MANILA, DECEMBER 14, 2007 (STAR) By Mike Frialde and Aurea Calica - Administration officials rejected yesterday allegations of bid rigging and conflict of interest involving a presidential brother and a businessman reputed to be close to President Arroyo in the awarding of a 25-year concession to run the country’s power grids to a consortium of Filipino and Chinese firms.

The consortium of Monte Oro Grid Resources Inc., China’s State Grid Corp. and Calaca High Power Corp. narrowly beat the group of San Miguel Energy Corp. with its bid of $3.95 billion for the concession contract for National Transmission Corp. or TransCo. The San Miguel group’s bid was $3.905 billion.

Controversy hounded Monte Oro’s bagging of the contract because of the group’s alleged links to presidential brother Diosdado “Buboy” Macapagal Jr. and businessman Enrique Razon who served as treasurer for the pro-administration Team Unity in the last May elections. Razon also chairs the International Container Terminal Services Inc. (ICTSI). It was Sen. Jamby Madrigal who first raised the allegations.

Moreover, Jose Ibazeta, head of the Power Sector Assets and Liabilities Management Corp. or PSALM, is a member of the board of ICTSI. PSALM is tasked with privatizing the state’s energy assets.

“Can they match the price? Tell Jamby, even to her we will award it if she can match the price,” Presidential Spokesman Ignacio Bunye said.

Presidential Management Staff chief Cerge Remonde said the bidding was conducted “fair and square regardless of who wins.”

Justice Secretary Raul Gonzalez also sees nothing wrong with the bidding, and even with the presidential brother’s being part of the winning consortium.

“Assuming that he is involved, he is just part of the group that bidded,” Gonzalez said. “Does it mean that just because he is there, you have to disqualify the bid which was the highest bid?”

“It was the corporation that participated. The personality of the corporation is different from the individual,” he pointed out.

In a text message to The STAR, Deputy Ombudsman Mark Jalandoni said the Procurement Act bars relatives of government officials and employees “up to third degree of consanguinity” from taking part in bidding for state projects. The extent of the presidential brother’s exposure in Monte Oro is not immediately clear.

Gonzalez said it was on the basis of its high bid that Monte Oro was declared winner in the process.

“That is unfair to the PSALM which is basically headed by the Secretary of Finance. What is important there is that the PSALM Board provided for a floor price, a minimum, but the offered bid of the winning bidder was very, very much more,” he said. He also ruled out canceling the bid unless there are valid reasons.

“Why will you cancel a winning bid unless you have a good reason? You could be sued,” he said.

At a joint congressional hearing yesterday on allegations of bid-rigging, Ibazeta defended the bidding and denied there was conflict of interest on his part just because of his being a board member of ICTSI.

“Under the documents submitted by the Monte Oro consortium, it’s headed by Mr. Walter Brown and not by Mr. Enrique Razon,” he told the joint congressional power commission hearing the bid-rigging allegations.

“Assuming that Mr. Razon actually has some participation in a company affiliated with Monte Oro, my sitting in the board with Mr. Razon of the ICTSI does not give rise to a conflict of interest situation,” Ibazeta said.

Ibazeta also denied that Razon had asked for his help to have Monte Oro pre-qualify and win, saying he even inhibited himself from the process. He added he could not be a dummy of Razon because he has sizable shares in ICTSI, a company he helped build with businessman Andres Soriano.

He added that he could not have possibly influenced PSALM because it was a collegial body.

He stressed that the bidding last Tuesday was a major achievement for the government, which had been trying to privatize TransCo despite its debts.

He said the winning bidder would be able to operate the power grids only after getting a congressional franchise. In the meantime, TransCo will take care of the operations and that it can take back the ownership of the grids if the consortium fails to get a franchise within a year from the awarding of the contract.

Ibazeta said he was committed to steering the TransCo privatization to success after three failed bids.

“The lone remaining bidder during the previous privatization bid had put in considerable time and funds during its attempt to bid and it was not eager to go through the process again,” he said. “Investors had to be re-convinced that TransCo was and is a good investment.”

Miriam clears PSALM chief

Sen. Miriam Santiago, co-chairperson of the joint congressional committee, said she found Ibazeta’s explanation “reasonable and therefore valid.” She co-chairs the committee with presidential son Pampanga Rep. Juan Miguel Arroyo.

“He (Ibazeta) is saying that there is no conflict of interest. I am chair of a terminal services corporation and we are here dealing with the power sector, so I don’t see any conflict between terminal services and the power sector,” Santiago told reporters after the hearing.

“Besides, he inhibited himself from the bidding process because of the ethical question that has been raised. Unless there is further evidence, we find that he has acquitted himself successfully on the charge of conflict of interest,” she said.

“Whether there is any irregularity in the bidding process itself or in the projected dire consequences of the sale to this winning bidder, that will be taken up by another committee,” Santiago stressed.

Santiago said the consortium could get its franchise from Congress in three months if the sale would be proven aboveboard. She said the hearings on the franchise application could be done simultaneously with the investigation.

But she threatened to sanction TransCo president Arthur Aguilar for snubbing the hearing and sending his vice president Noel de Leon instead to face the senators.

“You are not acceptable to this committee, you are the vice president and we are talking of billions of pesos to the Filipino taxpayer,” she told De Leon.

“How dare the president not come here just because he has a national meeting of his subordinates? He is going to bask in the sycophantic hallelujah chorus of his subordinates but he does not want to explain to this committee what has happened to over P160 billion,” an enraged Santiago said.

“Tell him he is in contempt. He may file a motion for reconsideration if he wishes to do so,” Santiago barked at De Leon.

Santiago said Aguilar could be jailed for at least a year and fined no more than P50,000 for not showing up at the Senate.

“He (Aguilar) said he had to preside over a nationwide bidding of his subordinates and regional managers. He is not giving the JCPC the proper courtesy of at least his physical appearance,” Santiago said.

For Senate Minority Leader Aquilino Pimentel Jr. and Senators Panfilo Lacson, Juan Ponce Enrile and Richard Gordon, there is still a need to justify the sale of TransCo to Monte Oro.

Earlier, Madrigal filed Senate Resolution 238 directing the committees on Blue Ribbon and economic affairs to jointly investigate the alleged rigging of the TransCo bidding.

“True enough, Monte Oro Grid Resources, a company which we know now is owned by persons close to Mrs. Arroyo, later emerged as the partner of the State Grid of China for the TransCo bid,” she said. “The circumstances are too telling.”

She said Mrs. Arroyo’s several visits to China, particularly on Oct. 27 last year, might explain the consortium’s success in bagging the concession. She said the President was even photographed with State Grid of China president Liu Zhenya.

“You do not have to be a fortune teller to know that this bidding was rigged and anomalous from the very start,” Madrigal said. “We have sold our sovereign rights to foreign companies to benefit the vested interest of cronies.”

She said she is prepared, together with Pimentel, to contest “this hideous contract” before the courts.

Observers said Monte Oro’s bagging the contract also highlighted China’s continuing push into Philippine markets despite concerns over transparency and overpricing that scuttled an earlier lucrative contract for a national broadband network.

The Arroyo administration canceled earlier this year a $329-million NBN contract with China’s ZTE Corp. after a Senate inquiry implicated former elections chief Benjamin Abalos as an alleged broker. He later resigned. - With Sandy Araneta, AP

Chief News Editor: Sol Jose Vanzi

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