A cautionary 'Thale'

President Noynoy Aquino has been doing a good job so far, making it known that his administration is serious in putting an end to graft and corruption in government.

Beginning with his state-of-the-nation address expose on shenanigans at the MWSS, the President is looking under every rug to find out if any dirt has been swept under it. His pet peeves include “midnight appointments” and “midnight deals” of the previous administration.

Some quarters have been urging the President to take a look at the transportation department’s CNS/ATM Systems Development Project, which aims to modernize the equipment of our airports.

The project, costing $190 million (P8.7 billion) was split into two – one costing $70 million and the other, $120 million.

Funding for the project will come from a loan to be granted by the Japanese International Cooperation Agency (JICA).

Invited bidders for the first phase of the project include Kanematsu Corp. and Selex Sistemi Integrati of Italy; Marubeni Corp. and Indra Sistemas, a Japanese-Spanish joint venture; Sojitz Corp. and Raytheon of Japan; and Japanese firm Sumitomo Corp. and French company Thales Systems.

 The first two groups did not make it past pre-qualification for failure to comply with minor deviations in documentation. The last two bidders, Sojitz and Sumitomo, were prequalified.

 As it turned out, the Sumitomo-Thales joint venture won by default, after Sojitz and Raytheon backed out for reasons it did not divulge.

 Concerned parties are calling on the DOTC to conduct a thorough investigation on the alleged irregularities in the pre-qualification bidding process and to ensure fair and honest procedures in awarding the project.

 One of the allegations is that JICA interfered in the bidding process and even asked for the “predisqualification” of one of the possible bidders in the first package, as condition for the processing of the loan.” Being an untied loan, JICA should not be meddling.

Meanwhile, the haste with which bidding for the first phase of the project was conducted has raised suspicion that this is another “midnight deal” rushed to profit the officials in place when the deal was awarded.

Reports about Thales’ reputation are equally disturbing.

According to Transparency International, Thales Engineering and Consulting SA (THEC), has been debarred from receiving World Bank-financed contracts for a year as a result of fraudulent practices in relation to the Cambodia Demobilization and Reintegration Project.

In South Africa, prosecutors charged two local subsidiaries of Thales with corruption. In the same year, the former head of Thales’ engineering and consulting unit accused Thales of having a centralized slush fund to bribe and corrupt officials to win contracts.

An international court has ordered France and defense electronics group Thales to pay $830 million in compensation to Taiwan over a sale of overpriced warships in 1991.

Thales’ precedessor Thomson CSF was also blacklisted in the Philippines for failure to deliver on its contract package for a so-called Global Maritime Distress Safety System (GMDSS). Thomson was awarded the contract in 1999 for the warning system but its inability to provide the software resulted in the abandonment of the project.

President Noynoy should immediately ask DOTC Secretary Ping de Jesus to look into the award of the CNS/ATM contract to the Sumitomo-Thales (formerly Thomson CSF) group before it is too late.

A win-win solution

I do not understand all this hulabaloo against the compromise agreement entered into between Hacienda Luisita Inc. (HLI) and three farmworker groups recently.

The agreement was signed between HLI and the three farmer-leaders of Alyansan ng mga Mangagagawang Bukid ng Hacienda Luisita (Ambala), United Luisita Workers Union (ULWU) and Supervisory Group of Hacienda Luisita Inc.

What we have here is a case of Luisita farmers who either want to own the lands that they till or those who want to receive shares of stocks as a form of compliance by the company with the mandate of the comprehensive agrarian reform law.

In 1989, a memorandum of agreement containing compliance with CARP through the stock distribution option was executed by Tarlac Development Corp., HLI, and 93 percent of the farmworkers.

Unfortunately, the MOA got embroiled in legal controversy. The three groups that just signed the compromise agreement back in 2004

 asked the Department of Agrarian Reform to revoke the MOA and to order the distribution of the lands. The Presidential Agrarian Reform Council revoked the stock distribution agreement contained in the MOA, which action HLI assailed before the Supreme Court. The High Court issued a restraining order pending resolution of the petition.

In 2007, Ambala and supervisory group told the DAR that they are amenable for exploratory talks of settlement.

Last July 14, the farmworker groups personally delivered a letter to President Aquino for assistance to revive the stalled settlement negotiations with HLI. As a result, meetings were held anew between HLI counsel and the farmworkers to fine tune the terms of a compromise agreement.

Under the said agreement, which will be submitted to the SC for approval, farmworkers-beneficiaries have the freedom to choose between being given agricultural land, or retaining the stock distribution option. For those who chose land, HLI agricultural lands will to be given to them for free and clean of any lien or encumbrances.

In addition, all benefits received by the farmer-beneficiaries by virtue of the MOA, like homelots and production share, shall remain with the FBs, even if they now opted for land distribution. Financial assistance totaling P150 million will also be given to all FBs on a staggered basis. Of the total amount, P20 million will immediately be released.

Based on a census, out of the 10,502 farmworker shareholders, 7,441 signed the compromise agreement representing 70.85 percent. And out of this number, 7,302 or 98.13 percent chose the SDO.

All controversies and disputes must come to an end. The Hacienda Luisita dispute has lasted for two decades and the proposed compromise settlement offers a win-win resolution to this dispute.

One of the hard lessons learned from the many years of implementing CARP is that it is generally a failure. Many who have been awarded the lands that they work on had no choice but to sell these lands after the lock-up period. It is not easy being a farmer in this country, especially if you are working on a small plot of land. One needs economies of scale to grapple with the high cost of inputs, of credit (including access thereto). A farmworker has access to farm equipment such as tractors and harvesters courtesy of the landowner but not a small landowner-farmworker who literally has to work using his bare hands. Banks generally do not accept CARP lands as collateral so these CARP beneficiaries are forced to borrow from loan sharks, or worse, just abandon their lands. The CARP did provide sufficient funding as well as a mechanism for strong support services delivery to CARP beneficiaries.

There are reports that some of our legislators want to investigate this compromise agreement. C’mon. If the farmers want to receive shares of stocks or land, then let them choose. After all, it is Congress fault if we have a CARP law that does not work. Let the farmers be.

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