NORTHRAIL:  AFTER  P11 BILLION,  WHERE'S  THE  RAILROAD?
 
MANILA, JULY 6, 2008 (STAR) By Jess Diaz - After the government spent nearly P11 billion for the North Luzon railway, the next question is: Where is the railroad?

“The government has advanced $150 million to the Chinese contractor. At the present exchange rate, that is more than P6.8 billion. The clearing of squatters along the railroad has cost taxpayers at least P4 billion. In all, expenses have reached a staggering P10.8 billion,” Harry Roque told reporters.

Roque said all that has been accomplished was the clearing of squatters by a task force led by Vice President Noli de Castro, who chairs the Housing and Urban Development Coordinating Council.

He said the Chinese firm contracted to do the project, China National Machinery and Equipment Group (CNMEG), “has nothing to show for the $150 million advanced to it.”

“Company officials are claiming that the bulk of the money has been paid to corrupt Philippine officials in the form of bribes,” he said.

He pointed out that Malacañang is insisting that the project is still on despite the contractor’s apparent unwillingness to proceed with it because billions in taxpayers’ money have already been spent for the planned North Luzon railway system.

The project is delayed by five years, according to Roque.

On Thursday, Roque revealed that CNMEG wants out unless it is able to recover the “huge cost of corruption” in has incurred.

He said the contactor wants an additional $200 million, which the government is reportedly unwilling to give.

“The Chinese contractors reported the bribes to President Arroyo last Monday when she met with them in Clark (in Angeles City),” he said.

He added that one official involved in the project had at least P500 million in one bank account.

He claimed that Chinese embassy officials know about the “tongpats” or price padding, but these diplomats “are not speaking about it, at least not publicly.”

Roque is the lawyer in a case challenging the legality and constitutionality of the Northrail contract.

He said the Makati Regional Trial Court has ruled that the contract is not a treaty between the Philippines and China, and that it is covered by the Procurement Law and should therefore be subjected to public bidding.

“The court declared it as a commercial contract because it did not involve the exercise of sovereign functions,” he said.

He said CNMEG questioned the decision before the Court of Appeals, where the case is still pending.

“They are claiming that it is a treaty and should not go through the requirement of public bidding, and that they are immune from suit because they are a Chinese state corporation,” he added.

Roque pointed out that administration officials are speaking “with discordant voices to hide the corruption involved in Northrail and the fact that the $150 million advanced by the government is already gone without even a meter of railroad being built.”

“One official claimed the project has been terminated, while another asserted that it’s still on,” he noted.

He was apparently referring to the conflicting statements made by Executive Secretary Eduardo Ermita and former Angeles City mayor Edgardo Pamintuan, whom the President has reportedly named to head North Luzon Railways Corp.

Pamintuan is taking over from Arsenio Bartolome, a former banker who had inexplicably quit after only a few months in the corporation.

The former mayor said CNMEG has “demobilized” from the project, leaving it in limbo; while Ermita said the railways undertaking will continue despite issues involving its contractors.

A similar Chinese-funded project, the plan to build a national broadband network (NBN) for the government, has been derailed by allegations of corruption.

Disturbing

Meanwhile, Senate Minority Leader Aquilino Pimentel Jr. expressed concern yesterday over the revelation of Roque, saying the allegations were “very disturbing and should provide a strong basis to continue the Senate inquiry into the foreign-funded railways project.”

Pimentel said the alleged bribes, and the fact that the project’s construction is already delayed by more than three years, should prod the Senate to investigate the railway project and to review the terms and conditions of the country’s agreement with the Chinese government, which is financing the project.

“We need evidence of Atty. Roque’s claims. It’s a serious charge. $150 million is not peanuts. It may mean implicating important persons. Of course, the Senate should investigate this deal,” he said.

The first phase of the NRP – a 32-kilometer stretch from Caloocan City to Malolos City – has a funding of $500 million, of which $400 million was borrowed from China’s Export-Import Bank and $100 million is the counterpart of the Philippine government.

But since the loan agreement was signed on Feb. 26, 2004, the project has not yet started. The construction of the railways should have started in 2005 after tens of thousands of squatters living along the rail routes were cleared and relocated.

Pimentel said he and other senators questioned the loan agreement after it was signed on account of its terms and conditions that were grossly disadvantageous to the Philippine government.

He said one of the provisions in the agreement that was unfair and inimical to the Philippines was the awarding of the project to a Chinese contractor chosen by China’s Export-Import Bank without the benefit of public bidding.

“Officials of Malacañang and members of the Cabinet ignored our objections and the demand for a renegotiation of the agreement by insisting that it was ‘aboveboard’ and beneficial to the Philippines. It turned out that they were in effect not interested in uncovering some of its fraudulent and onerous terms and conditions,” the minority leader said.

Pimentel said the Arroyo government committed another blunder when it contracted a second loan in 2006 – this time amounting to $500 million – from the China Eximbank to finance the second phase of the project, covering the railway line from Malolos to Clark Special Economic Zone, despite the undue delay in the implementation of the first phase of the project.

Despite the continued suspension of the railway project, Pimentel said the government is required to pay P1 million a day in loan interest to China’s Eximbank, the cost of which is ultimately passed on to Filipino taxpayers. – Christina Mendez

‘No bribe talk on Northrail’ By Dino Balabo Sunday, July 6, 2008

MALOLOS CITY – Edgardo Pamintuan, chairman and chief executive officer of the North Luzon Railways Corp. (Northrail), denied yesterday the allegations of lawyer Harry Roque that the Chinese contractors of the long delayed Caloocan to Malolos railroad project have reported to President Arroyo the payment of bribes.

“It is not true that the Chinese contractors reported the bribes to (President Arroyo) last Monday when she met them at Clark Field,” Pamintuan said.

He said the President met with the officials of the Regional Disaster Coordinating Council, including governors and mayors in Central Luzon and the regional police director who reported the damage caused by typhoon “Frank” in the region.

“We don’t know where Harry Roque got his stories,” Pamintuan told The STAR in a telephone interview.

Pamintuan said work on the $503-million Northrail project, which will rebuild the old Philippine National Railway (PNR) line from Caloocan to Malolos, has been suspended pending right-of-way acquisition, demolition of bridge piers, cost adjustments, approval of the variation order, and approval of the design by Northrail.

With regard to the $120 million withdrawn by railroad contractor China National Machineries and Equipment Group (CNMEG), Pamintuan said the money was spent for sub-structure and piling works, refining structures, soil stabilization in selected areas, embankment, temporary facilities, design, and preliminary testing like soil boring which impact the railway design.

He said the contract with the Chinese company has not been cancelled as earlier reported.

Pamintuan confirmed that the technical staff of the CNMEG for the 32.2-kilometer, double-track Northrail project has left as early as March.

The departure of the Chinese contractors triggered rumors in Bulacan that certain officials in the province have allegedly delayed the project to force the contractors to purchase filling materials from local quarry operators.

Sources told The STAR that a local official demanded a 20 percent commission for every truck of quarry materials.

Northrail officials have reportedly complained that Bulacan officials allegedly attempted to secure contracts to supply filling materials in 2005.

The sources said several officials allegedly tried to secure contracts to lease to the Chinese contractors some heavy equipment to be used.

Other local officials allegedly offered a contract to put up a perimeter fence on the PNR property after squatter shanties were cleared, the sources added.

Roque clarified that he did not say that the Chinese contractors had reported paying bribes.

He said the story was based on the “Serye” press forum that was held last July 3, where he posed the question: “Who will now refund the $150 million that the country paid by way of counterpart financing and 30 percent downpayment to the Chinese contractor, CNMEG?”

He said the country had already paid this amount to CNMEG, as proven by the supply agreement for the project as well as the national appropriation laws for the past three years.

“I also expressed doubts that we could hold CNMEG liable before our courts since it does not have corporate personality in the country nor does it maintain assets here,” said Roque.

He denied saying during the forum that he had verified information that would confirm the bribery of $150 million.

“In hindsight, I believe that the statement that was attributed to me in the article was the statement made by a radio commentator who privately relayed this information to me while we were seated waiting for the forum to start,” he said.

“I remember replying to the radio journalist, in private as well, that my source told me that the reason the contractor abandoned the Northrail project was because it wanted to increase the purchase price by $200 million. My statement, however, was not meant as a confirmation of the broadcast journalist’s remarks,” he added.

“It is not my intention to indicate that the Northrail contract is aboveboard. On the contrary, I stand completely by the conclusion of the UP Law Center study group, of which I was a part of, that this contract is legally infirm. It is my intention, however, to be as truthful as possible, consistent with my advocacy for truth and transparency in governance,” he said.

Roque said this is also the reason why they filed a case for annulment of the Northrail contracts with the Makati regional trial court.