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NFA’s P1-B deal probed

Ex-head OKs cargo contract without bidding

NFA workers unload tons of rice imported from Vietnam. INQUIRER FILE PHOTO

Former National Food Authority Administrator (NFA) Orlan Calayag and his special assistant, Dennis Guerrero, have been placed under investigation for allegedly granting a P1.08-billion rice cargo-handling contract to a trucking company without a bidding being conducted, a violation of the antigraft law, according to Francis Pangilinan, the presidential adviser on food security.

Calayag was appointed by Agriculture Secretary Proceso Alcala on Jan. 17, 2013, to replace Lito Banayo, who is facing graft charges in the Office of the Ombudsman for illegal acts allegedly committed when he was the NFA head.

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Calayag resigned as NFA administrator in May 6 following the appointment of Pangilinan who now exercises jurisdiction over the NFA, instead of the Department of Agriculture (DA).

Alcala’s assistant for policy

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After Calayag resigned from the NFA, Alcala appointed him assistant secretary for policy at the DA. Guerrero is now Alcala’s chief of staff.

Pangilinan identified the firm that was the recipient of the billion-peso contract that his office is now investigating as Avega Bros. Integrated Shipping Corp. with offices in Makati City.

Questionable

He said the questionable contract covered the 800,000 metric tons (MT) importation of long-grain, well-milled white rice and brokens that were bought from Vietnam Southern Food Corp. 11 (Vinafood 11) last April.

Vinafood, represented by its general director, Truong Thanh Phong, is a Vietnamese state corporation which supplies the rice that the Philippines imports to serve as buffer stock during calamities and in preparation for the lean rice months.

A DA employee on Friday said Calayag could not be contacted because he was in Malaysia.

Seller or buyer?

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Guerrero on Friday claimed that Avega Corp. was the cargo handler of choice of Vinafoods, not the NFA.

“The seller (Vinafoods) chose Avega Corp. The NFA had nothing to do with the selection of the cargo handler, the NFA had no contract with Avega,” Guerrero said in a telephone interview.

Purchase contract

However, Guerrero’s statement was contradicted by a purchase contract dated Nov. 26, 2013, a copy of which was obtained by the Inquirer, between Vinafood and the NFA signed by Calayag for the purchase of 500 MT of well-milled rice with 25-percent brokens. The contract showed that the NFA had appointed the cargo handler, not the seller.

The surveyor and cargo handler item B in the contract read:  “Seller shall utilize the cargo handler appointed by the buyer for the unloading and delivery of cargoes from the disport to the designated warehouses, for the sellers account. The scope of work of the cargo handler is subject to the conformity of the buyer.”

Told about the contract, Guerrero still insisted that it was the NFA policy that the seller chooses the cargo handler.

“You read the contract carefully, it’s a policy, the seller not the buyer has the choice to choose the cargo handler,” he said.

Based on the NFA policy, the cargo handler handles the unloading of the imported rice from the vessel, as well as the transport of the cargo inland, replacement and repacking of torn bags and delivering the rice to the designated NFA warehouses.

An NFA source said the wording of the purchase contract pertaining to the appointment of the cargo handler was changed during Calayag’s time to suit his alleged preference for Avega Corp.

An earlier contract dated April 17, 2013, between the NFA and Vinafood for the purchase of 187,000 MT of rice states that the “seller shall inform the buyer of its appointed cargo handler for the delivery of cargoes to the buyer’s designated warehouses. All the expenses thereto shall be for the sellers’ account.”

Overpriced by $3 per MT

A look at Avega Corp.’s website showed the firm as headed by Alec and Alexander Vega and its date of establishment as 1981.

Former National Food Authority Administrator (NFA) Orlan Calayag. FILE PHOTO

The Inquirer visited the Avega Corp. office in San Antonio Village but was told by a secretary that her employers were out.

Another NFA source said that the cargo handling cost is overpriced by at least $3 per metric ton.

The contract between Vinafood 11 and the NFA also indicated that all government taxes and duties in the handling and delivery of the imported rice are for the NFA account.

According to several documents obtained by the Inquirer, Calayag openly endorsed Avega Corp. as the cargo handler of the Vinafood rice imports.

Calayag also sent a memorandum dated May 16, 2013, to all NFA regional directors disregarding Vinafood 11’s chosen cargo handler. The memo also stated that he had designated Avega as the cargo handler of the rice imports.

“Please be informed that Avega Bros. Integrated Shipping Corp. is the cargo handler of our rice imports with Vinafood 11. In this regard, please coordinate with Avega on the logistical requirements needed in the unloading of our rice imports and up to the designated warehouses. Please disregard all other communications pertaining to the cargo handler,” the memo said.

At the time the communication was sent out by Calayag, there was an existing contract between Vinafood 11 and DYS Seair Worldwide Inc. designating the latter as the handler of the rice cargo purchased by the Philippine government.

Forced to hire Avega Corp.

According to the NFA source, DYS was forced to hire Avega Corp. as a subcontractor after the NFA did not allow the unloading of the rice shipment that had arrived from Vietnam.

“To cut demurrage costs and losses because every delay will cost them, DYS decided to give in to the request of NFA to use Avega,” the NFA source said.

The source added that the rice shipment arrived on May 6, 2013, but was only unloaded on May 15, 2013, nine days after its arrival.

NFA pressure

The source also said that on May 8, 2013, Guerrero, Alexander and Allison Vega, Alfredo Diy Roa and NFA deputy administrator Luduvico Jarina traveled to Vietnam to inform Vinafood of their choice of cargo handler.

Initially, the source said, Vinafood refused because of its existing contract with DYS, “but had to yield to the pressure of NFA to avoid incurring more losses.”

Pangilinan said that his office is now in the process of gathering documents against other individuals who may have received kickbacks in connection with the suspect cargo-handling contract.

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TAGS: Avega Corporation, Department of Agriculture, Francis Pangilinan, Lito Banayo, National Food Authority, NFA, NFA policy, Orlan Calayag, presidential adviser on food security, Proceso Alcala
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