MANILA, Philippines—The three construction firms that were blacklisted by the World Bank can still do business in the projects of the Philippine government, Public Works Secretary Hermogenes Ebdane said Tuesday.

Ebdane told the Senate committee on economic affairs that the rules of the Department of Public Works and Highways (DPWH) provided for such an arrangement. He said the three firms were barred only from bidding on projects funded by the World Bank.

“We follow a set of rules that if they so qualify, they can be involved, unless there are some other violations,” Ebdane said.

Sen. Miriam Defensor-Santiago, the committee chair, retorted that this would then allow the blacklisted firms to “continue with their collusion” at the DPWH, if indeed there was such a collusion.

Ebdane said CM Pancho Construction Corp., one of the blacklisted firms, was in fact still taking part in the World Bank-funded National Roads Improvement and Management Program, known as NRIMP 1, as it had won the last project there in 2007.

Santiago later told reporters that the “biggest problem” at the DPWH was the collusion of bidding contractors. She said this had resulted in deficient road and other infrastructure projects.

‘Very defective’

At the hearing, Santiago zeroed in on what she described as the “very defective” DPWH guidelines for contractors.

She said that for one, the guidelines had no measure on the preventive suspension of blacklisted firms.

“You have to suspend the firm so that it cannot go around destroying evidence or threatening witnesses,” she said.

According to Santiago, the guidelines also have an “outlandish” provision that “negates the concept of blacklisting” when it allows a firm blacklisted by the DPWH to continue with a project and profit from it.

Saying this provision “does not make sense,” Santiago urged Ebdane to amend the DPWH guidelines within 30 days.

Ebdane could only agree.

Sen. Manuel “Mar” Roxas II said the mere fact that the World Bank blacklisted the companies showed that the bidding process at the DPWH was “defective.”

He said this was because “the bidding did not produce the best price and the best quality for the Filipino people because it allowed a collusive product or a collusive outcome.”

“What is central to this is the bidding undertaken by the DPWH. The rules and regulations of the DPWH in fact allow this collusion to happen,” Roxas said.

‘Jumping the gun’

Ebdane told the senators that the DPWH actually “jumped the gun” on the controversy because he had earlier requested President Gloria Macapagal-Arroyo to drop World Bank funding for two of the 10 projects in NRIMP 1 costing $33 million.

In a statement he prepared but was not able to read at the inquiry, Ebdane said the projects were dropped due to a failure of bidding.

But eventually, he said, these projects were “repackaged” into three projects and local funding was allocated.

“There was no transaction because we dropped funding for the project and we continued it with local funding. And it was only in November 2007 that the World Bank came out with its investigation [of collusion],” he told the senators.

But Ebdane’s explanation did not sit well with Santiago, who said it was not only World Bank money that was spent but also the money of the government

“There’s still collusion,” she said.

And despite the senators’ questions on the World Bank findings on the collusion of the firms, Ebdane said he had no information because the World Bank had sent its report to the Department of Finance and the Office of the Ombudsman.

He said he got wind of the World Bank investigation in 2007 and his office conducted its own probe.

Ebdane also said his office had blacklisted 700 construction firms for violations of DPWH rules. He said it was preparing to blacklist 300 more.

5-minute interview

The senators also grilled the contractors accused of collusion by the World Bank.

Eduardo de Luna of E.C. de Luna Construction Corp. denied that his firm, which was permanently barred by the World Bank, had colluded with another.

He said he was “interviewed” for five minutes by two World Bank officials in his office in 2007. He said he was asked how he bid in projects and who his partners were.

No documents were asked from him, he said.

Asked by Senate President Juan Ponce Enrile if the investigators had mentioned the involvement of other contractors in the collusion, De Luna replied in the negative.

But Enrile said this was “impossible.”

“You are being investigated for collusion. You can’t collude with yourself,” he told De Luna.

Santiago asked De Luna and contractor Lamberto Lee Jr. of International Construction and Development Corp. who they were dealing with at the DPWH.

“In your ordinary course of business, you’re talking with people there. Who are they?” Santiago said.

De Luna and Lee replied that they talked with almost all the DPWH officials because they were doing business there.

This angered Santiago, who told them that they were “stonewalling.”

In a briefing after the hearing, Santiago said it was impossible that these bidders were not in collusion with government officials if they kept on winning project contracts.

“If the World Bank said these three firms were colluding with each other, who are the others we still don’t know of?” she said.

Apology

A day after she stormed out of the Senate in protest of what she thought was an attempt by her colleagues to stop her committee from being the lead investigator in the blacklisting controversy, Santiago said she had apologized to Sen. Francis Pangilinan and intended to do the same to the other senators.

Santiago last week questioned a move of Pangilinan, the former majority leader, to transfer the inquiry to the public works committee chaired by Sen. Ramon Revilla Jr. or the blue ribbon committee chaired by Sen. Richard Gordon.

Pangilinan Tuesday confirmed that Santiago had apologized to him. He said “she explained that she was very frustrated about corruption.”

No Joker

But even if the inquiry pushed ahead, Sen. Joker Arroyo did not attend the hearing.

He said that as early as November 2007, three senators had sought an investigation of the suspension of the World Bank loans due to the alleged collusion of some firms, and that no probe was done by the committee on economic affairs.

The committee was then headed by Sen. Loren Legarda, who, along with Senators Roxas and Revilla, filed resolutions seeking an inquiry on Nov. 21, 2007.

“There was never a hearing in 2007 and then the World Bank complains, and suddenly there is a hearing… Are we suffering from guilt or inferiority complex?” Arroyo told reporters.