Piatco-Fraport paid off three administrations

Normally in constructions, the builder turns over the structure first for the owner’s inspection before final billing. Not so in the case of NAIA Terminal-3, whose ceiling collapsed days before scheduled test-run. Here, builder Piatco, German partner Fraport, and general contractor Takenaka are in a hurry to lay their hands on anywhere from $412-$560 million in construction fees. And officials of the owner-government are too eager to pay out a $55-million installment even without thorough check.

Piatco-Fraport’s haste is understandable. Their own collection suits in Singapore and Washington unexpectedly drew damaging testimony about sloppy work and slush funds. Get the money and run would be the aim of any larcener before the entire roof caves in from more leaks of shenanigans.

The officials’ alacrity is strange, though. It’s as if they’re partners in a long-drawn cover-up. The tale of Terminal-3 spans three administrations. In each, officials appear to have made hay while the sun shined.

In 1996 the Chengs who own Piatco had grabbed the build-operate deal from original proponent Asian Emerging Dragons Corp. It was a fast break. Piatco took a look at AEDC’s bid, then bested it by offering lower construction costs yet higher revenue shares to the government. There was a catch. Piatco worked from totally different terms of reference – a breach of the build-operate law. That the bid passed nonetheless could only have been the result of payoffs.

Piatco then slept two long years before constructing. Under a new regime in 1998 it suddenly awoke to wangle an amended contract, this time for a higher building fee and lower operation share to the government. For good measure it appended two self-serving supplemental agreements.

Only then did Piatco-Fraport hire constructor Takenaka. Their deal held two tidy provisos: Takenaka was to tap favored subcontractors and suppliers listed in a "Schedule 7"; otherwise, it was to reveal the names and phone numbers of outsiders, who would then be subject to Piatco’s calls. Takenaka’s designer Robin Swinnerton later explained why. "What then happened was a systematic bullying of the potential subcontractors ... for as much as 10 percent of the bid price ... as kickback to the relevant people in Piatco."

Maurits Van Linder, project manager of Siemens AG, was bolder. His firm had partnered with Fuji-Haya to bag mechanical and electrical works worth $129 million, two-fifths of Takenaka’s $323-million contract. Siemens’ margins dipped because forced to take in unqualified but favored suppliers in Schedule 7.

Linder swore at the Washington arbitration: "Piatco, Fuji-Haya, Dai-Dan – which incidentally took over Fuji-Haya’s scope of the M&E subcontract – and Takenaka were taking the differentials and using (these) to pay bribes to government officials, including President Estrada and his Executive Secretary, Mr. Zamora, as well as pay kickbacks to the Chengs, Fuji-Haya and others." He submitted as Exhibit 11 a flow chart of payoffs, identifying Estrada cronies who own Fuji-Haya and Dai-Dan.

Came still another administration. The payoffs continued, going by the consul-tancy contract of Alfonso Liongson, a retired drug salesman and Cheng kin. The guy came into the picture in June 2001 when Piatco-Fraport creditors imposed 77 conditions for their first loan drawdown. The cohorts tapped Liongson for an up-front fee of $200,000, monthly fee of $200,000, and $1.8 million to obtain eight vital signatures from government officials in compliance with the lenders’ stipulations.

In a record two weeks, Liongson waved two accomplishments. He won approval by then-transport chief Pantaleon Alvarez, through officer-in-charge Wilfredo Trini-dad, of yet a third supplemental agreement, letting Piatco build a surface road connecting Terminal-3 to 1 and 2, in lieu of an $18-million tunnel. Too, he got transport office assent for Piatco subsidiary PAGS Terminals Inc., into which Piatco illegally had bought more than 40 percent, as the new contractor-operator of Terminal-3. For these, Liongson was "paid" $1 million.

Piatco founder Vic Cheng Yong had claimed in a Senate inquiry that Liongson got a total of $2.1 million for "publicity fees". He didn’t give a complete story. About $6.3 million passed through Liongson’s accounts in Hong Kong Shanghai Bank (HK) and Banco de Oro (Manila). Just before he was hired, Piatco lawyers incorporated two firms – Jetstream Pacific Ltd. and Mainland Global Inc. – in the Virgin Islands. The lawyers, aspirants for the Supreme Court, dissolved them in July 2004. Still, Piatco-Fraport during their three-year corporate life laundered funds through Jetstream’s HSBC Account No. 485-6-605763 and Mainland Global’s HSBC Account No. 485-5-605764. The authorized signatory for both accounts was Liongson.

Emanating from Liongson’s Hong Kong and Manila banks, funds went to pay:

• Vic Cheng Yong, $1.6 million,

• Top Victory Investments, $2.5 million,

• Stephan M. Bauchpless, a former Piatco director who had left the project before receiving $75,000,

• Maxtor Asia-Pacific, an Asian subsidiary of a US technology company, $582,000,

• Liongson himself, $1.7 million, and

• anonymous and undisclosed recipients, $2.1 million.

Liongson is now golfing away in the San Francisco Bay Area, far from the reach of Philippine law. But since part of the loot came from and went back to Manila banks, the Anti-Money Laundering Council would do well to investigate. After all, the damning papers have been in the hands of government officials since 2002 – along with reports on the shoddy work and bribes.

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