Hyundai Heavy Industries, the South Korean firm that will supply the Philippine Navy with frigates, has been barred by its government from participating in state bids for two years, according to Rep. Gary Alejano. File

Firm in Navy frigate deal banned from government projects in SoKor
Audrey Morallo ( - February 1, 2018 - 7:08pm

MANILA, Philippines — There is now more reason for Congress to conduct a probe into the supposed anomalous frigate deal of the Philippine Navy and Hyundai Heavy Industries after the South Korean firm has been banned by Seoul from participating in state-led bids for two years, Rep. Gary Alejano (Magdalo) said on Thursday.

According to Alejano, Hyunda’s “history of engaging in corrupt activities” should put more urgency in suggestions for Congress to probe the frigate acquisition deal between the Navy and the South Korean company following the two-year ban imposed on it.

He said that Hyunda’s record should put into question its ethics and should prompt the Philippine government to doubt its later actions.

“There is even more reason now to conduct an investigation on the frigate deal,” Alejano said.

“HHI’s history of engaging in corrupt activities should further prompt an investigation on the FAP. Its involvement in bribery puts question on the ethics of the company. If a company has a record of engaging in such practices, it is but natural to doubt its later actions,” Alejano said.

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Hyundai got embroiled in a bribery scandal in South Korea in 2013, and its executives were found guilty of bribing an official of the Korea Hydro and Nuclear Power Company in exchange for bagging the deal to become the supplier of reactors to be exported to the United Arab Emirates.

Hyundai tried to nullify the restriction but lost in 2015. South Korea’s Supreme Court made a final decision on Dec. 22, 2017 imposing a two-year ban on Hyundai in participating in state-led bids, according to the opposition lawmaker.

Hyundai has since been listed as an “improper” business firm, and its ban will stay until 2019, according to Alejano.

Alejano has questioned the supposed involvement of the Palace in the multibillion-peso modernization program of the Navy and tied the deal to the unceremonious relief of former Navy chief Ronald Joseph Mercado.

He said that Special Assistant to the President Bong Go tried to lobby for the Navy to use the combat management system of Hanwha Systems despite the superior program of Thales Tacticos of the Netherlands.

Both Defense Secretary Delfin Lorenzana and Go denied the allegations and insisted that the presidential aide only relayed the document to the defense chief in his capacity as the chief of the presidential management staff.

“I have not participated nor intervened, directly or indirectly, in the transactions of DND. Clarification on the issues should be addressed to SND Lorenzana,” Go said.

Alejano has accused Hyundai of offering the Navy a superior combat management system only to choose an inferior and cheaper program later to maximize its profits.

Alejano said that the ban would cast doubts on the integrity of the South Korean firm, tasked to modernize the fleet of one of the most dilapidated navies in Asia.

“It is corruption in the form of bribery that HHI was found guilty of. It is its own government which tagged HHI as an improper business entity. The integrity of FAP – wherein HHI is the main contractor – will consequently be disputed,” said Alejano who filed House Resolution 1590 to conduct an inquiry on the frigate project and its compliance with procurement laws.

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