Ombudsman indicts Abaya, 16 others over P3.8-billion MRT deal

MANILA, Philippines — Ombudsman Conchita Carpio Morales has found probable cause to file a graft case against former Transportation Secretary Joseph Emilio Abaya and 16 others in connection with the allegedly anomalous Metro Rail Transit-3 maintenance contract with Busan Universal Rail, Inc. 

Abaya and 16 others including transport undersecretaries and private respondents were indicted for violation of Section 3(e) of the Anti-Graft and Corrupt Practices or Republic Act No. 3019 over the allegedly anomalous MRT-3 maintenance contract.

Among those facing chargers are Transport Undersecretaries Edwin Lopez, Head of the Negotiating Team Rene Limcaoco and Vice-Head of the Negotiating Team Catherine Jennifer Francis Gonzales.

Other transport officials indicted are MRT-3 General Manager Roman Buenafe, Assistant Secretary for Procurement Camille Alcaraz, Vice-chair of the MRT-3 Bids and Awards Committee Ofelia Astrera, Charissa Eloisa Julia Opulencia (Attorney V), Chief Engineering Division Oscar Bongon and Jose Rodante Sabayle (Engineer III).    

Also included in the indictment are the following private respondents including officials of BURI:

• Eldonn Ferdinand Uy – Edison Development and Construction

• Elizabeth Velasco – Tramat Mercantile Incorporated

• Belinda Tan – TMI

• Brian Velasco – Castan Corporation

• Antonio Borromeo – BURI

• Jun Ho Hwang – BURI

• Elpidio Uy – BURI

The graft case stemmed from a complaint filed by the DOTr in October 2017.

“We want to know the truth. We find it anomalous that the project was awarded to Busan JV, but the one receiving payments and doing MRT-3 maintenance works is BURI, a totally different entity,” the October 2017 complaint read.

The Ombudsman’s probe found that in October 2014 and January 2015, the DOTr — called Department of Transportation and Communications under the Aquino administration — conducted two biddings for the three-year maintenance service contract for the MRT3. These did not push through due to non-submission of bids.

Abaya subsequently issued a Special Order creating the MRT3 Bids and Awards Committee on Jan. 28, 2015. This committee is assigned to handle the procurement of goods, infrastructure projects and consulting services of the MRT3 system. 

Two months later, the MRT3 BAC recommended the resort to to Negotiated Procurement through Emergency Cases under Section 53.2 of the Revised Implementing Rules and Regulations (RIRR) of the Government Procurement Reform Act (Republic Act No. 9184).  

The deal was supposed to be awarded to a single maintenance service provider that would establish a Single Point Responsibility for all the following disciplines:

• Maintenance of the MRT3 system

• General overhauling of 43 units of light rail vehicles

• Total replacement of the Signaling system

• Additional maintenance works and

• Total Approved Budget for the Contract

The followinf firms submitted proposals in October: Busan Joint Venture (Busan JV); Joint  Venture of DM Consunji, Inc., Beta Electric Corporation, Baudis Bergmann Rosch Rail Automation GmbH, and Hamburg Consult GmbH; and the Joint Venture of Schunk Bahn-Und Industrietechnik GmbH and Comm Builders and Technology Philippines Corporation.  

The Busan JV is composed of the following firms:

• Edison Development and Construction;

• Tramat Mercantile Incorporated;

• TMI Corporation, Inc.; and

• BURI

Awarding of maintenance deal to Busan 'irregular'

The negotiating team then found all offers to be deficient in their eligibility and technical documents but they were given a chance to remedy the lapses.

In October 2015, the negotiating team announced that only Busan JV passed the eligibility on technical and financial documents evaluation.

It was then recommended to be declared as the Single Calculated Officer and that post-qualification proceedings be conducted. 

BAC resolved to recommend that the P3.8 billion worth MRT-3 long-term maintenance contract be awarded to Busan JV. The firm entered in to contract with the DOTC and the MRT3 on Jan. 7, 2016.

The investigation of the Ombudsman, however, revealed that the indicted officials “extended unwarranted benefits, advantage and preference to the contractor when it awarded the project to Busan JV, an ineligible and unqualified entity.”

The Special Panel of Investigators said Busan JV being awarded the deal is a violation of the rules under the R.A. No. 9184 or the Government Procurement Reform Act since the Busan partners did not enter into a Joint Venture Agreement in accordance with the rules.

According to the procurement documents, it was only Eldonn Uy of Edison Development and Construction that executed a “Statement to enter Into a Joint Venture” purportedly as the authorized representative of all the members of the Busan JV.

 “Since only one potential partner of the Busan JV submitted the required statement, it should have been disqualified from participating further in the negotiated procurement since it lacked an eligibility requirement,” an excerpt of the 88-page consolidated resolution read.

It added that Busan JV was allowed to just submit a Certificate of Registration of BURI as a Special Purpose Company (SPC) instead of a valid JVA, which is another violation.

The Ombudsman said it suspects that it was DOTC Assistant Secretary for Procurement Alcaraz who wrote the Securities and Exchange Commission to facilitate the registration of Busan JV as an SPC.

“This Office notes that [Alcaraz] was the DOTr Assistant Secretary for Procurement and the Chairperson of the MRT3 BAC. Her action thus reeks of impropriety as it gives the impression that she was acting in favor of the Busan JV,” the resolution read.

The Ombudsman stressed that Abaya, who occupies an executive position, has the authority and responsibukuty to regulate the acts of the transport officials responsible for the procurement of the MRT deal. It added that he is required “to exercise diligence in the highest degree in the performances of his duties.”

“He cannot simply evade such responsibility by invoking reliance on his subordinates, especially considering that the subject contract is one with a scope and magnitude affecting a big portion of the commuting public in Metro Manila, with an accompanying financial impact on the coffers of the government amounting to more than P4 billion,” the consolidated resolution read.

“By allowing the award of the contract to the Busan JV despite the attendant glaring irregularities, Abaya deliberately ignored applicable laws, rules and regulations, and standard operating procedures, falling short of or disregarding the required competence expected of him in the performance of his official functions,” added the Consolidated Resolution,” it added.

Ombudsman dismisses graft charges vs ex-Cabinet officials

Meanwhile, the Ombudsman cleared the former Cabinet officials of the Aquino administration who were included in the complaint of the DOTr, for lack of probable cause.

The Ombudsman dismissed the charges against the following former Cabinet secretaries:

• Mar Roxas – DOTC

• Florencio Abad – Department of Budget and Management)

• Cesar Purisima – Department of Finance

• Carlos Jericho Petilla – Department of Energy

• Mario Montejo – Department of Science and Technology

•  Voltaire Gazmin – Department of National Defense

• Rogelio Singson – Department of Public Works and Highways and

• Arsenio Balisacan – National Economic and Development Authority

Abaya to decide on next course of action

Spokesperson of Abaya, Enricka Gonzales said the former transportation chief received the news through media. She said Abaya found the decision “unfortunate.”

“We find this decision unfortunate, considering that Sec. Jun clearly laid out his defense against the poorly-crafted and unsubstantiated complaint filed by the DOTr,” Gonzales said in a statement.

Abaya will consult with his lawyer the next course of action once his camp receives the official copy of the decision.

Meanwhile, Sen. Grace Poe welcomes the Office of the Ombudsman's finding of probable cause to charge former Transportation Secretary Abaya and others with graft over maintenance contracts for the Metro Rail Transit 3.

"This announcement is consistent with the conclusion of the Committee Report submitted by the Subcommittee on Public Services, which observed the badges of negligence and inactions of the DOTR officials led by Abaya indicating insensitivity, callous indifference, and acts disadvantageous to the commuters, to the Filipino public and to the government with regard to the malfunction problem of the MRT," Poe, who held hearings on problems on the MRT, said. — With reports from Rosette Adel and Elizabeth Marcelo