RP agrees to pay SGS P6.2B as settlement

The Philippines has agreed to pay P6.2 billion to Switzerland-based Societe Generale de Surveillance SA, a global goods inspection company, a top finance official said.

“In light of a recent ruling of the International Centre for the Settlement of Investment Disputes favoring SGS and the Commission of Audit’s recognition of government’s financial obligation to SGS, we believe this settlement is in the government’s best interest,” Finance Undersecretary Gil S. Beltran said.

In a statement, the Department of Finance said the government has agreed to settle an arbitration case with the Geneva-based company and has agreed to pay 150 million Swiss francs or P6.2 billion in two equal installments this year and next year.

Beltran said the settlement amount is lower than the total SGS billings for services rendered from Sept. 1998 to March 2000 amounting to 206 million Swiss francs or P8.5 billion.

The case is related to the country’s unpaid obligations to SGS for pre-2002 discontinued pre-shipment inspections contracts.

SGS, for its part, welcomed the settlement agreement.

“I am delighted that we could bring this matter to a fruitful conclusion. We are now, finally, in a position to put these matters behind us. For this, the board of directors of SGS thanks the government of the Republic of the Philippines for their continuous, constructive cooperation during the settlement process,” said Sergio Marchionne, chairman of SGS.

The settlement will be recognised in SGS’s consolidated accounts as an exceptional item.

This agreement is registered as an award of the International Center for the Settlement of Investment Disputes.