Who has the better right?

The perfect question to ask right now is this – who has the right to operate NAIA Terminal 3?

There is a growing consensus that it is the Asia Emerging Dragon Corp. (AEDC) and not Manila Hotel Corp. which has the prior right to operate this controversial international passenger terminal. And why not? It was AEDC’s original unsolicited offer to build and operate the facility which was approved by government. On the one hand, MHC’s claim on the right to operate the terminal is based on its buyout of Fraport’s interest in the Philippine International Air Transport Corp. (Piatco), the same consortium which challenged AEDC’s offer and was consequently warded the contract to put up and operate the facility, a contract which was later nullified by the Supreme Court.

Jun Yasay, AEDC lawyer, hit it dead center when he said that AEDC retains the right to operate the facility since its approved original offer has not been voided nor withdrawn. Since the challenger to this offer, Piatco, was disqualified when its contract was declared illegal by the High Court, it is only but proper that the AEDC be given the right to operate the terminal.

The Fraport share purchased by Manila Hotel represents about 30 percent or $200 million of the reported $650 million construction cost. A Japanese contractor, Takenaka, meanwhile has said the terminal was constructed at a cost of only $290 million.

Yasay also explains that even if the buyout deal between Fraport and MHC was purely private in nature and granting it was a legitimated transaction, it still does not restore to Piatco the right to operate the facility by virtue of the sale of one of its members‚ interest. MHC’s claim is legally untenable since it amounts to an award of a franchise to operate the terminal without the benefit of a bidding.

He adds that as a result of the buyout, the Manila Hotel group at best may get a share of the just compensation to which Piatco will be entitled to depending on the outcome of the pending expropriation proceedings.

If we go a little deeper, the plot thickens.

Employees of the GSIS have deplored the plan to use GSIS money to finance the deal between Manila Hotel and Fraport. Manila Hotel is partly owned by GSIS. They said that although foreign financial institutions will finance the amount involved, it will still be a loan that eventually will have to be paid and GSIS will surely be obliged to share in the financial burden since it partly owns Manila Hotel.

Since GSIS is financed by contributions from its members from the public sector, shouldn’t it be more circumspect in choosing where to invest the money it actually holds in trust for its members? Piatco hardly qualifies as a proper and safe investment for GSIS funds. Remember how Piatco, the Chengs, Fraport, and their lawyers were accused of conspiring with some unscrupulous government officials to milk the NAIA Terminal 3 project for what it is worth?

As a brief reminder, the Chengs bagged the concession agreement for the project in 1996 notwithstanding lack of financial prequalification. True enough, they could not begin with the project until four years later when a new financier (Fraport) came in. During the construction, the Chengs and Fraport reportedly required contractor Takenaka to award 90 percent of the subcontracts to their "preferred" subcontractors and suppliers, preferred because they were either affiliates or would give huge commissions. Former DOTC Secretary Pantaleon Alvarez allegedly got three lucrative contracts himself. As a result, he is now facing plunder charges.

Funds continued to flow into the pockets of certain government officials to secure needed signatures for special clarificatory opinions and illegal amendments to Piatco’s concession agreement. Some say that up to $100 million was spent on bribe money to government officials. Who got the bulk of this will remain a mystery because Piatco and Fraport will never make a proper accounting to the public of where the funds went.

When the High Tribunal declared the contract null and void ab initio, the Piatco, the Chengs, Fraport, and their lawyers went into a mad scramble to get back some of the money. The arbitration cases filed by Piatco with the International Chamber of Commerce (ICC) and by Fraport with the International Centre for Settlement of Investment Disputes (ICSID) were but desperate attempts to gain leverage in obtaining the highest possible settlement from the Republic.

Unfortunately for Piatco and Fraport, their tactic backfired. They have awakened a sleeping giant. With the expropriation of the facility, there is no need to guess how much the facility really costs since it is now up to the courts to determine what the just compensation for the terminal will be. Graft charged have been filed against Piatco and Fraport officials with the Sandiganbayan. The plunder cases against Alvarez, the Chengs, Fraport officials, to name a few, has been submitted for resolution before the Supreme Court. And according to sources, the NBI has concluded its investigation of charges against Piatco, the Chengs, and Fraport for violation of the Anti-Dummy Law. Criminal charges for violation of anti-monopoly laws are also underway based on records showing that the shareholders‚ agreements for Piatco required that the Chengs and their companies be given monopoly of cargo handling, ground handling, fueling, and catering.

Let’s not forget that the bad guys do not win all the time.

Not So Hidden Agenda

The business community believes that Former Trade and Industry Secretary Johnny Santos, chairman of the Ramon Magsaysay Awards Foundation, is doing the right thing in concentrating on non-government organizations. This way, he will be of great help to our country.

Since his retirement from Nestle and before joining government, he had been an active trustee of this prestigious foundation, and has served as chair since 2004. And now that he is out of government, he is back to one of his greatest passions, helping out NGOs. While still CEO of Nestle, he encouraged outsourcing of non-core activities to SMEs in the filed of logistics, distribution, product promotion, and service providing. Let’s wish him all the luck.

For comments, e-mail at philstarhiddenagenda@yahoo.com