Just memos, contract, with Chinese firm, says BCDA

No contracts, just memorandums of understanding (MOUs) with Chinese companies for feasibility studies, said the Bases Conversion and Development Authority (BCDA) chief, as a senator called on Malacañang to investigate how Chinese firms with tainted track records were tapped for major Philippine infrastructure projects during President Duterte’s state visit to China.

But BCDA president and CEO Vince Dizon did not give a categorical answer when asked if he knew the companies he was dealing with were banned by the World Bank from participating in all road and bridge projects funded by the international financial institution.

In a statement, Dizon [no relation to the Inquirer reporter] said that while BCDA admired the “diligence of the Philippine Daily Inquirer in finding the World Bank document regarding CCCC [China Communication Construction Company] and its subsidiaries … the same diligence should have been exercised in simply reading the MOU that was signed, which very clearly states that the MOU is only for the conduct of a study for the project at the cost of the Chinese company and not the Philippine government.”

“It is by no means an award of the contract … We are very far from that point in the process, we are only at Step 1—the feasibility study—and to make an assertion that the project has already been ‘bagged’ or awarded to a company is completely false and irresponsible,” Dizon said.

Duterte visit to China

The MOUs were borne out of the recent state visit of Mr. Duterte to Beijing, where he secured $24 billion worth of investment and credit line pledges.

Trade Secretary Ramon Lopez later announced that $15 billion worth of 26 investment projects were signed, including the Bonifacio Global City (BGC) -Ninoy Aquino International Airport (Naia) segment of the Metro Manila Bus Rapid Transit-Edsa project and the 65-kilometer Subic-Clark Railway project (SCRP) that will traverse through Subic-Clark-Tarlac Expressway.

The BCDA said China Road and Bridge Corp. (CRBC) expressed interest in the BGC-Naia project while China Harbour Engineering Co. (CHEC) was interested in the SCRP project.

SCRP was highlighted in the MOU as one of the “top priority development infrastructures intended to be implemented during the term of the Duterte administration.”

The BGC-Naia segment is part of the Metro Manila-BRT system approved in September last year by the National Economic and Development Authority Board headed by the President.

The project aims to provide alternative mass transit in Metro Manila.

CCCC Dredging Co., another CCCC subsidy, has also bagged Philippine projects despite involvement in reclamation activities in the South China Sea.

CCCC Dredging signed an investment project with Mega Harbour Port for the Cebu International and Bulk Terminal Project.

Collusion in bidding

The World Bank debarred CRBC in 2009 after its internal investigation showed that the company had colluded with several Filipino and foreign companies in the bidding process for the first phase of the Philippine National Roads Improvement and Management Program.

The ban was extended to CRBC’s parent company, CCCC, and its subsidiaries, including CHEC, in 2011.

Corruption watchdogs in other countries protested their governments’ contracts with CCCC and its subsidiaries, citing the World Bank debarment.

Asked if he knew about the World Bank’s debarment of CRBC and CHEC, Dizon replied:

“We are now aware of it and we thank the Inquirer for their diligent work, but the debarrment does not bar them from conducting a feasibility study at their own expense especially since the project is not a WB project (Editor’s note: The preceding sentence was belatedly sent by the BCDA and does not appear in the printed version of the article. KS”

“We would like to reiterate and reassure the Inquirer, [Inquirer reporter] Ms Dizon and the public that when the project finally reaches the stage of implementation, it will go through the most rigorous, stringent and transparent procurement rules of the Philippines, and if any company is deemed banned or unqualified then it will not be allowed to participate in the bidding process.”

The World Bank ban on CRBC, its parent company, CCCC and consequently CHEC as a subsidiary, is enforced until Jan. 11, 2017, or three months from now.

Effective from signing

The BCDA’s MOUs with the two Chinese companies are effective from the date of their signing and would be “valid for 12 months, extendible for another 12 months” as long as they send a written notice to BCDA two months before the expiration of the initial period.

According to the World Bank, the debarment on CCC, CRBC and CHEC could be reduced to three years, if after “five years of the date of ineligibility, CCCC has put in place an effective corporate compliance program acceptable to the World Bank and has implemented this program in a manner satisfactory to the World Bank.”

Dizon said the MOUs were “nonexclusive” and did not preclude the government from “considering other groups or companies interested in the project.”

Reaction of senators

Amid the controversy, Sen. Panfilo Lacson called on Malacañang to immediately look into  how Chinese firms with questionable integrity were contracted for major infrastructure projects during Mr. Duterte’s state visit to China last week.

Lacson warned that the involvement of the Chinese firms—one banned by the World Bank for fraudulent practices and others known to be involved in land reclamation activities in the disputed Spratly Islands under protest by the Philippines—may affect how Filipinos regard the President.

“Whoever is responsible (for tapping the Chinese firms) must be dealt with accordingly and with dispatch. Malacañang should lose no time in investigating the matter and get to the bottom of this embarrassing issue,” he said.

Huge red flag

Sen. Leila de Lima said the World Bank ban should have served as “a huge red flag.”

“I am very wary and cautious of such arrangements as these are avenues and instruments of corruption. We have to make sure that our interests are being protected,” she said.

“Instead of ‘change is coming,’ this might turn out to be just another way of scamming the Filipino people. We have been burned by that,” De Lima told the Inquirer.

Sen. Grace Poe, chair of the Senate committee on public services which handles transportation concerns, emphasized the need for transparency in any project that involves public funds.

“Allegations of corruption by contractors are red flags that should caution us in our dealings with them,” she said.