Smartmatic,TIM given until Friday to resolve conflict

MANILA, Philippines - The Commission on Elections has given the Netherlands-based Smartmatic Corp. and Filipino-owned Total Information Management Corp. (TIM) until Friday to decide whether or not they could push through with the automation contract for the 2010 elections.

Comelec chairman Jose Melo announced yesterday that money was the root of the fallout between the two companies, jeopardizing the automation of next year’s local and national polls.

Melo made the announcement after coming out from an hour-long meeting with officials of Smartmatic and TIM.

If the two companies cannot push through with the automation contract, Melo admitted that next year’s elections might be done manually because the Comelec no longer has the time to convene a second bidding for a new supplier of machines.

“I told them in a joking manner that they will be the one to decide on what type of marriage will they have – a marriage of convenience, a shotgun marriage or a real marriage,” Melo said.

“In the meeting, they aired each other’s sentiments. It all boils down to control of the money. Are you surprised? But we called them and they had the opportunity to talk, one after the other,” Melo told Comelec reporters.

The meeting, which Melo described as a “civil confrontation,” was attended by TIM president Jose Mari Antuñez, senior vice president Salvador Aque and lawyer Boy de Borja, and Smartmatic international sales director and project manager Juan Villa.

Last Monday, Antuñez had told Melo that TIM was withdrawing from its partnership with Smartmatic, citing “irreconcilable differences” and “loss of confidence.”

Smartmatic and TIM had won the lease contract to supply the 82,000 precinct count optical scan (PCOS) machines to be used in the 2010 elections with its bid offer of P7.2 billion.

The Comelec had dropped its plan to replace TIM and partner with Smartmatic in undertaking the automation because this is not legally possible.

Melo expressed hope that all would still end well between Smartmatic and TIM, as both firms have expressed intention to pursue the automation.

“In my personal opinion, there is a 50-50 chance that they would come into accommodation of each other,” he added.

The poll chief said that “in an agreement or suggestion coming from the Joint Oversight committee, as far the technical matters are concerned, this must be in the control of the foreign company because it is the expert.”

He, however, could not immediately ascertain which party should have control over finances.

Comelec commissioner Nicodemo Ferrer said the rift was “basically on the operational disbursement – who will decide on spending.”

Ferrer had suggested that the Comelec act as arbiter in case of a deadlock in decision-making, but this was shot down by Melo who claimed the agency should not be involved in matters of private companies.

Gag order

The Comelec had imposed a gag order on the officials of the two firms and other poll officials so as not to fuel the rift.

But in an interview over dzMM earlier in the day, TIM lawyer De Borja said that his client had decided to sever its ties with Smartmatic because the foreign firm wanted to have an upper hand in decision-making.

“The Filipino in this joint venture is us, we are the last one to do anything that would undermine the Filipinos’ longing for automated elections. What’s happening now is that whenever there is a disagreement, their decision prevails,” he claimed.

De Borja cited, for instance, “check disbursement” wherein the signature of TIM is no longer needed.

“There were many times during the negotiation that we wanted out but we wanted to give it a chance. We had our differences and even before, we wanted out,” he added.

He maintained that TIM could not allow this because “down the road, we are the Filipino partner so if there is a problem, we’ll be the one that will be left to answer.”

“It’s not the automation that will cleanse our elections. We have to make sure the integrity (of those involved) is beyond doubt. The 60-40 percent are not just figures that popped out in the air. We’re being vigilant for the country,” he said, referring to the constitutionally-mandated capital investment of 60-40 percent for Filipino and foreign firms, respectively.

There were reports that TIM was demanding some P500 million from Smartmatic.

For its part, Smartmatic international sales director Cesar Flores confirmed that TIM wanted “to have more control in the operations.”

“It’s the requirements of the Comelec that the company with the biggest experience in automation – which in this case is Smartmatic – is the one that has to guarantee the technology, the software, the transmission and the operations of the elections so we are indeed in charge of the operations,” Flores added.

P500-M demand

Makati Rep. Teodoro Locsin Jr., chairman of the House electoral reform committee, told reporters that TIM wanted P500 million “up front” from its foreign partner.

TIM president Antuñez made the “ridiculous demand” in a meeting with Smartmatic’s lawyers a few days before announcing that TIM was backing out of the automation contract, Locsin said. He said the demand was “tantamount to extortion.”

He said Antuñez told their foreign partner’s lawyers that their problems with their partnership could be solved if Smartmatic paid its local partner P500 million.

Muntinlupa Rep. Rozzano Rufino Biazon said an “unseen hand” forced TIM to back out of the project.

“It is a curiosity why a winner to a historical multi-billion-peso contract will back out at the last minute after surviving the selection process. My suspicious and malicious mind tells me that there’s a gun pointed to someone’s head,” he said.

Legal liabilities

The entire consortium that was supposed to provide machines for the automation of next year’s national elections may face legal liabilities following the withdrawal of TIM from its partnership with Smartmatic last Monday, according to Justice Secretary Agnes Devanadera.

In an interview with reporters, Devanadera explained that a firm that backs out of a government project it had won through bidding could be held accountable for civil damages.

“We will have to evaluate very well the kind of communication between Comelec and the winning bidder. But based on what we can see, the consortium may be held liable for damages,” she said.

But Devanadera explained that Smartmatic should also be held accountable even if it was only TIM that backed out.

Several senators pressed the Comelec yesterday to push through with the automation of the 2010 polls and said TIM must be charged and not be allowed to just walk away from the project it was supposed to undertake.

Senators Richard Gordon, Pia Cayetano, Loren Legarda, Panfilo Lacson, Manuel Roxas II, Francis Pangilinan and Senate Majority Leader Juan Miguel Zubiri all asked the Comelec to exhaust all means so automation would be carried out in the 2010 polls.

The Nacionalista Party headed by Sen. Manuel Villar Jr. warned that the withdrawal of the local partner of the consortium that would facilitate automated polls might just be part of the Arroyo administration’s grand scheme to cancel elections.

Gordon, principal author of the amended Automated Elections System Law, said the situation was very sensitive and that he would have the matter investigated as chairman of the Senate Blue Ribbon committee. – With Aurea Calica, Jess Diaz, Edu Punay, Evelyn Macairan, Dennis Carcamo, Rhodina Villanueva, Delon Porcalla