The bold truth

There was recent news that Global Gateway Development Corp. (GGDC) is assuming operational control over the development of the $3-billion 177-hectare Global Gateway Logistics City (GGLC) project in the Clark Freeport Zone in Pampanga.

This was after GGDC, a wholly owned subsidiary of Kuwaiti private equity investment firm KGL Investment Co. (KGLI), obtained a favorable ruling from the Court of Appeals against the former contractor of the project, Peregrine Development International Inc. (PDII).

This project is carefully being watched not only because of its sheer size, but more importantly because of the benefits it will bring to the community. The ambitious infrastructure is expected to attract investments that will, in turn, create jobs for the people in that growth area.

 Unfortunately, the $3-billion project has been tainted with a smear campaign allegedly funded by a small Virgin Island company founded by three foreigners. Peregrine claims that the Clark project has been stalled, and that hundreds of Filipino workers have been displaced due to the lack of funding from the Kuwaiti investor.

One of the local newspapers has reported that the CA has issued a Temporary Restraining Order in favor of GGDC in connection with a petition for certiorari filed by GGDC. The TRO effectively sets aside the previous rulings of the Regional Trial Court where Peregrine had initially filed its complaint.

The same report revealed that Peregrine filed a complaint with the RTC after GGDC lodged an arbitration case against Peregrine in a Singapore court, in which GGDC alleged substantial breaches of the engineering, procurement and management (EPCM) agreement between Peregrine and GGDC.

GGDC said in its petition for certiorari that the EPCM agreement with PDII has already been terminated for reasons expressly allowed under the agreement and that as a consequence, PDII has lost its right to be the sole and exclusive contractor for the project.

Moreover, GGDC cited alleged breaches by Peregrine including cost overruns, dealings unbene-ficial to GGDC, the use of GGDC-funded assets for non-GGDC projects, failure to comply with applicable laws which materially affected the project’s implementation, failure to faithfully observe the procurement and bidding procedures to ensure competitive bidding, and willfully committing other acts inimical and adverse to the best interest of GGDC.

Peregrine’s failure to abide by the termination of the agreement and conditions of the EPCM has reportedly caused millions of dollars of unnecessary losses to GGDC, the company said.

Peregrine claims it is the victim, but the sad truth is that it is simply about an unhappy former contractor who got into a legal dispute with its principal after being terminated from its contract with GGDC.

Peregrine was able to convince a Pampanga court to grant a 72-hour TRO on June 10, 2014 which was, thereafter, extended by an additional 17 days on June 13, as well as a subsequent writ of preliminary injunction.

It is, however, claimed that this legal action alone is already a breach of the EPCM agreement which mandates that conflicts arising from the two parties must be resolved in an arbitration body in Singapore.

Fortunately, last Aug. 12, the CA issued a decision suspending the preliminary injunction ordered by the RTC of Angeles City.

GGDC was originally founded by The Port Fund, a private equity fund managed by the Kuwaiti-based KGL Investment Group which in turn is a well-respected firm in  Kuwaiti and  backed by the Kuwaiti government and GCC countries.

GGDC has invested over $100 million in the Clark project to date, with another $150 million expected to be put in by the end of 2015. Believing in the strength of the Philippines economy, it has also invested in two other Philippine companies – 2GO group and Negros Navigation.

Regarding the stoppage of work despite a court order, it is being claimed that Peregrine is attempting to hold the site hostage by forbidding other contractors to work on it by utilizing a Filipino security firm as private army.

If Peregrine is so keen about the development of the project and the well being of the Filipino workers, why don’t they peacefully step aside as ordered by the CA. Why didn’t they just grant GGDC’s request to give the latter a list of Peregrine employees associated with the GGLC that Peregrine planned on redundating, so that GGDC could have the opportunity to interview them for employment on the GGLC site.  If Peregrine is so concerned about Filipino workers, why did Peregrine chose to fire these employees instead of allowing GGDC to hire them?

GGDC says Peregrine should leave the project amicably and let the legitimate owners finish the project for the benefit of Central Luzon.

The first locator at the GGLC site is The Medical City Clark, a world-class hospital that is on track for its grand opening in December this year. The 150-bed Medical City Clark, which is being developed as a state-of-the-art, energy-efficient and technology-enabled smart building, is said to be already over 95-percent complete.

Once completed, the GGLC Clark project is expected to generate employment opportunities to over 300,000 workers with $600 million in annual payroll for entry-level employees, the company said.

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