RP faces foreign aid cut due to corruption

MANILA, Philippines - The Philippines is facing a big cut in foreign aid because corruption in government is “deeply entrenched” and the World Bank report is “worrying” a big donor country, a diplomat disclosed yesterday.

The diplomat from the major donor country, who spoke on condition of anonymity, said their government is closely following the WB report and the investigation into the anomalous road projects funded by the foreign financial institution and the extent of government corruption that has identified First Gentleman Jose Miguel Arroyo as the alleged patron of colluding contractors in a $33-million road project in 2003.

Diplomatic sources have told The STAR that corruption is also of concern to the Millennium Challenge Corp., a US government-backed foreign aid arm, and that the Philippines is unlikely to get promoted from “threshold” to “compact” aid status, which would have secured more funding for the country’s development efforts.

“It’s worrying us because it’s so serious. The World Bank report showed that corruption here is deeply entrenched,” the diplomat said.

The diplomat admitted that assistance to the Philippines will be reviewed by their government but a significant reduction is seen.

“We’re following this. This kind of experience can bring down governments in some countries,” the envoy said, urging the media to use its influence to bring out the truth and expose corruption in government that “should lead to prosecution whoever the people involved are.”

According to the WB report, one Japanese and two Filipino contractors revealed the First Gentleman’s role in the collusion to favor some contractors.

Earlier, Ambassador Alistair MacDonald said the Philippines had to be “attentive” to its negative image that has been projected because of allegations of corruption in government.

MacDonald, head of delegation of the European Commission to the Philippines, said the country’s image has been projected negatively because of anomalous transactions and the corruption in road projects detailed in the WB report. 

When asked if the corruption will lead to a reduction in EU assistance to the Philippines, MacDonald said the EU is always attentive to issues and developments in countries.

MacDonald emphasized that the EU has a robust control system in place to make sure that their assistance goes to where it is intended.

Washington also said the government should ensure transparency in biddings and awarding of contracts for government projects.

The World Bank had uncovered a major cartel involving local and international firms bidding on a Philippine road project and it had barred seven companies – three from the Philippines and four from China – from bidding on its projects due to alleged corruption.

The World Bank’s corruption-fighting unit said the firms were blacklisted for “engaging in collusive practices” during the bidding of the project financed by the Washington global development lender.

Investigation by the bank’s Integrity Vice Presidency (INT) “uncovered evidence of a major cartel involving local and international firms bidding on contracts under phase one of the Philippines’ National Roads Improvement and Management Program, known as NRIMP 1.”

Companies blacklisted by WB were Philippines-based E.C. de Luna Construction Corp., Cavite Ideal International Construction and Development Corp., and CM Pancho Construction, Inc.; China Road and Bridge Corp., China State Construction Corp. and China Wu Yi Co. Ltd., China Geo-Engineering Corp.; and Korean firm Dongsung Construction Co. Ltd.