The Mystery Of Binga: Who is Law Cho Shek?

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Philippine Center for Investigative Journalism ( Third of a series )

But interviews with Binga and Napocor insiders, as well corporate and official documents, all indicate that the Binga deal did get off to a questionable start.

In early 1993, Tan arranged a meeting at Malacañang between Ramos and a group of Chinese investors from the Chinese state-owned firm China Chang Jiang Energy Co. (CCJEC). At that time, the Philippines was suffering from 12-hour brownouts, and Congress had not yet passed the law granting Ramos emergency powers to enter into contracts with independent power producers (IPPs).

Napocor officials who were present said Tan and Ramos wanted them to sign a contract right there and then for the rehabilitation of the Binga plant, with CCJEC as contractors. But the state power firm officials refused, since Napocor technical personnel had not yet reviewed the document.

To provide a blanket of legality over the procedures, Napocor decided to invite bidders, although the process was not formally called a bidding. Records show that a solicitation of project proposals was advertised on April 30, May 1 and 2, 1993, for a "canvass bidding" that was to be held on May 17, 1993.

The two-week time period given to prepare the bids was not enough, say Cruz and other people who studies the bidding procedures. "It’s not easy to study a project and put up a bid," says a lawyer who is familiar with the case, adding that coming out with a proposal alone could cost millions of pesos. Cruz also recalls that given the short time frame, "it was indeed very difficult for serious proponents to make viable estimate for such a big project."

Late bid entertained

The bidding was held on May 17, 1993, from 2 to 5 p.m. According to Cruz, when the clock struck five, only three proponents – all local contractors – had been able to submit their bids. He says the Chinese arrived after 5 p.m., yet their bids were entertained. Cruz says he found that suspicious since he had participated in previous biddings where the deadline was strictly kept.

The bids were supposedly opened in the absence of the bidders. The CCJEC offered the Napocor a price of $.0449 per kilowatt hour for the energy that Binga was to produce. FF Cruz’s proposal was $.0480; Cruz was later to fume in a letter that the closeness of the Chinese bid to that of his company’s was "statistically improbable if not impossible in a clean and formal international bidding."

Before anyone knew it, CCJEC was declared winner, and the government soon entered into a negotiated contract with it. In a memorandum to Ramos on May 28, 1993, then presidential legal counsel Antonio Carpio advised the former president that he could grant the Napocor authority to enter into a negotiated contract for Binga, under Republic Act 7648 or the Electric Power Crisis Act, which Congress had passed just a month before. In the marginal notes appearing on the memo, Carpio wrote, "Sir, this is the first project to be negotiated under RA 7648." (Underscoring Carpio’s).

Other legal experts would not share Carpio’s apparent excitement over the deal. One lawyer who studies the Binga case later lamented, "Is this the best we can do for Binga? Bring in a China Chang Jiang? Couldn’t we have done better than this?" The question had to be asked because, as it would later turn out, the Napocor continued to pay the Chinese company even after it became obvious that it was not fulfilling the provisions of the contract, mainly to dredge the Binga reservoir.

On Sept. 19, 1994, then Batangas Rep. Hernando Perez, who is now the Secretary of Justice, delivered a privilege speech exposing how CCJEC "has been milking and milking the Filipino people." Perez cited how from Aug. 12, 1993 to March 25, 1994 alone, the Napocor paid CCJEC P257 million in fees even as silt continued to collect in the Binga reservoir. Other records show that CCJEC collected a total of $24.89 million in net payments from August 1993 to August 1995.

Some of the Chinese officials of CCJEC would later be accused of dollar salting, charges that others involved in the Binga project say were trumped up to get them out of the way. Whether that was true or not became moot after the CCJEC’s Chinese officials were deported. Before they left, however, they turned over their shares to a Taiwanese firm called Thunder International, which then became majority stockholder of the company.

Herman Ho was designated Thunder’s representative. A deed of assignment dated May 20, 1995 showed that the other shares were transferred to Chan Bun Pen, president of Mindanao Shipbuilding Corp., a Binga subcontractor, and to Jesse D. Alto, an accountant and supposedly the representative of Catalino Tan, whose name thus far had yet to appear in any of the documents.

Shortly after that, Ho would also find himself slapped with charges, this time from the Bureau of Immigration. One day in 1996, Ho landed at the Ninoy Aquino International Airport only to find himself barred from entry. Immigration officials said he did not have the necessary working permit and that he was blacklisted from entering the country. Yet someone privy to Ho’s case says that save for a handwritten note from then Immigration Commissioner and former Lakas congressman Leandro Verceles, there is no record of any complaint against the Taiwanese.

All this time, CCJEC had a capitalization of only P13 million. In December 1996, the company informed the Securities and Exchange Commission it was changing its name to Binga Hydroelectric Plant, Inc. (BHEPI).