Huge bribes delayed $503-M Northrail project, says lawyer

MANILA, Philippines – The Chinese contractor of the $503-million North Rail project wants out because of the “huge bribe” paid to Filipino officials, causing a five-year delay in the project, according to a lawyer familiar with the case.

Speaking at the Serye Café news forum in Quezon City, lawyer Harry Roque said China National Machinery and Equipment Group (CNMEG), a state-owned corporation, spent most of the $150 million advanced by the government under its contract paying bribes.

“The contractor is backing out of the project because of the huge cost of corruption,” he said.

“They have paid big bribes to Philippine officials, and they want to recover those big amounts first before they proceed.”      

Roque said one official involved in the project had at least P500 million in his bank account.

“The Chinese contractor reported the bribes to President Arroyo last Monday when she met with them in Clark,” he said.

Chinese embassy officials know about the bribe or “tongpats,” but they “are not speaking about it, at least not publicly,” he added.

Roque said CNMEG  wants the government to advance an additional $200 million to recover the cost of alleged corruption, but that Malacañang has refused.

“This is the story that Palace officials are not telling the public,” he said.

Roque, who challenged the legality of the Northrail contract, said the Makati Regional Trial Court has ruled that since the contract is not a treaty, it is covered by the Procurement Law and should be subjected to public bidding.

“The court declared it as a commercial contract because it did not involve the exercise of sovereign functions,” he said.

Roque said CNMEG  has questioned the decision before the Court of Appeals, where the case is pending.

“They are claiming that it is a treaty and should not go through the requirement of public bidding, and that they are immune from suit because they are a Chinese state corporation,” he said.

Roque said administration officials are speaking “with discordant voices to hide the corruption involved in Northrail and the fact that the $150 million advanced by the government is already gone without an inch of railway being built.”

“One official claimed the project has been terminated, while another asserted that it’s still on,” he said.

Edgardo Pamintuan, whom Mrs. Arroyo has reportedly named to head North Luzon Railways Corp., said CNMEG has “demobilized” from the project, leaving it in limbo.

However, Executive Secretary Eduardo Ermita said the railways project will continue despite issues involving its contractor.

A similar Chinese-funded project, the plan to build a national broadband network (NBN) for the government, has been derailed by allegations of corruption.

The awarding of the NBN contract to Chinese firm ZTE Corp. was witnessed by Mrs. Arroyo herself on April 21, 2007, just days after her husband went through life-threatening heart surgery.

The First Gentleman was still recuperating when Mrs. Arroyo left his bedside for China for the signing ceremonies between ZTE officials and Transportation and Communications Secretary Leandro Mendoza.

There were claims that at least $130 million in commissions and kickbacks were to be made from the $329-million ZTE contract. There were even allegations of advances amounting to $41 million.