The mystery of Binga: IPP contractor has no office, can’t explain phantom shareholder

Click here to read Part I

Philippine Center for Investigative Journalism ( Second of a series )

Not far from an estero in Manila’s crowded Chinatown district stands a narrow, four-story building fronting an alley barely wide enough for a car to pass through. A shingle on the ground floor says it is the office of a recruitment agency called "Lakas Tao Consulting Services."

Records of the Securities and Exchange Commission (SEC) say this is the Lakas Tao building, and that on the third floor can be found the head office of the Binga Hydroelectric Plant Inc. (BHEPI) which, until four years ago, held the $143-million contract to rehabilitate the Binga power plant in Benguet.

Employees at the ground floor office say BHEPI folded up in 1998, soon after Fidel Ramos’ term as president ended. Yet the National Power Corp. (Napocor) is now handing back the power plant to the same company that people say no longer exists.

This is only one of the many mysteries that surround the BHEPI, a company owned by businessman Catalino Tan. Apart from presiding over what appears to be a phantom firm, Tan also allegedly used a fictitious stockholder to wrest control of the management from the hands of Taiwanese investors.

Catalino Tan is listed in the SEC as having only two other companies aside from BHEPI: the garments firm Pearl Lady and the food company Shanghai Maling Corp. Yet another mystery is how he and some Chinese investors managed to snag the Binga project over other contractors in the first place.

But while he had no previous experience in the power industry, Tan had – and has – formidable clout to back up his claim to Binga: personal ties with former President Ramos and now, President Arroyo, as well as connections elsewhere in the government.

In 1998, however, tables were turned on Tan when people identified with Ramos’ successor, President Joseph Estrada, wrested control of Binga from him. At the time, Tan was also deep in a dispute with the Napocor, which refused to pay him because it said he had failed to perform the work required at the plant.

Now that Ramos and Lakas again have considerable influence in government, Tan has retapped his personal and professional ties with those in power and is now poised to regain control over the Binga power plant.

Defending Tan in a telephone interview with the PCIJ, Presidential Adviser for Political Affairs and Lakas stalwart Joey Rufino remarked that people may think Tan is a "bad person" and that the contract "was given to him on a silver platter."

But, he said, "it was worse during the time of Erap (Estrada). Tan was crying for two years. Kung malapit siya sa amin, eh di kaagad nabalik na (If he really were that close to us, then he would have had it back sooner)."

In the meantime, the Taiwanese watched as the renamed and reorganized company listed a certain Law Cho Shek as its majority stockholder. (To be continued)