Constitutionality of Piatco contract questioned

The Philippine Airlines Employees Association (PALEA) will ask Malacañang and Congress to investigate reports that majority of the Philippine International Air Terminals Co. Inc. (PIATCO), operator of the Ninoy Aquino International Airport (NAIA) Terminal 3, is now controlled by the German firm Fraport AG.

Romy Sauler and Antonio Josue, PALEA officials said if published reports from Germany are true that Fraport controls 70 percent of PIATCO, "then there could be a violation of the Constitution, particularly on the 60 percent foreign ownership rule."

They said, they are inclined to believe that PIATCO is now controlled by Fraport, more than what the constitution allows, in view of the huge sums of money being poured into the project by the German firm since a consortium of international banks would not release funds until allegations of corruption on the project have been cleared up.

A leading financial newspaper in Germany, Handelsblatt, carried in its Dec. 11, 2001 issue a story headlined "Fraport Must Renegotiate Terms of Philippine Airport Contract" that "Fraport in effect controls 70 percent of PIATCO, the company set up by the Chengs, a local business tycoon family of Chinese origin, to manage Terminal 3."

The company, according to the article, has assumed the role of primary contractor, using its own money after four major creditors would not release loans totaling $440 million to Fraport for the Terminal 3 construction. To date, it has reportedly spent $300 million for the project.

The article acknowledged that the anomalies surrounding the project could jeopardize Fraport’s investments. "For Fraport, these corruption allegations have not just been a source of bad publicity. They have also caused the project to become a financial drain… the interim financing agreed by Fraport’s supervisory board will be close to running out."

Sauler said PIATCO should make public the amount of its investment in the project to protect the country’s interests. "Such vital infrastructure project should remain in the hands of Filipinos to protect the country’s interests," he said.

It was learned that at the time PIATCO won the bidding for the project, its paid-up capital was P500 million compared to actual cost of the project, which was then pegged at $350 million. Since then, project cost has risen to $600 million.