GOVT  TOSSED  BLAME  ON  CORRUPTION TO  WB; WILL  PROCEED  WITH PROJECTS

MANILA, NOVEMBER 21, 2007
(STAR) By Sandy Araneta And Paolo Romero - The government tossed the blame to the World Bank yesterday on corruption-tainted road projects worth $265 million and said it would push through with the implementation of the projects even without the bank’s funding.

At the same time, the Office of the Ombudsman will launch its own inquiry into reports of corruption in the nationwide road building project, which led the World Bank to withdraw a $33-million loan and hold off $232 million more.

“We will be asking the assistance of the World Bank in the conduct of our investigation,” Ombudsman Merceditas Gutierrez told The STAR.

Budget Secretary Rolando Andaya said the World Bank was partly to blame for the alleged irregularity because its procurement system was prone to corruption.

“This is an alleged incident. It happened, if ever it happened, because of its (WB’s) own system and not our own government’s procurement system,” Andaya, who is also the chairman of the interagency Government Procurement Policy Board, said.

“It was for all intents and purposes a World Bank bidding,” he said.

Public Works and Highways Secretary Hermogenes Ebdane Jr. said even without funding assistance from the World Bank, the government will push through with phase 2 of the road project.

Ebdane said that in the event of the cancellation of the entire loan, the government would utilize the P900 million allocated for DPWH for next year as well as a portion of revenue from road users’ taxes.

He said the government is “capable of implementing this project using local funds although it will take us a longer time to complete.”

The World Bank earlier announced that it was shelving its funding for the 2nd phase of the National Road Improvement and Management Program or NRIMP – totaling $265 million – in the wake of an internal report on bid-rigging involving a Chinese construction company and local contractors.

Fu Yucheng, the representative of the Chinese firm China State Construction Engineering in Manila, denied the allegation last Monday saying the firm did not participate in the World bank loan project.

“The government supports all efforts to curb corruption,” Secretary to the Cabinet Ricardo Saludo said in a statement.

President Arroyo is in Singapore for the Association of Southeast Asian Nations (ASEAN) leaders’ summit and has only just been briefed on the WB report.

“We have had many years of cooperation with the World Bank, especially in procurement reform,” Saludo said.

He said the government’s anti-graft agencies will “look into and act on any solid evidence of corruption.”

“While there may be some damage we hope to be able to resolve it,” Presidential Management Staff chief Cerge Remonde said.

Finance Secretary Margarito Teves welcomes a probe and said he is confident the issue will not affect pending and future loan negotiations.

“We will allow the Ombudsman to take action. We should give the Ombudsman time to look into this,” Teves said.

He said the World Bank informed him of the review way back in April last year.

“I don’t think this will have any effect on other loans. Nevertheless, we are in a better position to consider other options,” Teves said. “We can use our own resources for future loans and those offered by other multilateral agencies.”

He said the World Bank had recently described the Philippines as the best performer among Southeast Asian middle economies.

“I see no reason why they will change their view on the Philippines. Our macroeconomic fundamentals are strong,” Teves said.

World Bank regional vice president Jim Adams, in a statement from Washington released in Manila late Monday, said the Philippine government must adopt “stringent anti-corruption measures” and form a “citizen and road user” group to monitor the project before the World Bank board will consider the $232-million shelved loan request.

The World Bank said it had originally pledged between $580 million and $630 million for a multi-phased national road improvement and management program.

It disbursed about $138 million between 2000 and 2007 for contracts covering the first phase of NRIMP, while rejecting two other contracts between 2003 and 2006 “because of strong signs of collusion and excessive pricing” linked to government procurement.

The second phase of the project would have involved improvements on 450 kilometers of national arterial roads and bridges.

World Bank spokesman Peter Stephens said he expects the board to discuss the projects again in the next weeks because it wants “to be sure that all of the safeguards and precautions are in place.”

No stopping road project

“Most of these projects under NRIMP-2 involve maintenance anyway. It will just be a matter of prioritization,” Ebdane told reporters at a news conference.

“And in terms of delay, the NRIMP has already been delayed for three years already because of changing requirements of the World Bank. So the State of the Nation projects of the President are affected as far as meeting the target completion is concerned,” he pointed out.

But the official admitted that it would be more convenient for the government if the World Bank finally decided to release the loan.

“I think it should be clarified that the loan program was just set aside by the World Bank and no official decision has yet been announced. In fact, they tapped representatives in Southeast Asia to go to the ground,” Ebdane said.

“They told us the processing of the loan program is still ongoing.”

The DPWH chief declined to comment on reports that corruption issues prompted the World Bank decision.

“We don’t have access to the data of the World Bank so we don’t know the details,” he said.

WB blamed

“Definitely it was not our rules. The World Bank has already sent word that it’s willing to adopt our system,” Andaya said as he urged the lender to go back to the negotiating table.

One weakness of the WB procurement regime, he said, is it allows the bidders to quote above the ABC or awards and bids committee of the implementing agency. “There is no permanent ceiling to speak of.”

“In contrast, the Philippines’ Government Procurement Reform Act or GPRA fixes a price ceiling which cannot be breached and there lies the big difference – and the superiority of our own bidding rules,” Andaya said.

“They have elastic price limits while we use immoveable ones,” he said.

“Nothing gets approved without the imprimatur of the bank. WB-funded projects are subject to what I call close-quarter monitoring. By practice they are there every step of the way,” the budget chief said.

He conceded that any country which borrows from a foreign source “inevitably loses some of its sovereignty when it comes to the utilization of aid or credit.”

Senators eye probe

Still with their hands full, some senators are open to investigating the NRIMP corruption allegations.

“There is a need to look into that report. The Senate will not hesitate to look into that report especially once a resolution has been filed. I want to clarify that we are not so keen on the conduct of inquiries, it just happened that problems such as these crop up and we have to do our jobs,” Senate President Manuel Villar said.

Sen. Loren Legarda said the Senate economic affairs committee, which she chairs, may try “to determine the circumstances that led to the loan’s deferment in line with its ongoing public hearings on the utilization of overseas development assistance funds.”

“However, the better approach may be for all concerned Senate committees to hold joint public hearings on the issue,” she said. “We need to look into this so we can pass remedial legislation providing safeguards in the use of so-called soft and tied loans.”

For his part, Sen. Manuel Roxas II called the latest controversy “a huge national embarrassment.”

“I support the World Bank’s recommendation for the creation of a civil society-led ‘Road Watch’ group to promote transparency and integrity in the bidding of these projects. Sadly, however, this is also an indication of the need for independent monitors just to ensure that government does its job in an honest and professional manner,” Roxas, chairman of the Senate committee on trade and commerce, said.

“A thorough investigation is needed to verify the facts surrounding the failed bids and the circumstances that led World Bank officials to defer the grant of these infrastructure loans,” he said.

“If indeed, Public Works Secretary Hermogenes Ebdane had ordered an early investigation into the three failed bids cited in the World Bank report, then what were his findings?” he asked.

Ground for resignation

Militant groups said the latest controversy should bolster calls for Mrs. Arroyo to resign.

“The move of the World Bank merely affirms what we already know, that many public works projects in the Philippines are tainted with corruption,” Bayan secretary general Renato Reyes Jr. said.

“And if a foreign multilateral lending agency like the World Bank can take notice of these shady deals, then the Arroyo administration must really be pushing the threshold of corrupt practices. Therefore, calls for her to resign are justified,” Reyes said.

Bayan said this was not the first time that a road project in the Philippines was embroiled in anomalies.

Bayan cited the P1.1-billion Diosdado Macapagal Boulevard, which it called “the most expensive stretch of road on earth.”

“It was believed to be an overpriced stretch of road. The case is still pending with the Sandiganbayan,” Reyes said.

Bayan urged donor countries and financing institutions to rethink their relationships with the Arroyo administration. “It is really a cause for alarm if there is the perception that these aid go to the pockets of some unscrupulous officials.”

Mrs. Arroyo has been struggling to shake off the image of a graft-ridden administration amid several corruption scandals.

She has canceled a $329-million national broadband contract with China’s ZTE Corp. after a Senate hearing implicated elections chief Benjamin Abalos as a broker in the allegedly overpriced deal, as well as First Gentleman Jose Miguel Arroyo who has also been accused of pocketing kickbacks. - With Iris Gonzales, Christina Mendez, Katherine Adraneda, Edu Punay, AFP, AP


Chief News Editor: Sol Jose Vanzi

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