‘Fraport overstated claim by $392 M’

German airport developer Fraport AG overstated its claim on the construction of the Ninoy Aquino International Airport Terminal 3 (NAIA-3) by about $392 million, a fraud examiner said in his testimony before an international tribunal.

Howard Silverstone, an expert witness for the Philippine government, told the International Court for Settlement of Investment Disputes (ICSID) that only some $33 million was traced as actually used in the terminal for direct "soft cost."

Fraport said it invested more than $425 million in the project before the Philippine government took physical possession of the facility this year.

The takeover by the government followed a Supreme Court ruling that the contract with Fraport was null and void.

Silverstone claimed only $53 million was documented to have been coursed through the Philippine International Air Terminals Co. Inc. (Piatco) consortium.

He added the actual amount used on the construction of NAIA-3 could not be ascertained since Piatco and Fraport have refused to open their books of accounts and submit accounting-related documents for examination.

Silverstone noted Fraport asserted it could not submit its financial books and claimed they do not have access to all Piatco documents, which the fraud examiner said was "a lame excuse to shield obvious shady deals."

He claimed the limited documentation of the use of funds by Fraport and Piatco continues to be an indication of fraud.

Silverstone said the only confirmed documented transactions were those submitted as part of the reply to the Philippine government panel to the ICSID.

He said Fraport and Piatco had failed to produce evidence demonstrating the propriety of a contract and payment documents, thus indicating the presence of fraud in the NAIA-3 project and Fraport’s alleged investment.