Duterte: Water concessionaires liable for graft, plunder

MANILA, Philippines — Water concessionaires who profited from lopsided contracts are liable for plunder and graft, President Duterte said yesterday, as he declared that he won’t heed arbitration rulings that ordered the government to pay billions in damages to the water firms.

Duterte said water concessionaires have been “fooling” Filipinos since they signed contracts that he said violated the law.

“Huwag mo ako bolahin, l**** ka (Don’t fool me b****), don’t f*** with me. Linaro niyo Pilipino sa pera. Sabi ko (You tricked Filipinos with money. I said) I will pursue this if this is the only thing I can achieve in this administration. Birahin ko talaga (I will really run after them), economic plunder,” the President said during a briefing on the effects of Typhoon Tisoy in Albay.

“This is a classic case of economic plunder. Wala lang nakasilip dito (Nobody saw it). I can only assume money really talks,” he added.
Duterte said Filipinos have been shouldering the corporate income tax of the water utilities.
“It is money of the entire Republic of the Philippines. They are your constituents. Government money was used to pay your income tax. How can you say that only Metro Manila was affected? We paid for your taxes,” he said.
“I said, well, there’s always a time for everything. The Bible says there is a time to be comfortable with what you have stolen money, there is a time to wallow in filth, in riches, but there is also time for reckoning, to explain to the people how it came about. Talagang yayariin ko sila dito (I will really hit them here),” he added.
Duterte said he won’t comply with an arbitration ruling ordering the government to pay Manila Water P7.39 billion in damages.
“The lawyers knew that when they were crafting the contract... all provisions at that time until now...they knew it was all in violation of law – the diminution of our sovereignty, that we have to pay for their losses. Son of a b****, that’s against the anti-graft (law). If you put that together, the money we have to absorb, we have to pay for their income tax,” he said.
“You are lawyers. Right (from) the start, it was a contract that was all in contravention of the anti-graft law. Over a period of time, that’s plunder... over a period of time for so many years, and then you will collect P7 billion from me? I’m not satisfied, I’m pissed off with the services,” he added.
Duterte reminded the Ayalas, the owner of Manila Water, that plunder is a non-bailable offense, adding that he wanted to see billionaires in jail.
He vowed to solve the problem involving water concessionaires before he steps down: “The next president will have a lot of problems. But I will finish these two. If I can’t finish this in a peaceful way, I will just lock their office buildings and burn them. That’s easy to do. So I go to prison? I am old. At my age, death is the least of my concern.”
New deals
Justice Secretary Menardo Guevarra said yesterday that while the Department of Justice is willing to talk to Manila Water and Maynilad, the DOJ’s priority is to get a new deal with the concessionaires.
This was Guevarra’s reaction to statements made by the two water concessionaires that they are willing to talk so that they can come up with a “workable solution” with the government on the PCA ruling.
More than reaching a compromise with the two water firms, however, Guevarra said they are more interested in removing the provisions onerous to the government, such as the one extending their contract from the original expiration year of 2022 to 2037.
The extension was reportedly done 12 or 13 years before the contracts expire in year 2022 without any changes in the terms and conditions from the original contract.
“The government is more interested in getting a new deal than in compromising the arbitral award,” Guevarra said.
Asked if going to court is the option that the government is exploring, he answered, “Both sides are willing to talk. We would just prioritize this first.”
Duterte has instructed the DOJ to come up with an integrated solution, according to Guevarra.
“We are still studying our legal options, but we’ll probably start with the drafting of a new version that excises all provisions in the concession agreement that we believe are contrary to law and public policy as well as those that are highly prejudicial to the interest of the consuming public,” Guevarra said.
The justice chief added that they are still studying their legal options. The Office of the Solicitor General (OSG) is contemplating judicial remedies that can be done locally or abroad, while some Cabinet members are suggesting the overhaul of the existing concession agreements with Manila Water and Maynilad.
The Duterte administration is not inclined to pay damages to water concessionaires for the losses they incurred from the deferred implementation of rate hikes, insisting that their concession deals are unfair and “against public policy.”
The government has suffered setbacks in the arbitration cases involving the supposed breach of its obligations with Manila Water and Maynilad, and has been ordered by a Singapore court to pay more than P10 billion to the water firms.
Last year, a Singapore-based court ordered the government to pay P3.42 billion in damages to the Pangilinan-owned Maynilad for the company’s losses that stemmed from water regulators’ refusal to implement an upward tariff adjustment for 2013 to 2017.
Earlier this week, the Permanent Court of Arbitration (PCA) in Singapore ruled that the government should pay P7.39 billion in compensation to Manila Water for losses incurred from the delayed water rate increases since 2015.
Malacañang, however, insisted that the concession agreements with the water firms are “onerous.”
“The contracts are onerous. They are disadvantageous to the government,” presidential spokesman Salvador Panelo told radio station dzXL yesterday.
The deals could be rescinded if they go against public interest, according to Panelo. – With Evelyn Macairan, Delon Porcalla, Edu Punay

“Under the Constitution, the President has the duty to serve and protect the people. So on the basis of that, the President can do things that can either annul, rescind contracts that are against the interest of the people or public policy,” he said.
“These are the contracts that are against public policy. Once the court declares them to be such, they would be annulled,” he added.
Last Tuesday, Duterte accused Manila Water and Maynilad of turning water distribution into a moneymaking scheme and threatened to file economic sabotage charges against everyone behind the agreements.
Duterte particularly criticized a provision of the contracts that prevents the government from stopping rate increases. He ordered the finance department and the solicitor general to draft a new concession agreement that is favorable to the government and the public.
Panelo claimed that the government officials who signed the contracts were controlled by the owners of the water concessionaires.
“(Officials) would not have allowed (the signing of the contracts) if they were promoting the interest of the nation,” the Palace spokesman said.
“If the government cannot provide the service, the private corporations can do it. But the provisions of the contract should be fair, not one-sided,” he added.
House probe set
Meanwhile, a resolution was filed yesterday at the House of Representatives that will set into motion an investigation on the PCA ruling.
Dasmariñas City, Cavite Rep. Elpidio Barzaga Jr. filed House Resolution 572 that directs appropriate committees of the chamber to conduct an inquiry, in aid of legislation, on the recent ruling.
“The right to water is a fundamental human right and is a key driver of economic and social development, and all efforts should be made to ensure that every Filipino has access to clean and potable water,” Barzaga stated in his two-page resolution.
The Ayala-owned Manila Water earned the ire of Duterte, who accused them of tax evasion, even as they claimed they lost P7.3 billion borne out of forgone revenues as a result of government’s refusal to allow them to hike water rates from 2015 to this month.
Barzaga, however, pointed out Manila Water, in fact, claimed it had a “gross income” of P6.5 billion, a “net income increase of six percent” from the previous year (2017).
Maynilad likewise reported a net income of P7.3 billion in 2018, up from P6.8 billion in 2017.
“As per its 2018 Annual Report, Maynilad’s core income increased by five percent due to the combined effect of a three-percent growth in billed volume and several rounds of tariff increases,” he said.
What is more disappointing is that both water concessionaires have not even complied with the Supreme Court ruling, where they were both fined nearly P1 billion each for violating the Clean Water Act in 2009.
“We have yet to see if these sanctions have been complied with,” Barzaga said, noting that Manila Water and Maynilad were also “penalized” by the Metropolitan Waterworks and Sewerage System for service interruptions early this year.
“It is clear to every Filipino that Manila Water and Maynilad have failed to deliver efficient water services,” he said.
No less than Guevarra revealed they found some onerous provisions in the government’s contracts with the two firms.
“Unfortunately, despite Manila Water’s dismal performance in its Manila concession, it won 11 new projects in 2018 through its Manila Water Philippine Ventures,” Barzaga, president of the National Unity Party in Congress, lamented. – With Evelyn Macairan, Delon Porcalla, Edu Punay