs with good track records. Small businesses survived, and at the end of the day, the default rate was almost zero.”

The most likely global risk is severe income inequality WEF video

stabilizing outlay pales in comparison to the state bailouts in America and Europe since 2008, he points out. “You need to inspire confidence ... in decisive action by government,” Tsang counseled. But even as he called for urgent, resolute measures, Tsang also wanted attention and action on one thing often forgotten in financial restructuring: people. “During the Asian crisis we dealt with institutional issues — we sort out the banks, the stock markets, the regulatory regime, and so on,” he said. “But we have forgotten the people.” He lamented years of painful deleveraging which wiped out more than half of asset

Lastly, he stressed, “you must help the poor, making sure they can reschedule their loans, pay their bills.” The support cost 6%-7% of economic output over two to three years. “If you don’t have the money to do it, find the money,” Tsang argued, “making sure the grassroots is at ease and they have their jobs ready for them.” Thus, confidence was sustained, “and you have domestic consumption going.” For him, 2012 is the crucial year.“And remember: you have to deal with the people,” he said to generous applause. “That is what public service is all about.”

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The world according to Davos

Addressing global risk. Judging from the WEF’s Global Risk 2012 report, which listed the top five risks in terms of likelihood and impact, Tsang’s counsel is spot on. Most of the ten worries will directly and severely

If those risks aren’t enough burdens for those living on less than a dollar or two a day, two other worries in the high-impact list are food shortage crises and extreme volatility in energy and agriculture prices, which squeezes the marginalized between escalating food costs and dwindling farm incomes.

Presented in London, Global Risk 2012 cited three major cases: dystopia or the rise of hugely dysfunctional, if not disastrous Is the world getting warmer to solutions for its enormous problems? The annual meeting of minds in Davos and other global collaborations are needed for states and humankind to move forward Photo: MySwitzerland.org conditions; the failure of impact the poor. Considered among both the social and economic safeguards, as most likely and the highest impact are water seen in the 2008-09 global financial crisis; supply crises and chronic fiscal imbalances, and cyberspace disruptions, which can which lead to drought, disease, and decline derail the ICT systems on which modern in real incomes among the destitute. societies and economies depend for everyday life and activities. Top in the most likely list is severe income disparity, with the poor getting less and Given the enormity of the challenges less of the economic pie. Meanwhile, and threats, no one nation, region, or deemed of greatest impact is major systemic organization can effectively defuse the financial failure, especially if the euro crise risks it faces. Only by joining hands can spins out ot control and pulls down the humankind survive and move forward. global economy and banking system. That Exactly what the World Economic Forum doomsday scenario would throw millions aims to promote in bringing together the out of work and divert state resources from movers and shakers, thinkers and doers of social programs to financial bailouts. the planet.

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World
U.S. to hold first talks with North Korea since Kim Jong Il's death
North Korean officials will meet with a representative of the U.S. government on February 23 to talk about the Asian country's willingness to give up its nuclear program, according to U.S. state Department spokeswoman Victoria Nuland. Washington is optimistic that the meeting will signal the new regime's desire to negotiate terms with the United States, and put the U.S. renewed diplomacy drive with North Korea back on track. In line with concerns over its nuclear program, a possible bargaining point may be U.S. food assistance. earlier than their original end-June deadline. Earlier this February, officials had announced that nominations for the presidential race would be accepted starting March 10. The candidates will be given three weeks to declare their candidature, and 45 days to campaign; although most candidates are already unofficially campaigning. According to an approved referendum last year, forthcoming Egyptian presidents will be limited to two consecutive four-year terms. China's stance on Syria, as well as the Asian power’s need to follow fair trade practices. "We want to work with China to make sure that everybody is working by the same rules of the road when it comes to the world economic system," Mr Obama said. "That includes ensuring that there is a balanced trading flow, not only between the United States and China, but around the world."

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Clashes mark anniversary of Bahrain protests
Hundreds of activists attempted to reach the landmark Pearl Roundabout in the heart of Bahrain's capital, Manama, last week on the anniversary of last year's pro-democracy protests. The island nation's Interior Ministry relayed via Twitter that police had arrested rioters blocking a major thoroughfare in Manama. They also reported that "thugs" in Northern Bahrain had set an electrical facility on fire, and even tried to stop firefighters from putting out the blaze. Small groups of protestors continued to pop up throughout the day; to which security forces responded with rubber bullets, bird shot and tear gas. Last year, tensions rose in the Bahraini capital when police forcibly dispersed a protest encampment at the Pearl roundabout. Over 60 people were injured in the chaotic scene involving shots fired, tear gas clouds and people slipping in pools of blood as they took cover.

Chinese VP Xi Jinping: 'We want to These talks will be the first work with China’ Photo: The Global Times high-level contact between the two nations since the death of national leader Kim Jong Il last December, and the ensuing transfer of power to his youngest and previously least-known son, Kim Jong Un.

U.S. President Obama welcomes

Egypt to hold presidential poll in May: report
Egyptian state newspaper alAhram quoted a government official last week as stating that the troubled country's first presidential election since Hosni Mubarak was overthrown will be held late in May 2012. Street protests and public demands to hand power back to civilians soon are likely what prompted the government and its Army leaders to set the day

China’s heir apparent calls for building trust with America

Chinese Vice President and heir apparent Xi Jinping met with U.S. congressional leaders last Wednesday, accentuating during a Washington speech sponsored by the U.S.-China Business Council the need for building mutual trust between China and the United States. Xi said that relations between the two countries were "at a new historical starting point at this second decade of the 21st century." Meanwhile, U.S. President Barack Obama reiterated concerns over

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For Facebook and Google, Your PC Is Just One Big Two-Way Mirror
The big business of data mining touches off a debate over online privacy
By Tanya L. Mariano The race to mine your personal data just got a lot more serious. Two tech giants have recently been in the news of late: Facebook on February 1 filed for an initial public offering (IPO) that could place the social network company’s value somewhere between $75 billion to $100 billion, reports the Wall Street Journal. For its part, Google announced on its official blog that it is changing its privacy policy, effective March 1, to consolidate the individual privacy documents of more than 60 of its products into one main policy, which would mean each user will have a single identity while navigating across various Google services, such as Google Mail, YouTube, and Web search. As reported in the Los Angeles Times, Google seems to be increasing its ability to track users and know more about them in order to better

STRATEGY POINTS
Google’s new privacy policy and Facebook’s IPO raise data security concerns Tracking consumer behavior online is seen as the fastest growing business on the Internet Installing plug-ins and adjusting browser settings could help protect your privacy on the Internet

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compete with Facebook’s treasure trove of information about its own users’ connections and interests. Both companies make a ton of money turning user information into advertising dollars through targeted ads. In 2011, Facebook earned $1 billion from $3.7 billion in gross revenues – 84.8% of which was from ads – and Google earned $9.7 billion from gross revenues of $37.9 billion, 96% of its total revenue coming from ads. A cause for concern? All this seems to be making a bunch of people nervous. Privacy watchdog Electronic Privacy Information Center has sued the Federal Trade Commission in a bid to halt Google’s implementation of its new privacy policy, and the Telegraph reports that Europe’s Data Protection Working Party is calling for Google to postpone enforcement of the changes pending an analysis to determine whether these violate user rights. In a New York Times think piece, “Facebook Is Using You,” ChicagoKent College of Law professor Lori Andrews writes, “unlike other big-ticket corporations, it doesn’t have an inventory of widgets or gadgets, cars or phones. Facebook’s inventory consists of personal data — yours and mine.” Andrews goes on to explain how data mining and aggregation, a normal practice in many industries, can be used against you. Your job, credit, or insurance application may be denied, not on the basis of any personal information you’ve provided, but “on the basis of aggregate

data, what other people whose likes and dislikes are similar to yours have done.” It’s hard to defend yourself from something of which you’re not even aware. How your online data is collected and shared. Data mining is “the application of database technology and techniques—such as statistical analysis and modeling—to uncover hidden patterns and subtle relationships in data and to infer rules that allow for the prediction of future results,” according to the 2004 U.S. General Accounting Office report, “Data Mining: Federal Efforts Cover a Wide Range of Uses,” while data aggregation is “any process in which information is gathered and expressed in a summary form, for purposes such as statistical analysis,” and “may be used to prepare data for subsequent mining,” according to a report by the National Association of State Chief Information Officers, a nonprofit association of state chief information officers and IT executives in the U.S. While marketers have long been privy to this method of tapping their target markets, the digital age is making it easier to collect information and, according to an in-depth investigative series by the Wall Street Journal published in July 2010, we are witnessing the rise of the fastest-growing business on the Internet: spying on Internet users. The WSJ looked at 50 of the most popular websites in the U.S. and how they track the behavior of visitors. It found that “the tracking of consumers has grown both far more pervasive and far more intrusive”

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than most realize: the top websites installed an average of 64 pieces of tracking technology onto visitors’ computers, usually without warning, creating profiles of visitors that are “constantly refreshed and are bought and sold on ‘stock-marketlike exchanges.’” Between the advertisers and the users they target are over 100 “middlemen – tracking companies, data brokers and advertising network competing to meet the growing demand for data on individual behavior and interests.” The WSJ created an interactive graphic (bottom left) that illustrates which websites employ the most trackers. Surprisingly, dictionary.com tops the list with 234 trackers downloaded onto the WSJ’s test computer. Free online encyclopedia Wikipedia has none. What’s more, tracking technology is growing more and more sophisticated. On top of simple “cookies” – tiny text files, introduced in the browser Netscape Navigator in 1994, that were originally intended to remember the contents of Web shopping carts – the WSJ found “new tools that scan in real time what people are doing on a Web page, then instantly assess location, income, shopping interests and even medical conditions. Some tools surreptitiously re-spawn themselves even after users try to delete them.” Watch the following video from the WSJ for more information on the ubiquitous cookie, with a few words from the inventor of the cookie himself, Lou Montulli, who developed the tracking technology as one of the founding engineers of Netscape. Tech executives ‘ask for forgiveness, not permission.’ Both Google and Facebook are no strangers to lawsuits and allegations of privacy violation, and in a New York Times blog entry by Nick Bilton on the recent discovery by a programmer in Singapore that mobile social network Path is copying iPhone users’ address book contacts without notifying them, for which Path’s CEO Dave Morin has

Of the top 50 websites in the U.S., dictionary.com has the most number of trackers at 234, while Wikipedia uses none. Graphic from the Wall Street Journal

  A primer on computer cookies, with input from the cookie creator himself, Lou Montulli. Video from the Wall Street Journal

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since apologized. Bilton observes that tech executives have adopted a management philosophy of “ask for forgiveness, not permission” – taking user data without consent then apologizing only when someone cries “foul.” Google has flip-flopped over privacy issues, with CEO Eric Schmidt saying during a 2010 interview on The Colbert Report that the company does not mine user data, as reported by online tech magazine The Register, then later admitting to National Public Radio journalist Andy Carvin during a 2011 interview that Google+, the company’s social media service, is practically a data-mining scheme, according to a report by tech publication GigaOM posted on the Bloomberg Businessweek website. A post on pingdom.com’s Royal Pingdom blog enumerates the ways in which Google gathers user information, which include tracking web searches and using tools like Google Analytics, Adsense, and Adwords. Facebook, likewise, is guilty of dipping their

hands into user data without permission. In 2011, the company was sued after an Australian blogger discovered that, through its installation of cookies, it was tracking users’ web activities even after users logged off Facebook, as reported on Bloomberg.com. The social network has a troubled history of privacy protection and this has turned its young billionaire CEO into a “serial apologizer.” Liz Zannes of technology news analysis magazine AllThingsD compiled this list of mostly privacy-related apologies Mark Zuckerberg has made over the years, beginning with a “pre-apology” in 2006 a week before rolling out its “news feed” feature, which was negatively received by most users. ‘Public by default, private by effort.’ The problem is that in the past, “You were private by default and public by effort. Nowadays, you’re public by default and private by effort,” according to Lee Tien, a senior staff attorney at the digital rights advocacy group Electronic Frontier Foundation, as quoted in the Time article, “Data Mining: How Companies Now Know Everything About You,” written by columnist Joel Stein. Stein was surprised to find out what a number of companies knew about him based on data mined online, and even prepared a video to showcase just how many different online personas he apparently has.

TIME columnist Joel Stein discovers who he is in the eyes of Web and data-mining companies, one of which thinks he’s an 18- or 19-year-old woman. Video from TIME magazine

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For instance, Google thinks he’s “a guy interested in politics, Asian food, perfume, celebrity gossip, animated movies and crime but who doesn’t care about ‘books &

“Do-Not-Track Act of 2011,” which, if passed, would afford individuals the ability to opt out of online tracking. While Tom Spring asserts that privacy should not be taken lightly since your online behavior can greatly In the past, “You were private by default and affect your offline life, Patrick Miller argues that ad targeting public by effort. Nowadays, you’re public by is “no big deal.”

default and private by effort” – Lee Tien, senior staff attorney, Electronic

Since it is advertising that creates revenue on the Internet Frontier Foundation and allows for a lot of content to remain free, and since online literature’ or ‘people & society,’” something ads will continue to proliferate whether the writer asserts is not true, while a Texasor not the bill is passed, Miller writes that based data marketing firm called Alliance targeted advertising will result in better and Data has him pegged as a “39-year-old more relevant ads, and concludes that, if he college-educated Jewish male who takes in has to put up with them anyway, “I’d rather at least $125,000 a year, makes most of his have better ads than crappy ads.” purchases online and spends an average of only $25 per item.” Spring, however, challenges his colleague’s arguments, maintaining that “the threat is The more that people become dependent real,” in that advertisers now employ more on services such as Google and Facebook advanced tracking methods, and “for the to communicate – to organize, mobilize, or determined, such as a government, scammer, simply socialize – the more these behemoths or advertiser, it’s easy to extrapolate a name of the technology world are able to dictate from the anonymous data collected online.” how privacy is treated. Several studies show that most consumers In an commentary published in Forbes. share Spring’s concerns. A 2008 National com, British Telecom security technologist Research Center Consumer Report that and Chief Security Technology Officer surveyed 2,006 randomly sampled adults Bruce Schneier writes, “On the Internet, our in the U.S. found that 77% believed that privacy options are limited to the options tracking of online behavior could be harmful. those companies give us and how easy they Of this percentage, 53% were uncomfortable are to find… As long as privacy isn’t salient, with “Internet companies using the content and as long as these companies are allowed of emails and browsing history to send to forcibly change social norms by limiting relevant ads, even if that information cannot options, people will increasingly get used to be tied to their name or any other personally less and less privacy.” identifiable information,” and 54% are uneasy over the collection of their email But is it all that bad? In 2011, PCWorld content and browsing history by third parties magazine had two of its editors debating the for advertising purposes.

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The afore-mentioned WSJ “What They Know” investigative series also found that more than half or 8,819 of the total 14,770 respondents to their online survey were “very alarmed” about companies and advertisers tracking their online behavior. Regulation could lead to a ‘less robust Internet.’ Findings of another study, however, suggest, “privacy regulation may affect the direction of innovation on the advertising-supported internet.” In “Privacy Regulation and Online Adverising,” researchers Avi Goldfarb of the University of Toronto’s Rotman School of Management and Catherine Tucker of MIT Sloan School of Management studied the responses of 3.3 million survey-takers randomly exposed to 9,596 banneradvertising campaigns from 2001 to 2008. They found that, following the enactment of the privacy regulation in the European Union in 2002, advertising effectiveness dropped by an average of 65% relative to the rest of the world (the authors used expressed “purchase intent,” rather than actual purchase data, to measure ad effectiveness). Reporting on Goldfarb and Tucker’s study, the Washington, D.C.-based think tank Information Technology and Innovation Foundation concludes, “policymakers should recognize that privacy, as with any other value, must be balanced against other competing interests and can, as it will here, come at a real financial cost—fewer jobs, less investment and a less robust Internet… The Internet is a vital part of economic and social life and federal data privacy legislation should ensure that beneficial uses of data are not curtailed by overlyrestrictive data sharing policies.”

How you can protect yourself. As the debates rage on, one thing that those uncomfortable with tracking can do right now is increase their online protection. The TIME article by Stein lists a couple of services that could help safeguard your online presence: 1. Sign up for a service like Reputation, which charges $8.25 a month to “keep trackers off your browser,” and will make you look good online for a little extra fee 2. Install Ghostery, a free browser plugin, which tells you which companies are tracking you every time you visit a website 3. Visit PrivacyChoice, which has a database of over 300 tracking companies and gives you the choice to opt-out of being tracked 4. Go to the websites of industry associations like Network Advertising and About Ads to opt-out of data mining being conducted by their members The WSJ also recommends updating to the latest version of your browser to stay up-to-date on privacy options, deleting cookies, adjusting browser settings to block “third-party” cookies, and using “private” browsing (an option available on most internet browsers) when online. Aside from all these, being careful with what you share online, and whom you share it with, is also important. With major players appearing to step up their game in the big business of data mining and aggregation, the least that Internet users can do is beef up their data privacy protection to safeguard the security of their online identities.

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NEWS ON THE NET
Technology
efforts. In a study released by the ETC Group, the nongovernmental organization argues that green economies will benefit predominantly largo corporations, unless changes are made to the existing models of production and consumption of good, as well as global governance. The green economy has been defined by the United Nations Environment Programme as “a system of economic activities related to the production, distribution and consumption of goods and services that result in improved human wellbeing over the long term, while not exposing future generations to significant environmental risks and ecological scarcities.” The subject will be a central theme at the United Nations Conference on Sustainable Development this June 2012. To facilitate the process, Glam has enlisted more than 100 culinary notables – food writers, bloggers, critics, chefs and more – to produce content for the site. Foodie.com is riding the wave of the social network boom, and is poised, like Facebook, for its IPO. Other specialized social networking sites are enumerated in an article published by MakeUseOf.com, a daily blog that tracks popular websites and online trends.

FAA told to make room for drones in US skies
The time when drones are commonplace may arrive sooner than we all think. Now, drones are now poised to share the skies with passenger planes, at least in the United States. Last week, the Senate sent President Obama legislation that would ultimately require the Federal Aviation Administration to devise ways by which this very scenario would become a reality – in three years. The varied uses of drone technology range from searching for missing persons, to collecting scientific data. However, drones are still best known for their combat usage. Drone operations in Afghanistan, Iraq and Pakistan were not out of the ordinary. Recently, the technology was further refined, as U.S. combat troops were reported to be using new mini-"kamikaze" drones against the Taliban.

Textile scientists bare veggie wear
Last week, a truly innovative fashion show dubbed "Bagong Habi... Salinlahi" was staged in Makati, featuring clothes made from unique and all-natual fabrics. The fabrics were made from banana, pineapple, saluyot (C. Olitorius), maguey (Agave cantala [Roxb.]), and water hyacinth. Providing the science and technology behind the successful wearable innovations is the Philippine Textile Research Institute (PTRI). “It has never been tested and proven before that we can use food, fruit and vegetables as textile — until now,” PTRI Director Carlos Tomboc said. The fashion show was a delayed event marking January as the Philippines' Tropical Fabrics Month, a new monthly celebration promoting the use of indigenous fibers in the country.

The green economy, boon or bane?
Green economy development is a hot topic among specialists around the globe. Some assert that it will heighten social inequalities and support increasing big business control over the world's natural resources, while others point out that it will create jobs and do much to help environmental conservation and protection

Publisher launches social network for foodies
Glam Media, online lifestyle publisher, recently launched Foodie.com, a social network focusing entirely on the gastronomically inclined.The company hopes to build a community where users can create profiles connected to either their Facebook or Twitter accounts. From there, they can follow their favorite chefs and food writers, make use of a recipe finder, share their thoughts, and participate in many more activities.

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