Senate’s wise decision

A senior executive at the Department of Transportation and Communications (DOTC) told Congress last month that the P54-billion tucked in the proposed 2015 budget plan would be used to buy out DOTC’s private partners in the Metro Rail Transit Line 3. And once MRT3 is fully government-owned, government would bid it out again to a private operator. Not a single cent of that amount would be used to upgrade the train system. 

Quezon City Rep. Winston Castelo, who chairs the House committee on Metro Manila Development, quoted DOTC Undersecretary Rene Limcaoco as saying that the planned equity value buyout (EVBO) would do away with the annual payments due the private shareholders who built this railway system nearly two decades ago via the Build-Lease-Transfer (BLT) mode of public-private partnership.

This is the reason why Filipinos hate paying taxes. Our government imposes one of the highest income tax rate at 32 percent in the ASEAN region because of its failure to encourage other sources of revenues. And then its leaders can’t even use the funds judiciously. 

Government already has a private BLT partner, MRT Corp. (MRTC).  And the worsening state of MRT3 is a direct result of the DOTC’s refusal to let MRTC do its job of running MRT3 as per their agreement.

 Instead of wasting P54 billion, which actually would just be enough to buy out the bondholders but not MRTC, government should just allow MRTC to take charge of upgrading the system and overseeing the operation and maintenance (O&M) work by a qualified MRT3 service provider based on the previous “single point of responsibility” principle.

 This same principle made the original O&M service provider Sumitomo Corp. of Japan fully accountable for keeping the trains in tip-top shape when it was the operator for more than a decade since the EDSA line started its run in 1999.

 In short, it was only when government, and the DOTC in particular, started dipping its fingers where it shouldn’t that the woes of MRT3 began.

In the latest proof of the MRT3’s awful state, another technical glitch struck the rail line during Monday morning’s rush hour, prompting management to put the system on half-line operations as commuters scurried to work. It was a broken rail incident, which is expected actually, given that the DOTC’s anointed maintenance contractors, PH Trams and APT Global, have been reportedly charging the government for “ghost” spare parts since 2012.

Metro Rail Transit Holdings II (MRTH) chairman-president Robert John Sobrepeña has said that an honest-to-goodness government takeover would cost some P90 billion. About P36 billion of that would cover the shares or interests of MRTC and the other private owners, which include the Metro Pacific Investment Corp. (MPIC), the Ayala Group, Ramcar, and the Ramos Group of National Bookstore. MRTH II owns MRTC, while the MPIC acquired a stake in MRT3 in 2011 under a cooperation agreement with the Sobrepeña Group.

MRTH vice president Frederick Parayno even believes that the actual buyout cost is double the DOTC-proposed EBVO budget of P54 billion, noting that the price estimate for the train line was already set at P110 billion back in 2009.

The Senate made a wise decision when it removed the P54-billion funding for the EVBO from its version of the 2015 General Appropriations Act (GAA) budget of P2.6 trillion. Instead, it channeled P9 billion of the deleted P53.9-billion outlay for MRT3 repair and P6 billion more for the payment of taxes for MRT3-contracted loans (which is actually dubious given that all MRT3 loans have been fully paid in 2010), and the balance was earmarked for social services.  

Had the EBVO fund been approved, it would be Filipino taxpayers’ money down the drain. Not to mention that it could also be disadvantageous to the government, which of course is a violation of the anti-graft and corrupt practices act.

The Ombudsman has already ordered the preliminary investigation of DOTC executives for possible violation of the Anti-Graft Law and/or the Government Procurement Reform Act in connection with the anomalous award in 2012 of the MRT3 maintenance contract to PH Trams-CB&T??  through a negotiated deal in lieu of a competitive public bidding as provided under the law.  

Haven’t they had anough?

The other bidder

An administration lawmaker has urged Comelec to scrutinize multinational corporations participating in the election. 

This was after IT service provider Indra Sistemas, which participated in a recent Comelec bidding, was reported to be involved in an ongoing corruption investigation in Spain, in addition to its questionable track record in its Southeast Asia operations.

 Capiz Rep. Frenedil Castro, chairman of the House Committee on Suffrage and Electoral Reforms, said the Comelec should examine and screen carefully each and every bidder who would participate, particularly since it involves billions of pesos of taxpayers money. And those with dubious reputations should be disqualified outright as part of the cleansing process.

In fact, Castro’s committee plans to conduct a congressional inquiry into the reports about Indra Sistemas.  Some concerned groups have asked Comelec to look into the background of Indra which allegedly was responsible for a failed election in Albania.

Indra and current Comelec PCOS machines provider Smartmatic are the two companies which are bidding for contract to supply on a lease basis 23,000 additional PCOS machines to Comelec for use in the 2016 elections.

It turns out that Indra’s main commercial interest is in the defense industry, which has raised concern among Filipinos.

In addition to reports of Indra’s involvement in alleged “scandals and wrongdoings” in other countries, the Comelec-BAC officials are also verifying claims that Indra is actually controlled by the Spanish government which owns majority shares of the company and which also reportedly appoints the members of Indra’s board of directors.  

A Comelec official said this would clearly raise issues of conflict of interests “since we cannot have a company provide us with technology and operate it while it is controlled by a foreign government.”

Even the Guardia Civil (Spanish Police) has officially accused a high-profile executive of Indra in a corruption case involving inflated invoices to the provincial government of Madrid.

The other bidder of course is Smartmatic, the London-based technology provider that supplied the more than 81,000 precinct count optical scan (PCOS) machines used by the country when it started automating its elections in 2010.

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