Commission On Audit: Malampaya projects cornered by a few

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In the mid-1990s, Teddy Tiotangco was a roadworks contractor, whose small company was weighed down in debts.  His Chinese creditors hounded him like a wanted man with estafa cases.

That his BCT Trading was down and out wasn’t unusual at that time because business was really just bad. There was no money to be made from government contracts as the budget pie for public works was but a meager portion of the regular internal revenue allotment (IRA) of a small, isolated province with an annual revenue income of less than a billion pesos.

Palawan was such as sleepy town that even the Asian Development Bank (ADB) had hedged from funding the main road that will link most of the northern towns to the capital of Puerto Princesa City. “They (project evaluators) traveled north to Taytay enduring the impossible road and observed that there was little traffic that they wondered if people really needed that road,” former Gov. Salvador Socrates recalled.

The completion of the north road aside, no one had anticipated the boom that was to change things drastically. When oil companies hit pay-dirt and discovered the huge Camago-Malampaya natural gas deposit in the bottom of a deep seabed off El Nido, things influenced by economics started to look up. Royalty money soon came to Palawan and the business of government contracting never had it so good.

Today, Tiotangco is the registered owner of Puerto Princesa’s swankiest four-star hotel, not bad for a player who, for the longest time, had to toggle between building waiting sheds for former Gov. Joel Reyes and running a vulcanizing shop.

Teddy’s woes, however, are not far from over. A still unpublished Commission on Audit (COA) report on the expenditure of some P2.6 billion in Malampaya funds that went to Palawan in the late 1990s had identified his firm as one of those who had received undue favors from Capitol, corning a big chunk of the funding set aside mostly for infrastructure projects.

COA auditors, in a report obtained by the Inquirer, wondered how BCT Trading, for instance, won 80 Malampaya-funded contracts from the provincial government, all but one of which it had to implement simultaneously. The contracts were huge, the biggest ticket being a P400-million reclamation project in the bay of Coron, Reyes’ hometown.

Simultaneous projects

The 60-page report questioned why the provincial bids and awards committee (PBAC) did not automatically disqualify BCT Trading from other projects after it had already been awarded its first Malampaya project.

“There was misrepresentation, when logically the key personnel cannot be present in all the projects simultaneously,” the report stated. It noted that contractors must provide key personnel in each project “one contract at a time.”

COA found Reyes and the PBAC liable for graft in extending special favors to a select group of private contractors. The offenses ranged from disregarding standard bidding procedures to ensure a level playing field for all qualified contractors to the awarding of contract in favor of companies which were otherwise not qualified under strict bidding regulations.

The state auditors have recommended the filing of criminal and administrative charges against Reyes and several other provincial officials.

“This is of plunder proportions,” remarked Cesar Ventura, who heads a lobby group advocating for transparency in the Malampaya fund expenditures in Palawan. But whether plunder charges may actually be filed against Reyes and his people remains to be determined by the Office of the Ombudsman.

Lenient to contractors

The COA auditors also questioned why the provincial government did not impose penalties on the contractors after records had established delays in their accomplishment reports. To begin with, the report said most contracts did not incorporate provisions for liquidated damages and penalties as required under Section 68 of Republic Act No. 9184 (An Act Providing for the Modernization, Standardization and Regulation of the Procurement Activities of the Government and for Other Purposes).

The auditors noted the failure of the provincial government to deduct the required 10 percent retention money, estimated at P85.6 million from the progress payments to the contractors for the 217 Malampaya-funded projects.

In the case of the San Vicente Airport project, which had received close to P300 million, the COA cited as irregular its split into six different contracts, a ploy which, it said, favored certain private contractors and violated Section 54 of RA 9184. One of the contractors involved in the project had an expired PBAC registration, it said.

Solar home systems

A provincial government program to distribute solar home systems to outlying communities not reached by electrical services also came under scrutiny. The COA report showed anomalies in the collection system of fees paid by beneficiaries.

It noted that government collection agents were not properly authorized and pointed out missing funds amounting to P5.9 million as of Oct. 31, 2009.

At the very least, the report vindicated the late Dr. Gerry Ortega, who had used his daily primetime radio program to attack Reyes and the Capitol for allegedly misusing the Malampaya funds.

Ortega was shot dead on Jan. 24, 2011, and investigators have pointed to Reyes as the suspected mastermind and the motive of silencing the gutsy radio commentator.

“My dad died for this (Malampaya exposé),” Ortega’s daughter Erika said.

Reyes has repeatedly denied involvement in the killing. At the Department of Justice, the preliminary investigation of the murder case is still in progress. The crime is nonbailable.

Lifestyle check

Civil society groups and the Ortega family have called on the government to conduct a lifestyle check on Reyes and other government and private individuals who may have “unduly benefited from Malampaya funds.”

Ventura claimed that Reyes’ current lifestyle and his declared financial condition “does not add up” as his group, the Kilusang Love Malampaya, reiterated calls for a lifestyle investigation.

There is no paper trail that would link Reyes to some of the major assets rumored to be his, including Hotel Centro in Puerto Princesa and Gateway Hotel in Coron.