Corporate reputation

Why do some entities shy away from doing business with our government?

It’s like a box of chocolates. You never know what you’re gonna be getting.

Unfortunately, predictability and consistency in so far as the rules of the game are concerned is important to businesses. When these are thrown out of the window, which business in its right mind would want to do business with government, or worse, invest in the Philippines?

After a decade and a half of providing automated voting machines for the Philippine electoral exercise, Smartmatic was disqualified by the Commission on Elections from participating in future elections or at least until the Comelec changes its mind.

The Comelec en banc recently handed down the controversial ruling, saying that unresolved bribery claims against Smartmatic Philippines, a local unit of its London-headquartered parent firm, in relation to the 2016 elections affect the integrity of the polls.

The decision however has met heavy criticism, not only from Smartmatic which claims that it was denied due process but also from those who believe that the seemingly rushed ruling may have something to do with the next presidential election.

Smarmatic had questioned of the Comelec decision, which came days before the submission of the bid documents for the procurement of voting machines. The Comelec earlier set the deadline for the submissions for the 2025 automated election on Dec. 12.

There are also inconsistencies with statements from Comelec. While it is saying that the disqualification was to protect the integrity of future elections and that Comelec cannot afford to use a system that will bring doubt to the results of the elections, the poll body has also maintained that the ban does not mean that the integrity of the 2016 and 2022 presidential elections that utilized Smartmatic vote-counting machines and related services, had been compromised.

Comelec has never questioned the integrity of the technology and machines supplied by Smartmatic and in fact has been quite happy with previous election processes. So why ban it based on totally unrelated grounds?

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The ban, which Comelec insists it had the administrative power to do so, stemmed from an investigation launched by the US Justice Department against former Comelec chairman Andres Bautista for alleged corruption, conspiracy, wire fraud, and money laundering.

Comelec said that given the gravity of allegations related to bribery and compromised procurement processes, as independently determined by foreign bodies, the commission recognizes the imminent threat to the strength and integrity of the country’s democratic processes.

Bautista, who had denied the allegations against him, had awarded Smartmatic a $199 million contract for the supply of 94,000 counting machines for the 2016 presidential election won by former president Rodrigo Duterte.

US prosecutors have accused Bautista of receiving bribes in exchange for awarding the contract to Smartmatic and for having laundered the bribe money through multiple entities. They have asked the Philippine government for help to obtain official Comelec records to build the case against Bautista and others.

Not only is there no court ruling yet on Bautista’s case nor is Smartmatic facing any formal charges in the US, then why use that as a basis to disqualify Smartmatic?

Then there is this petition filed by a group led by former former DICT secretary Eliseo Rio and former Comelec commissioner Gus Lagman for the disqualification of Smartmatic for participating in public biddings and procurements for the 2025 automated election system (AES).

The group claims that the May 2022 national and local elections were marred by serious and material irregularities particularly in the transmission and reception of voting results.

But even before the case can be decided on its merits, the Comelec motu propio or on its own initiative voted to disqualify Smartmatic on grounds totally different from those cited in the case filed by Rio and company.

If it is Comelec’s intention to safeguard the integrity of future elections, including the 2025 presidential election, then this is definitely not the way to do it. In fact, by disqualifying Smartmatic based on these excuses and without observing the constitutional requirement of due process, the poll body is putting the upcoming bidding and the conduct of future automated elections in a very bad light.

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Smartmatic in a statement said that it has not been given the chance to respond to the bribery claims, adding that had it been allowed to explain its side, then the unfair disqualification would not have been meted out.

It emphasized that the basis for the ruling is not only false but also non-existent since it is not facing any formal charges in the US. But even if there is a pending investigation or indictment against it, Smartmatic pointed out that this does not automatically amount to guilt and that Comelec should abide by the constitutional presumption of innocence until proven otherwise.

Smartmatic questioned the timing of the Comelec decision, saying that the net effect of the surprise disqualification is to exclude it from the bid process, eliminating the biggest competition from the remaining bidders.

Meanwhile, Comelec chairman George Garcia explained that while the bribery allegations were not part of the June petition filed by Rio’s group, they were in a supplemental document later submitted by the same petitioners.

The Comelec chief insisted that there was an opportunity to be heard and that while the hearings have not yet been concluded, Smartmatic was asked to file a memorandum.

He also said that Smartmatic’s disqualification from participating in future election-related procurements is not perpetual but may change depending on the composition of the en banc or on the circumstances. But as far as the present en banc is concerned, the company is disqualified from here on, Garcia added.

But according to news reports, one Comelec commissioner submitted a separate dissenting opinion, saying that the poll body’s powers to enforce election laws is not a blank check for blacklisting technology providers without legal basis and finding the ban whimsical and arbitrary.

The same reports also revealed that even Comelec’s own legal department believes that there is no legal basis to review the eligibility of Smartmatic or prohibit it from participating in the procurement process of Comelec for the 2025 AES.

There are those who are saying Comelec’s rationale for banning a company based on a US government investigation would be comparable to our DICT banning Facebook in the country merely because it is under investigation in the US.

TikTok has been totally banned in a number of countries due to security concerns yet our government authorities are hesitating to impose a ban in the Philippines, even a partial one covering only government workers in the security sector until it is determined that the Chinese-owned company is using the platform to gather crucial intelligence information.

In administrative proceedings, what is required is the observance of procedural due process which is embodied in the basic requirement of notice and a real opportunity to be heard. As explained by the Supreme Court, to be heard does not mean only verbal arguments in court but also through pleadings. Meanwhile, the right to be notified includes the right to be actual or constructive notice of the institution of proceedings which may affect one’s legal rights.

A mere belated mention of the US bribery investigations against Bautista in Rio’s memorandum in connection with a still pending petition before the Comelec against Smartmatic involving a different ground does not seem to meet the requirements of procedural due process.

And we aren’t even talking about the damage to Smartmatic’s reputation that Comelec’s ban may cause.

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