Gov’t mulls suit vs Stradcom over fees

Transportation Secretary Manuel Roxas. INQUIRER FILE PHOTO

The Department of Transportation and Communications (DOTC) is mulling filing a court case against Stradcom Corp., the information technology provider of the Land Transportation Office (LTO), for the unauthorized collection of “interconnectivity fees” from other state agencies totaling over P2 billion over a  span of three years.

In a statement, DOTC said the possible suit stems from a recent Commission on Audit (COA) report that found that Stradcom deprived the government of revenue when it charged other agencies for the use of the LTO’s database of drivers’ license holders and registered vehicles.

“This is now a matter for litigation.  The DOTC is finalizing its legal position as we consider that this is unauthorized.  Our position is to recoup all unauthorized exploitation of the database which is owned by the government. The only method is through litigation,” Transportation Secretary Manuel “Mar” Roxas said.

Aside from the P2 billion in interconnectivity fees, the COA report said Stradcom charged P266 million  in “computer fees” for manually processed transactions.

The COA report noted that Stradcom failed to give the LTO its share of the revenue earned from letting other agencies use the database. Stradcom manages the database for the LTO.

Reacting to Roxas’ statement, Stradcom said all of its fees were legally sanctioned by both the LTO and the DOTC under the previous administration.

The DOTC statement acknowledged that Stradcom had been allowed to collect interconnectivity fees from other agencies since 2006, but said that the LTO should have been given its fair share.

“It’s a matter of contract execution,” Roxas countered. He said Transportation Undersecretary Jose Perpetuo Lotilla, head of the department’s legal group, had been ordered to go through the Stradcom contract line by line to find out what the company was authorized to do and not to do.

Budget hearing

Roxas had also revealed his plan to sue Stradcom during the Senate hearing of his department’s budget for 2012, after LTO chief Virginia Torres had complained the office had already lost an estimated P2 billion in interconnection fees since 2006.

“This is now a matter for litigation.  The DOTC legal (division) is finalizing its position (that) this (arrangement) is unauthorized,” Roxas told the senators.

Roxas added, however, that he could only elaborate further in executive session.

The DOTC’s plan was bared after Senator Panfilo Lacson asked during the hearing how much the government “is losing from Stradcom.”

Lacson noted that the Commission on Audit had asserted that the government owned the database used by Stradcom. “So why would it not give a share to the LTO for interconnectivity?

Torres said that aside from the interconnection fees that Stradcom collects “as per private contract,” it also charges fees for insurance.

“The (exact amount of the) interconnection fees are unknown to the LTO because these are private contracts with providers (entered into) without the LTO knowing it,” she said.

On the other hand, Stradcom insisted that there was nothing anomalous in its interconnection fees, which were duly authorized by the government.

“We were shocked to hear that Secretary Mar Roxas issued a statement that the DOTC is to sue Stradcom for its ’unauthorized exploitation of the database,’” Stradcom spokesperson Margaux Salcedo said.

“We welcome any investigation or case because DOTC records themselves will show that it was the government through the DOTC itself that engaged Stradcom to provide interconnectivity services from other government agencies to the LTO,” she said.

She noted that different department orders and memorandum circulars by the DOTC and the LTO, respectively, gave Stradcom the authority to charge fees to other agencies.

“Stradcom has never wanted to deprive the government of any income. In fact, as early as September 2010, Stradcom had already issued a proposal to the DOTC, addressed to then Secretary Ping de Jesus, proposing an income sharing system with the LTO wherein the government would get a revenue share of 20 percent,” Salcedo said.

This letter was received by the DOTC Office of the Secretary on Sept. 24, 2010.

Originally posted: 7:31 pm | Monday, October 10th, 2011