WORLD  BANK  PROMISED  TO  RELEASE  $232-M  LOAN  AFTER  INQUIRY

MANILA, NOVEMBER 22, 2007
(STAR) By Paolo Romero -7 The World Bank has promised to release the $232-million road building loan after the completion of an internal inquiry into alleged bidding irregularities in the first phase of the project, Budget Secretary Rolando Andaya Jr. said yesterday.

“They’re just awaiting the results of the investigation of the integrity group…but at the end of the day the project will be approved and implemented,” Andaya told a news conference at Malacañang.

He said World Bank acting Country Director Maryse Gautier gave the assurance over breakfast at an undisclosed hotel in Metro Manila. Andaya said Gautier also stressed that it was not the loan but the World Bank’s deliberation on phase-2 of the National Roads Improvement and Management Program (NRIMP) that was suspended.

“I was told by the WB country manager that it’s prudent on their side to put on hold the deliberations because there is no report yet. But it does not mean that there are anomalies and that was clarified to me,” Andaya said.

The World Bank’s Department of Institutional Integrity is reviewing NRIMP-2.

Andaya said Gautier voiced the World Bank’s wish that the procurement system be made safe, and that she assured him that the issue has not imperiled more than $7 billion in loans earmarked for the Philippines next year.

At one point during their breakfast meeting, Andaya said Gautier spoke to a World Bank official in Washington, after which she told him that the integrity body was independent and its report confidential.

Andaya said he is confident the World Bank will release next year the loan for NRIMP, after stricter bidding measures are put in place.

These include the Philippine Government Electronic Procurement System (PhilGEPS), which would be pilot tested for the second phase of NRIMP.

“Prior to nationwide roll out expected to be in July 2008, the harmonized PhilGEPS will be piloted in six agencies that are implementing ADB and WB assisted projects,” a joint statement signed by Gautier and ADB country director Thomas Crouch said.

In his meeting with Gautier, Andaya said it was also agreed that closer coordination would prevent problems such as when a blacklisted Chinese company was still able to participate in phase 1 of NRIMP because the World Bank bidding system was used. He did not identify the company.

Later in the day, Secretary to the Cabinet Ricardo Saludo released a joint government-WB statement clarifying that no World Bank loan was suspended.

The statement said one-tenth of the first phase of the project, amounting to $33 million, was cancelled due to failed biddings in three road contracts and these were reportedly the subject of the probe by the World Bank’s integrity team. Saludo said the first phase of the NRIMP was ongoing but using solely local funds.

The statement also said that the government and the WB instituted measures “to address bidding problems in the future.”

“The second phase, amounting to $232 million, is to be deliberated by the WB executive board upon submission of additional information requested when the Board first discussed the loan proposal last month,” the statement said.

It wasn’t clear what “information” the joint statement was referring to, but Andaya said it was the details of the proposal of the Philippine government to strengthen the bidding process, particularly with PhilGEPS.

“The WB continues to support development in the Philippines and remains actively engaged with the Government in strengthening governance and fighting corruption,” the joint statement read.

Finance Secretary Margarito Teves and World Bank officials are expected to hold a press briefing today on the issue.

China firm refutes WB

Fu Yu Cheng, representative of the China State Construction Engineering Corp., said the company “has never been and will never be involved in any form of irregularity in submitting project proposals.”

“China State Construction’s action is always aboveboard. We cannot risk tainting the good name and reputation of our company in any manner,” Fu said.

“We have always upheld the integrity of the company in our projects especially since it is state-owned,” Fu added. He also stated that China State Construction is one of the world’s largest construction companies with subsidiaries around the world.

Fu clarified that China State Construction won a road contract when the lowest of three bidders was disqualified. “Since our company was the second lowest bidder, we got the contract,” he said.

He also debunked reports that the World Bank had rejected three successive rounds of bidding involving his firm because of alleged signs of irregularity.

“We joined the first bidding, but not the second and third biddings,” he said. Fu also denied that the company had won other road-building contracts in the Philippines as part of a consortium with other Chinese firms.

“The allegation is entirely baseless,” Fu said. “China State has been barred from joining any bid during 2005, and joining a consortium with several other Chinese firms is not allowed.”

Senate probe

Senators will investigate beginning Monday the circumstances that led to the World Bank’s decision.

Senators Loren Legarda, Ramon Revilla Jr. and Manuel Roxas II filed separate resolutions asking appropriate committees to look into the matter.

Legarda, chairman of the Senate committee on economic affairs, said representatives from the World Bank, the Department of Finance, the Department of Public Works and Highways and the Department of Budget and Management would be invited to attend the hearings.

Legarda said the NRIMP should not have been tainted with corruption because it was supposed to be the government’s blueprint for modernizing the country’s road management.

Revilla, for his part, stated in his resolution the importance of keeping the international community’s confidence and trust.

“If we have to call foreign contractors to shed light on the accusations, we will. The integrity of the Philippine government is at stake here,” Revilla said.

“The World Bank report is not a trivial matter considering the huge amount of trust funds earmarked for its Philippine program and the prominent role it plays in promoting anti-poverty programs throughout the world,” Roxas said.

As of August, the WB assistance program in the Philippines covered 23 active projects with a total value of P1.28 billion.

“It is imperative that the Philippine government addresses this situation in a sober and systematic manner rather than being quick to put the blame on the alleged internal row among top officials of the World Bank,” Roxas said.

Sen. Panfilo Lacson said it is Malacañang, not the World Bank, that is to blame for the alleged bid-rigging.

“We will not be able to solve the problem if we won’t admit what the problem is, which is pervasive corruption in this administration,” Lacson said.

More furor

The Bagong Alyansang Makabayan (Bayan) accused the government of being “addicted to foreign loans,” which could have made it more vulnerable to corruption.

“The bottom line here is that at the end of the day, it is the Filipino people who will pay for the loans. If projects are overpriced, we have to shell out more in debt payments, to the great detriment of other social services that badly need government funding,” Bayan secretary general Renato Reyes Jr. said.

“The Philippine government under Mrs. Arroyo has been accused time and again of corruption,” he said.

Another group that claims anti-corruption advocacy said President Arroyo has to prove clearly that she does not tolerate corruption in her administration.

In a statement, the Center for Anti-Graft and Corruption Prevention Inc. said the latest controversy was an acid test of Mrs. Arroyo’s resolve to stamp out graft.

“Those corrupt public officials who took bribes and connived to rig the WB’s bidding process directly disgraced us. Worse, they put us, Filipinos, (again) in a very ugly spot for dire international humiliation before all men on earth,” Lane Afable, secretary general of the group, said. - With Sandy Araneta, Aurea Calica and Katherine Adraneda


Chief News Editor: Sol Jose Vanzi

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