Busan sabotaging MRT-3 – Nograles

Its maintenance contractor is sabotaging MRT-3 by installing fake train parts, shabby work, and suing its officers for taking it to task. Rep. Jericho Nograles warns about the perils to riders’ safety, and urges Transport Sec. Arthur Tugade to terminate the contract at once.

Tugade also must charge Busan Universal Rail Inc. (BURI) with plunder, along with past transport officials behind the illegal contract that has cost taxpayers P650 million and rising. Nograles describes as “criminal shakedown” BURI’s suing U-Sec. for Rails Cesar Chavez for withholding payment of its monthly billings.

Last week BURI filed graft raps before the Ombudsman against Chavez. Supposedly Chavez injured the company in withholding payment of its collectibles, and in threatening to terminate its P3.8-billion three-year contract. BURI’s lead lawyer is Lucas Carpio, brother of Ombudsman Conchita Carpio Morales and “balae” (co-parent-in-law) of President Rodrigo Duterte (their offspring are spouses).

Chavez says he withheld the payments precisely to protect public funds, hence, antithesis to graft. “How can I be charged with graft when I am only protecting public funds?”

Tugade says he fully supports Chavez’s handling of the rail sector issues and all the latter’s decisions were properly consulted with him. “I should be included in the graft case since the decision to withhold BURI’s payments was made with my consent,” he adds.

Payments were put on hold pending BURI’s submission of certificates of origin, genuineness, quality, delivery, factory inspection, and suppliers’ official receipts for crucial spare parts, which are requirements of the Commission on Audit, Chavez explains. “The DOTr is just scrutinizing the billings to ensure that original parts were being procured for the MRT-3 commuter railway,” he says. “If the documents required by the Commission on Audit are completed, we pay. If not, we don’t.”

Chavez says he is not threatening but is in fact recommending to Tugade to terminate BURI’s contract due to gross violations and unfulfilled obligations. USec for Legal Reinier Paul Yebra recommends the same.

The breakdown of trust between the government and the service provider now puts the lives of the riding public at risk, Nograles warns. Immediate termination of BURI’s contract would avert any more sabotage, he says. The maintenance can be transferred to the Light Rail Transit Authority, which runs LRT-1 and LRT-2, he adds.

The past two weeks MRT-3 services were interrupted three to four times a day due to train and signaling breakdowns. One day last week there were even six interruptions, requiring the unloading of passengers and shutdown of most stations.

One of the unpaid billings in BURI’s complaint is for two vehicle logic units (VLUs), each worth P2 million, recently installed on two coaches. Chavez contends that BURI has not submitted papers as to the origin and quality of the safety equipment, components of the all-important signaling system. A recent audit by Bombardier of Canada, supplier of the MRT-3 signaling, shows that BURI has not been purchasing original parts and equipment from it, Chavez says. So he needs to know where the P4 million VLUs came from, whether purchased at all or merely cannibalized from inoperative coaches. The signaling system electronically maintains safe distances between trains, automatically brakes the coaches to avert collision, and opens doors to disgorge passengers.

Nograles sees worse, saying that the VLUs are fake. The two units came from Diamond Pearl Development and Marketing Corp., a construction supplier, he cites records.

Diamond Pearl is not an authorized distributor of Bombardier parts and equipment, Nograles says. It is owned by Marlo dela Cruz, the “mystery man” behind the series of anomalous MRT-3 maintenance contracts since 2012, he exposes.

Dela Cruz hit the headlines when accused by the Czech ambassador among those extorting $30 million from Czech train maker Inekon Corp. in July 2012, Nograles recalls. He is also the chairman of PH Trams, the six-month-old undercapitalized company (P625,000 paid-up) that in Oct. 2012 suddenly grabbed the P54.5 million monthly MRT-3 maintenance contract from giant Sumitomo Corp. of Japan. The six-month contract, extended to ten, was without public bidding. Then started the rapid deterioration of MRT-3’s trains, tracks, signaling, power supply, and stations.

Dela Cruz’s family reportedly was the campaigner and fundraiser in Pangasinan for the Liberal Party’s Mar Roxas for vice president in 2010. Marlo and father Wilfredo dela Cruz, Sr. are card-carrying LP members. Roxas was transport secretary from 2011 to 2012.

Dela Cruz’s fellow-incorporators in PH Trams are Wilson de Vera, Manolo Maralit and Federico Remo, also purportedly LP supporters. De Vera ran but lost as LP mayor of Calasiao, Pangasinan in 2010. Another incorporator is Arturo Soriano, uncle-in-law of then MRT3 general manager Al S. Vitangcol. For that conflict of interest, Vitangcol, Dela Cruz, et al, are being tried for graft at the Sandiganbayan.

When PH Trams was exposed, transport officials hastily replaced it in 2013 with Global Epcom, allegedly owned by then Philippine National Railways general manager Allan Dilay. Yet, Global Epcom’s authorized representative to the transport department was Marlo dela Cruz.

 Nograles holds documents from the Securities and Exchange Commission showing that Dela Cruz, his father Wilfredo Sr., brothers Wilfredo Jr., and Jonathan, and one William C. Froio, are the incorporators of Diamond Pearl.

Wilfredo Jr. is said to have served as BURI general manager. BURI's managing director Eugene Rapanut is also an LP in Ilocos Sur according to Vitangcol.

BURI’s P3.8-billion three-year contract was granted in January 2016 without public bidding, only closed-door negotiations. The contract was signed by a mere undersecretary Edwin Lopez instead of then-secretary Joseph Abaya who should have authorized any deal above P10 million. This invalidates it, Nograles says.

Too, the transport department supposedly negotiated then with a joint venture of Busan Transport Corp. of Korea and Filipino firms Edison Construction Development Corp., Tramat Inc., TMI Corp., and Castan Corp. But there is no record in the SEC of the joint venture ever being registered, Nograles says. This illegalizes the contract.

The COA also is questioning the entry of BURI, with capital of only P500 million, but billing and collecting for a P3.8 billion-contract. This is in violation of government contracting laws that require capital higher than the contracted price. The COA is asking why BURI, supposedly a mere financial conduit, is dealing with DOTR-MRT3 on technical matters.

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