Jarius Bondoc | The Philippine Star | June 30, 2017
The Commission on Audit's fraud review of three past MRT-3 maintenance contracts is anti-climactic. Half-a-million regular riders already know there was sleaze. Starting 2012 they've been suffering frequent breakdowns, long waits, jam-packed rides – and injuries. What's left undone is to punish the culprits. The COA audit can initiate that – at last.
The Dept. of Transport had paid out P54.5 million a month for the upkeep. Yet MRT-3 trains, tracks, signaling, power, and stations only deteriorated. The money went to:
(1) PH Trams, Oct. 2012-Aug. 2013;
(2) Global Epcom, Sept. 2013-June 2015; and
(3) seven subcontractors, July-Dec. 2015.
Poring over the documents, the COA will spot graft. DZMM’s Ted Failon, Sen. Grace Poe, and this column have long exposed that:
• DOTr abruptly fired 12-year-long upkeep servicer Sumitomo, then declared an emergency to justify negotiated contracting. Talks were contrived with three parties. Yet the first, Sumitomo, was disinterested; the second, MiescoRail, complained of insufficient notice to quote a price. Only two-month-old, inexperienced, undercapitalized PH Trams got in. Its chairman and authorized rep was a Liberal Party-mate of contracting Sec. and LP head Joseph Abaya. PH Trams hardly bought spare parts, normally 65 percent of maintenance cost, so couldn't field the required 20 trains on peak hours.
• Bidding was rigged for next contractor Global Epcom, owned by Abaya's general manager at Philippine National Railways. Authorized rep was the same PH Trams chairman, Abaya's LP-mate. Dilapidation worsened, as still no parts were bought. Global Epcom merely used up $17 million (P850 million) in stocks left behind by Sumitomo.
• No bidding, the work was then given to seven subcontractors. Favored Global Epcom stayed, its P54.5-million monthly fee halved, to do the easiest: cleaning the stations. For monthly fees ranging from P7 million to P37 million, others handled the rolling stock, power, elevators and escalators, and ticketing. Still no spare parts. Communications went to a company with no rail experience, TriLink, owned by Sen. Antonio Trillanes' cousin and biggest contributor in the previous 2013 election.
MRT-3 maintenance is now with Busan Universal Rail Inc. BURI got its P3.8-billion three-year contract, starting Jan. 2016, also by closed-door negotiation. Abaya's LP-mate is still very embedded, along with a second one. Expectedly the same sloppy work continues.
BURI's contract too needs a fraud audit, says Rep. Jericho Nograles of Puwersa ng Bayaning Atleta. He cites three reasons in a letter to the COA this week:
(1) BURI was paid P54.5 million on each of the first eight months, minus only slight penalties for service interruptions and train shortages on peak hours. Undelivered spare parts and unfulfilled work were not deducted. BURI itself admitted it in Congress inquiries, Nograles said.
(2) Excessive amounts were paid for expenses that BURI could not justify. Four of 16 such overcharges were: (a) P83,000 monthly salary for each of six janitors at the MRT-3 depot; (b) P74,000 daily water to wash the exterior of only 60 or so coaches; (c) P436,000 monthly waste removal at the depot, compared to only P20,000 during Sumitomo's stint; and (d) P29.5 million for painting and retouching of coaches, depot, and posts – yet never done. (These overcharges need detailing in a separate column.)
(3) BURI's P3.8-billion contract has unauthorized signatories, so is void from the start. Mere undersecretaries signed: Edwin Lopez, Rene Limcaoco, and Catherine Gonzales, plus then-MRT-3 general manager Roman Buenafe. By law, a bureau head like Buenafe can sign only procurements less than P5 million. Under E.O.s 423 (2003) and 645 (2007), anything higher must be signed by the department secretary, in this case Abaya. In the secretary's absence, only the President may sign, not any u-sec. Abaya was not on leave during the negotiations with and contracting of BURI. He was very much in the news making alibis for the delivery of faulty new trains from China. One other flaw invalidated the deal. It was signed with BURI, yet the DOTr previously had qualified and negotiated with a "Busan Transport Co. joint venture," which is nowhere registered with the Government Procurement Policy Board, the Dept. of Trade, or the Securities and Exchange Commission. In an earlier letter to present Transport Sec. Arthur Tugade, Nograles cautioned against any more monthly payments to BURI under an infirm arrangement.
If it audits the BURI deal, COA would find more fraud. The excuse for negotiated contracting was that two biddings for the maintenance had failed; yet during the talks the DOTr threw in the P907-million overhaul of 43 coaches and the P888-million new signaling, for which there had been no previous biddings. That violated the Procurement Reform Act. Too, the financial terms of reference drastically were altered. At first it stated that any joint venture member should have at least P1 billion capital. It became P1 billion combined capital, to suit the four under-financed Filipino dummies of Busan.
Speaking of which, Abaya's separate P3.8-billion purchase of faulty Chinese trains needs a fraud audit too. The COA would find out that his LP-mate had brokered it.