SUBIC BAY FREEPORT—The Subic Bay Metropolitan Authority (SBMA) is looking into its lease contracts with a Philippine company after the arrest last week of several Chinese nationals for alleged espionage on Grande Island in Subic Bay.

Eduardo Aliño, chair of SBMA, issued instructions to review the specifics of its extended leasehold agreement with Silver Dragon Cruises Inc. (SDCI) after a board meeting following the arrests. 

In July 2000 SDCI was granted a leasehold agreement to rehabilitate Pier 684 and operate a ferry service within Subic Bay. Two years later, it entered into a lease and development agreement with SBMA to develop the islands of Grande and Chiquita, but it eventually assigned its leasehold rights to GFTG Holdings Corp. 

In January 2019 GFTG Holdings brought in Sanya CEDF Sino-Philippine Tourism Investment Corp., a Chinese company, as its biggest shareholder with 79.99% ownership of the firm.

The SBMA board of directors withdrew its consent to the change in the control and ownership of GFTG in May 2019, saying that the change was made without its approval. 

“It’s still a Philippine-registered company but Chinese-owned. SBMA has not yet given its consent to change in ownership,” said SBMA communications head Armie Llamas.

SBMA also deferred a proposal of the Chinese company to build hotels and recreational facilities in Grande and Chiquita, citing certain problems about their proposed activities.

Intel-based arrests

Last March 26, the National Bureau of Investigation (NBI) presented six Chinese nationals it had arrested in Grande. The arrests were based on an Intelligence report the NBI had received from the Armed Forces of the Philippines on March 17 and as part of its operation to serve an arrest warrant on one of them, Qiu Feng, for alleged involvement in the kidnapping of a minor and in online gambling activities in Porac, Pampanga.

According to the military information, the Chinese were suspected of carrying out covert intelligence, surveillance, and reconnaissance operations on critical infrastructures in Central Luzon.

At a news conference in Pasay City on March 26, NBI executive officer Van Homer Angluben and spokesperson Ferdinand Lavin presented to the media five Chinese nationals, a Cambodian and a Filipino along with confiscated mobile phones, passports, and a pistol.

An NBI press release cited investigation results and witness accounts showing that the Chinese were in Grande for supposed recreational fishing. They were utilizing hi-tech drones purportedly to transport fishing bait in conducting alleged surveillance on naval assets, including those of local forces and of allied nations passing the island, the NBI said. 

Grande is a strategic vantage point with a clear view of key sea lanes in the West Philippine Sea, including Scarborough Shoal. According to the NBI, the island allows the alleged spies to monitor naval assets entering and exiting Subic Bay during maritime patrols or joint naval exercises.

Authorities found that one of the Chinese, identified as Qiu Feng but whose real name is Ye Tianwu aka Qing Feng, was the subject of an arrest warrant issued by the Regional Trial Court Branch 63 in Tarlac City for violation of Republic Act No. 8799, or the Securities Regulation Code. 

On March 19, NBI agents led by Director Judge Jaime Santiago, together with military Intelligence officers and SBMA law enforcers, served Tianwu’s warrant and carried out pursuit operations.

Also arrested were He Peng aka Nan Ke, Xu Xining, Ye Xiaocan, Dick Ang, and Su Anlong. Their Filipino bodyguard, identified as Melvin Aguillon, was also taken for possession of an unregistered firearm. They were all brought to the NBI’s main headquarters in Manila.

Surveillance photos, vids

Authorities confiscated fake Bureau of Internal Revenue documents and identification cards, one 9-mm pistol and 16 rounds of 9-mm bullets, several electronic gadgets, and a piece of paper with Chinese markings that, when translated, stated the date, time and the vessels that left and entered the freeport.

The gadgets were later found to contain surveillance photos and videos, including photos of a US naval vessel and of Subic’s naval operating base sent to various Chinese personalities through social media platforms.

The Chinese were presented for inquest proceeding at the Office of the Provincial Prosecutor in Bataan for violations of Commonwealth Act No. 616 or the Espionage Law, Articles 172 (Falsification by Private Individuals and Use of Falsified Documents) and 178 (Using Fictitious Name and Concealing True Name) of the Revised Penal Code, RA No. 10591 (Comprehensive Firearms and Ammunition Regulation Act), and the Commission on Elections gun ban. 

Subic Naval Base was once the largest US naval facility outside the US mainland until its lease agreement expired in 1991 and its extension was rejected by the Philippine Senate. The US military pulled out a year later when Mount Pinatubo erupted.

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