Law bars railway deal this close to elections

What is it with elections that make the Arroyo admin rush into shady deals with Chinese state firms? Recall that:

• In 2004, when Gloria Arroyo ran for a full presidential term, she approved the construction of the 32.2-kilometer North Luzon Railway. The contract with China National Machinery and Equipment Corp. initially was only for $355 million. It has since risen inexplicably to $400 million, then $503 million, and now $802 million, the costliest railroad in the world. No public bidding was made, only price negotiations with CNMEG and a loan from China Export-Import Bank. The National Economic and Development Authority, headed by the President and consisting of Cabinet appointees, okayed the deal. But the Monetary Board never certified to the availability of loan repayment funds. To this day CNMEG has yet to construct the first kilometer of rail. But RP already is repaying China EximBank $1 million a month since Sept. 2004 in loan interest alone, excluding quarterly principal.

• Northrail was tied to China’s demand in the same election year for a Joint Marine Seismic Understanding. Under the pact with China National Offshore Oil Corp., RP unconstitutionally allowed the alien firm to explore 24,000 square kilometers of western territorial waters. The pact expired only last July. As oddly stipulated in the document, RP did not even get a copy of the seismic report.

• Moving up to the 2007 congressional-local elections, Malacañang illegally awarded ZTE International Corp. unconstitutional mining rights. Again with no bidding it gave away gold veins in Mount Diwalwal and North Davao. Signing by authority of Arroyo was Trade and Industry Sec. Peter Favila, with then presidential chief of staff Mike Defensor as witness. The same contract permitted ZTE to set up an exclusive economic zone in Mindanao, as well as agribusiness concessions.

• On April 21, 2007, barely a month before the balloting, Arroyo flew to China to personally award to ZTE the national broadband network deal. At first it was set at only $62 million-$78 million, depending on changing specs, whistle-blowing engineer Dante Madriaga testified at the Senate. It rose to $132 million when ZTE execs and Filipino lobbyists inserted their kickbacks. Engineer Jun Lozada swore that the proponents’ immoderate greed swelled the price further to $168 million then to $262 million in early 2007. When businessman Joey de Venecia offered a much lower price via build-operate-transfer, the other side tried to shoo him off with $10 million. He exposed the scheme. Still, Arroyo left a life-threatened spouse’s sickbed to witness the signing of $329 million, later proved to be overpriced by $200 million. Signing for RP was Secretary of Transportation and Communication Leandro Mendoza.

• In the same event at the Hainan airport four more deals with Chinese state firms were signed. All called for loans from China EximBank, for repayment by Filipino taxpayers but without Monetary Board clearance. Malacañang later hid the papers by claiming these were stolen from a hotel room moments after the signing.

Now comes another sleazy deal so close to the May election. The DOTC has announced the award of the 11.7-kilometer Light Rail Transit-1 Extension to a Chinese state firm. LRT-1 execs originally had budgeted only $683 million, or P32.1 billion at an exchange rate of P47:$1. But when the China Shanghai (Group) Corp. came in, the rate inexplicably zoomed more than two-and-a-half times to $1.78 billion (P83.66 billion). At $152 million (P7.15 billion) per kilometer, LRT-1 will beat Northrail as the world’s dearest.

Again there was no public bidding, only closed-door negotiations at DOTC and lobbying at NEDA. Again too RP is to borrow construction funds from China EximBank. DOTC Undersecretary Guilling Mamon-diong was silent on whether they will bother to secure Monetary Board assent. He only said in recent press releases that they would soon sign the contract.

There’s a hitch actually. Election laws bar the government from awarding contracts during the election period, which began last January 10 and ends on June 10. Along with the ban on hiring, firing and transferring government personnel, the contracting ban is to prevent election kickbacks. Sitting elective officials are also divested of undue advantage. Violation of the laws would mean disqualification from the campaign, removal from office, and imprisonment of up to six years.

Then again, the ban never stopped the Arroyo admin in 2004 and 2007. Testimonies of Lozada, de Venecia and then-NEDA Sec. Romy Neri on the ZTE scam showed that then-Comelec head Ben Abalos was among the Chinese firm’s lobbyists. Malacañang never sought Comelec exemption from the contracting ban. Officials just went on and collected their “tong-pats”. Is it happening all over again with the LRT-1 extension?

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“What God allows to happen to you is best for you if you accept it. Regret not your limits; grow through it.” Shafts of Light, Fr. Guido Arguelles, SJ

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