Diwalwal agency reports directly to Malacañang

The DENR’s Philippine Mining Development Corp. sent a rejoinder to my item on the admin’s rush to bid out Diwalwal (Gotcha, 1 Oct. 2008). Edited only for brevity, chief legal counsel Jaime de Veyra says:

“Allow me to respond directly to issues you raised:

“First, the bidding being conducted by PMDC is for exploration and mining development only of Upper Ulip-Paraiso, a 1,620-hectare portion of the 8,100-hectare Diwalwal mineral reserve.

“The PMDC decision to divide the reservation into parcels was made middle of last year. Bidding was delayed because we had to resolve first the concerns of small-scale miners and indigenous peoples.

“The $20 million is not comparable with the $70-million committed expenditure (not floor price) during the bidding under the previous PMDC president. The current bidding involves an area of only 1,620 hectares; the previous involved 4,000 hectares, including the gold rush area of 729 hectares. The gold rush area is being occupied and worked on by thousands of small-scale miners. Therefore, part of the work program would involve addressing the concerns and interests of the small-scale miners.

“Second, the bidding schedule cannot be considered tight as it conforms with periods provided for in the Procurement Law. We published our invitation to bid on Sept. 5, 2008, and gave prospective bidders from Sept. 8 to 23, 2008 to submit their intent to bid. Eventually, we extended the period to Oct. 10, 2008. In short, bidders were given a period of more than one month to express their intent. After they pre-qualify, they have an additional three weeks for due diligence before submitting their bid. The periods are in excess of what is required by laws and regulations.

“Third, PMDC’s reservation of its right to reject any and all bids and declare a failure of bidding is a standard provision in bidding notices which may be found everyday in the notices published in newspapers. This is also pursuant to regulations. Needless to say, PMDC will only reject bids which are non-compliant.

“Fourth, $20 million is not the floor price. It refers to the committed amount that the winning bidder will spend for his work program. PMDC has set the minimum commitment fee at $1.5 million, which the winner will pay upon execution of the contract. This is in addition to the royalty of 5 percent of gross sales of the minerals, which the winner has to pay during production-operation phase.

“Sixth (sic), there is no prohibition for PMDC to bid out Upper Ulip-Paraiso as there is no injunction by any court of competent jurisdiction which would prohibit or restrain us from bidding the subject area.”

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The issue is still transparency, though. Whether it’s 1,620 or 4,000 hectares and P20- or P70-million minimum plunk in, PMDC should state the financial basis for its bidding. In Nov. 2006 the government estimated its Diwalwal mines to be worth $1.8 billion. Yet we don’t see PMDC asking for minimum assured income for government. Did they forget to do this in the rush?

Too, when Atty. de Veyra first wrote on Sept. 4, he cautioned me that Diwalwal has pending Supreme Court cases, so sub judice and not for public discussion. Yet his PMDC is conducting a bidding that could pre-empt the rulings. Is it sub judice when they don’t want any media talk, but okay to bid out when it suits them?

Speaking of Upper Ulip, four tribes are seeking DENR action that can mar the bidding. The Manobo, Mandaya, Mangguangan and Debabawon hold ancestral title over 30,000 hectares of Monkayo mountains, including much of Diwalwal. When they applied in 2006 for exploration permit in 950 hectares of Diwalwal, the DENR urged them to forge joint operations with PMDC. In turn the PMDC, as DENR corporate arm, kept telling them to tie up with a specified Chinese company. They found out later that the favored foreigner allegedly is set to win the bidding. The tribes reportedly got funds for community development and legal work from British gold prospectors.

The muddle has to do with a Malacañang crony — an ex-official — who brought ZTE Corp. and another Chinese miner into Diwalwal. While still a Palace bigwig, that crony had snooped into PMDC affairs. Before leaving he caused the agency’s transfer to Malacañang supervision in July, and “return” to DENR in Dec. 2007. PMDC reports directly to the Office of the President, which selects its directors and officers. That’s why it swiftly began talking revenue sharing with ZTE in July 2006 right after the Palace illegally granted the foreigner mining rights in Diwalwal. ZTE wanted 90 percent of profit.

That July 2006 contract is still in force. Watch out for the bidding result.

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Former presidential chief of staff Mike Defensor also called to deny signing as witness to that July 2006 deal with ZTE. What he remembers signing, he says, did not state mining per se but only aluminum works, not national broadband network but telecoms in general.

Well, Defensor had better check with Sec. Peter Favila, who signed under “special authority” of President Arroyo. Or with his (Defensor’s) pals Yu Yong and Hou Weigui, ZTE’s main and witnessing signatories. Favila admitted to the contents of that deal under oath during the Senate hearing of Mar. 11, 2008. And the document shows Defensor’s signature on the entry of ZTE into mining operations in Diwalwal and North Davao.

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