Web of corruption in RP snags German firms

At the rate litigations here and abroad drag on, I don’t think President Arroyo will be able to meet her repeatedly postponed target date for the opening of the Ninoy Aquino International Airport (NAIA) Passenger Terminal-3.

In fact, Foreign Affairs Secretary Alberto Romulo and Defense Secretary Avelino Cruz, were summoned to appear before the International Court for Settlement of International Disputes (ICSID) based in Washington D.C. The two former Palace officials were asked to shed light on why they advised in 2003 the cancellation of the contract with the Philippine International Air Terminal Co. (PIATCO). At that time, Romulo was the Executive Secretary while Cruz was then the Chief Presidential Legal Counsel (CLPC).

They were joined in Washington by newly appointed Ombudsman Merceditas Gutierrez (also former CLPC), Solicitor General Alfredo Benipayo, and Presidential Chief of Staff Tomas Alcantara. They all flew there this week to explain before this arbitration body why the Philippine government took over NAIA-3 after it nullified its multi-million dollar contract over alleged anomalies and other unfavorable terms regarding this project.

A.G. Fraport of Germany, one of the consortium members of Piatco, sued the Philippine government before the ICSID and demanded for the payment of $465 million. Piatco, on the other hand, also sued the Philippine government before ICSID in Singapore and likewise demanded payment of $565 million.

Only last month, the Supreme Court of the Philippines upheld a lower court decision directing the government to pay Piatco over P3 billion in the expropriation of the facility before taking over the operations of NAIA-3. This ruling, by the way, was penned by slain Pasay City Regional Trial Court judge Henrick Gingoyon before he was assassinated in Cavite last Dec. 31.

Last Wednesday, two Japanese firms which are consortium members of Piatco, filed separate petitions to ask the SC to defer the Philippine government’s expropriations payment of P3 billion to Piatco. Through their lawyers here, Takenaka Corp. and its subsidiary Asahikosan Corp., which completed the NAIA-3 facility upon the prodding of the Philippine government, the two Japanese firms sought SC intervention to collect their share of the compensation out of this P3 billion expropriation payment.

With the pending litigations in courts and other judicial and arbitration bodies both here and abroad, I don’t think it’s wise for the Arroyo administration to keep on pushing back the target opening date for the use of NAIA-3. But admittedly, there are a lot of other complications in this Piatco case. In August last year, Manila Hotel Corp. quietly inked their $200 million purchase agreement with Fraport which sold their entire equity shareholdings, including all other rights and interests to Piatco’s related companies.

The Philippine government, led by Palace officials like Executive Secretary Eduardo Ermita, admitted they were caught by surprise by this purchase agreement which came to public knowledge after Reuters reported this from Germany. A Cabinet policy group headed by Ermita has been tasked by President Arroyo to ensure the opening of NAIA-3 by November 2005 after earlier pushing back its previous June 2005 timetable to open this facility. But as it turned out, Fraport negotiated through the back doors with the Manila Hotel group to get out of the Piatco mess.

A brewing scandal involving another German firm might erupt into a full blown legal tussle anew in the case of the P800 million project funded through a loan extended by the government of Germany to the Philippine Merchant Marine Academy (PMMA), a state-run university for prospective marine engineers and seamen. This project was being undertaken by the German firm, Rhinemetall Defence Electronics GmbH (RDE), a naval equipment firm based in Bremen but has its office in Duesseldorf.

The project involved the supply and upgrade of training facilities for the building of a dome replete with state-of-the-art full mission ship bridge (nautical), and ship engine simulators, computer infrastructure and delivery of one complete training ship with lifeboats and davits, port facilities to berth the ship, emergency power upgrade to make the PMMA independent from local power suppliers, among other components.

The German firm RDE won the project in a Europe-wide international bidding after it gave the lowest offer plus the qualifying factor of having a local counterpart company, Filipino International Resources, Science and Technologies (FIRST Corp.) to handle the after-sales components of the project as required in the bidding rules. A German national, Michael J. Heinen who has been living here for the past 10 years, heads FIRST Corp. as the local agent of RDE.

The project was due for completion and turn-over last month. However, it got snagged by allegations of "ghost" deliveries of supplies, use of secondhand and defective materials, bribes, scams, and other reported fraudulent activities that RDE’s local agent reported to the attention of the German government. Because of these allegations, this project, being undertaken at the PMMA campus in San Narciso, Zambales, came under critical scrutiny by the German government bank Kreditanstalt fuer Viede-raufbau (KfW) which funded it.

The KfW sent to the Philippines in October last year their representative, Ronald Scheffczyk, to conduct an ocular audit of the project site in the PMMA. The report of Scheffczyk to the KfW was, to say the least, unflattering to both his fellow German nationals and the Philippine government. It implicated the PMMA, headed by its president Fidel Diñoso, for allegedly accepting these "ghost" deliveries and secondhand equipment obviously as a means to cover-up all anomalies by RDE.

When RDE learned that the report came from Heinen, they cut the agency agreement with his FIRST Corp. abruptly without paying his agency commission for the project. What made things worse for 61-year old Heinen was a series of harassment and death threats he received, including the filing of a complaint against him at the Bureau of Immigration for being allegedly an undesirable alien.

Through his lawyer, Heinen is seeking the assistance of concerned government authorities to help him expose these anomalies that did not only defraud Filipinos but also the German taxpayers as well in this graft-tainted project.

If it is any consolation to us Filipinos, we don’t have the monopoly of corruption in our country. Corruption is a two-way street. And in law, both the bribe-giver and the bribe-taker are equally guilty, whether you are a Filipino or a foreigner.

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