Business interest led to sacking of ex-Navy chief, says Alejano

MANILA, Philippines — The P18-billion Navy modernization contract, blamed as the reason why former Navy Flag Officer in Command Ronald Joseph Mercado was relieved, may have involved the business interest of the contractor, an opposition lawmaker said in the House of Representatives.

Rep. Gary Alejano (Magdalo) said that it was odd that Malacañang got involved in the issue and stressed the removal from office of the head of a major service of the military such as the Navy could be done only with the imprimatur of President Rodrigo Duterte.

He asked who was backing HHI in the presidential palace and wondered if some unscrupulous people had already financially benefited from the questionable deal.

"Why should the Navy explain to Sec. Bong Go (special assistant to the president) why Thales Tacticos was chosen despite the lobby for Hanwha Systems? Does Sec. Bong Go know the technical specifications and needs of the Navy more than it which did thorough research on the frigate?" Alejano said.

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Alejano also connected the Navy acquisition issue, which could cost the government around P18 billion, to the stance of the administration on the dispute in the West Philippine Sea.

The Philippines, under Duterte, has forged closer ties with Beijing, despite their long-standing disputes in the strategic body of water, in an effort to court Chinese money to invest into its developing economy.

"Is he concerned that China would be angered if we strengthened our external defense capabilities?" Alejano asked.

The former Navy and Marine officer said the relief of Mercado might be because of his stance in the Philippine Navy's multi-billion peso project in which the former Navy chief was determined to fight for and protect the interest of the country's force.

"The controversy is a case where the 'contractor won over the Navy.' The wishes of the contractor, Hyundai Heavy Industries or HHI, which will construct the Navy's two frigates, prevailed upon what the Philippine Navy, their end-user, wanted," Alejano said in his privilege speech at the House.

According to Alejano, Mercado was removed, so the Navy, through its Technical Inspection and Acceptance Committee, would accept the design, on which the actual building will base, proposed by HHI.

Alejano said that Hyundai did not follow the specifications that the Navy wanted for its frigates. He added that the contractor also failed to submit many crucial documents such as drawings and list of equipment needed for the military to check if the design adhered to the specifications of the contract.

"When there were discussions, the contractor would say that this had the approval of high officials," the opposition lawmaker said in Filipino.

Despite the opposition of the Navy, the Department of National Defense, Alejano said, insisted on using the CMS of Hanwha Systems, a South Korean firm. The CMS is considered the "brain" of the ship as it integrates all the systems of the ship including weapons, sensors, communication and navigation.

"The Navy said that Hanwha CMS was non-compliant and will put it at a disadvantage," he said.

According to Alejano, Hanwha Systems was chosen by HHI despite the Navy's choice of Thales Tacticos of Netherlands, which had a better record, more advanced systems and more experience in marine defense systems.

"Allowing the shipbuilder to dictate the configuration of a warship is gravely dangerous when it comes to national security and defending one’s sovereignty. The end-user must dictate what mission critical equipment they should choose while getting the best value for money," Alejano said.

The choice of HHI was also questionable as its main rival for the project, Garden Rearch Shipbuilders and Engineers of India, submitted a bid which was lower by P700 million than the South Korean firm's.

GRSE, despite being a government company of India and covered with sovereign funds, was disqualified due to non-compliance to net financial contracting capacity, according to Alejano.

READ: Magdalo: Navy chief's ouster may be due to stance on P18B warship procurement