P111-B bridges to ‘serial plunder’?

SEN SERGIO ‘Serge’ Osmeña III on Monday, Sept. 17, accused former President Gloria Macapagal Arroyo of orchestrating a case of alleged “serial plunder” that allowed her and her associates “to overprice by tens of billions the P111-billion President’s Bridges Program.”

Osmeña’s investigation into the “highly anomalous undertaking” was triggered in part by a three-part report of the PCIJ (The Perils and Pitfalls of Aid, Feb. 11-13, 2008) on projects funded with Official Development Assistance (ODA).

But in the case of Arroyo’s bridges program, Osmeña said the P111 billion is the total amount of 14 bridge contracts that were “misrepresented” as having been funded by ODA or concessional financing from foreign governments.

The contracts were all awarded to Mabey & Johnson, a manufacturer and supplier of fabricated steel bridges based in the United Kingdom, and funded with, or so Arroyo and her officials had claimed, ODA from the UK.

But a PCIJ inquiry with the UK Embassy in Manila at the time yielded a contrary version of the story: It said the bridges were neither funded with ODA nor guaranteed by the UK government.

“This is the grandmother of all scams,” Osmeña said, citing that Arroyo and her officials from at least five government agencies “formulated a highly complex scheme that pushed the costs of the bridges way beyond their market prices.”

“Mrs. Arroyo must explain to the Filipino people these very anomalous series of contracts that they forged with foreign companies. She and her cohorts could be held liable for plunder because this involves P111 billion in people’s money,” he added.

According to Osmeña, “the overpricing was disguised as ‘local expenses’ averaging 16 percent to 21 percent of the total project cost. That amounts to roughly P20 billion, which could have built all the classrooms that Filipino children had been needing so badly.”

“Such a fee is big considering that each steel bridge is estimated by the Department of Public Works and Highways (DPWH) — and I think they were underestimating it — to cost around P560,000 per linear meter, he said, stressing that “our concrete bridge costs only P240,000 per linear meter.”

“I’m now wondering why the Arroyo administration purchased the more expensive steel bridges. Even our Skyway in Metro Manila is made of concrete. The Filipino people would have spent only P50 billion instead of P111 billion if we had hired Filipino producers to build the same length of concrete bridges,” Osmeña said.

His investigation showed, he said, that “there was collusion between government agencies to get every steel bridge project approved, exposing that there were no public biddings conducted and there was only one favored supplier for every bridge project.”

Mrs. Arroyo, he added, managed to “misrepresent” the entire bridges program as an ODA-funded project, “which justified her government’s decision to forego public bidding.”

He said, “Mrs. Arroyo even issued two Executive Orders which overrode the provisions of the Government Procurement Act and other laws, which mandate public bidding even for ODA-funded projects.”

“Fortunately for us,” Osmeña said, “we have some alert people in the media, PCIJ, the Philippine Center for Investigative Journalism, and they picked up the story in 2008 and they wrote a letter of inquiry to Peter Beckingham, the Ambassador of the United Kingdom in Manila, asking if indeed the Mabey & Johnson projects had been guaranteed (by the UK Export Credit and Guarantee Department or ECGD) and sourced from ODA.”

Quoting portions of the reply letter that the PCIJ received from the UK trade attaché, Osmeña noted a firm denial by the UK government that the Mabey & Johnson contracts had been guaranteed and funded by ODA. “In other words,” he said, “naloko tayo.”

The PCIJ’s 2008 investigation into ODA-funded projects showed that more than three-fourths of the £513-million guarantees that Mabey & Johnson got from the UK’s ECGD were for sales in the Philippines alone.

The British maker of steel bridges, through the efforts of its well-connected agent in Manila, was the supplier of choice for the special bridge-building programs not just of Arroyo but also of two other Philippine presidents before her — Fidel V. Ramos and Joseph E. Estrada.

A December 2005 investigative report in The Guardian newspaper concluded that Mabey & Johnson’s bridge sales to the Philippines helped the Mabeys become one of Britain’s richest families.

In 2004, the newspaper rich lists ranked the Mabeys No. 141, with an estimated wealth of £310 million.

“Analysis of the company’s accounts shows that the dramatic leap in fortunes has come largely from its Philippine contracts, worth £429 million and all funded by UK-backed loans,” the report noted.

Osmeña averred that, “the NBN-ZTE telecom and North Rail contracts pale in comparison with the GMA bridge contracts. The ZTE contract amounted to P13.7 billion and the North Rail contract amounted to P21 billion,” Osmeña said in a press statement released by the Senate.

“These P111-billion serial scams are eight times the ZTE contract and five times the North Rail contract,” he said,

The three-part report, “The Perils and Pitfalls of Aid”, was authored by PCIJ Fellow Roel R. Landingin, who is also the Manila correspondent of The Financial Times of London.

The series won for Landingin the top prize in the Jaime V. Ongpin Awards for Investigative Journalism in 2009.

Read the PCIJ’s three-part report on ODA-funded projects:

Part 1: ODA surge sparks scandals for Arroyo, debt woes for RP
Sidebar 1: NEDA in knots

Part 2: Bids sans caps, tied loans favor foreign contractors
Sidebar 2: Aid for whom?

Part 3: Seven in 10 ODA projects fail to deliver touted benefits
Sidebar 3: A toll tale