MANILA, Philippines – The Department of Justice (DOJ) affirmed yesterday the indictment of the executives of Fraport AG Worldwide Services Inc. and the Philippine International Air Terminals Co. (Piatco) for violation of the country’s anti-dummy law in connection with the Ninoy Aquino International Airport (NAIA) Terminal 3 project.
In a nine-page resolution signed by Undersecretary Francisco Baraan III, the DOJ denied the respondents’ consolidated petitions seeking a review of its earlier resolution dated March 15, 2007, which found probable cause against the Fraport and Piatco officials.
The respondents have been accused of using Philippine corporations as fronts for their investments in Piatco to circumvent the 40-percent ownership limit for foreign investors.
Indicted were Cheng Yong, Peter Henkel, Jason Cheng, Jefferson Cheng, Rita Bonifer, S. Samin Aydin, Lilia Cheng, Hachiman Yokoi, Gil Camacho, Katherine Agnes M.C. Arnaldo, Joerg Seyffart, Marife Opulencia, Mary Antonette Manalo, Ricardo Castro Jr., Hans Arthur Vogel, Dietrich F.R. Stiller and Noemy Dacanay.
“In this case, it is not disputed that the NAIA Terminal 3 project involves a nationalized activity; that the foreign investments in Piatco exceeded the 40 percent allowed under the Constitution,” the DOJ ruled.
It cited as main evidence the admission of Fraport in an international arbitration body of its having 61.44-percent interest in Piatco, while Nissho Iwai, another foreign investor in Piatco, has a 10-percent stake.
“Under the circumstances, there is sufficient ground to believe that a violation of the anti-dummy law was committed and there is probable cause to hold respondents for trial,” the DOJ added.
In a press conference, Baraan stressed that the latest DOJ ruling could have an implication in the ongoing bid of Fraport to claim damages from the Philippines.
“It only shows that Fraport was dealing with business in the Philippines through illegal means,” he said.
“It was easy to trace,” Baraan said of the German firm’s use of foreign firms to conceal the true extent of its exposure in Piatco.
He said the DOJ has found that the following corporate holders of Piatco were owned by Fraport: Philippine Airport and Ground Services Inc., Philippine Airport and Ground Services Terminal Inc., Philippine Airport and Ground Services Terminal Holdings Inc. and People’s Air Cargo and Warehousing Co. Inc.
The NAIA 3 project is covered by a concession agreement executed on July 7, 1997, under a Build-Operate-Transfer (BOT) scheme.
The case stemmed from a letter-complaint dated Oct. 21, 2003 of lawyer Jose Bernas of the Bernas Law Office and a complaint-affidavit dated Nov. 19, 2003 of lawyer Melanio Elvis Balayan in his capacity as convenor and executive director of CLAMOR, a lawyers’ group advocating justice, accountability and moral leadership.
In December 2002, the Senate Blue Ribbon committee ruled that the NAIA 3 concession was void because Piatco had violated the BOT Law and had resorted to wheeling and dealing to bag the deal.
The Supreme Court also declared the deal void in May 2003, citing among other reasons violation of the BOT and banking laws.
The DOJ, the Office of the Ombudsman and the Anti-Money Laundering Council also initiated criminal investigation of Piatco and Fraport officials for their alleged violation of the Anti-Dummy Law and Anti-Graft and Corrupt Practices Act.
In August 2007, Fraport lost its bid before the International Center for Investments Dispute (ICSID) to collect $425 million from the Philippine government after the German firm was found to have violated the Anti-Dummy Law in the Philippines.
Six months ago, an arbitration before the International Centre of Arbitration of the International Chamber of Commerce (ICC) also dismissed Piatco’s claims due to violation of the Anti-Dummy Law.
Sen. Francis Escudero, reacting to the DOJ ruling, said the indictment would put to test the integrity of the country’s anti-dummy law.
He said this “is the first time in recent history that an anti- dummy case will be filed against a big fish.”
“It is a good test case and to send a signal to forewarn all ‘dummies’ that what they are doing is illegal,” Escudero said.
Sen. Francis Pangilinan, for his part, said the filing of charges against the officials “would ferret out the truth behind the controversy once and for all.”