Lawsuit in Cebu airport affects rehab in Manila

Criminal raps concerning the Cebu airport can doom the rehab deal for the airport in Manila. The same parties are involved in the two international gateways. A Department of Transport rule affects them. It disqualifies “any bidder with a pending case against the government.”

The National Bureau of Investigation has charged with dummying the contractors of Mactan-Cebu International Airport. Allegedly Filipino firm Megawide Construction Corp. fronted for GMR Infrastructures Ltd. of India in the construction and operation of the MCIA passenger terminal.

Megawide and GMR are also partners in a P109-billion offer to rehab and operate the Manila International Airport for 25 years. Megawide’s aim is to make the aging MIA world class.

Their plan has hit snags. Lawmakers claimed undue haste in the grant of original proponent status (OPS) without requisite scrutiny and consultations. Finance Sec. Carlos Dominguez and Economic Planning Sec. Karl Chua nixed the proponents for lack of capital and incomplete submissions. MIA Authority board director Leoncio Nakpil withdrew consent to the OPS for being “misled” about legal compliance.

DOTr U-Sec. for Project Development Ruben Reinoso is fixing the deficiencies. But DOTr’s policy on bidders with pending cases further hinders Megawide-GMR.

The Memorandum of June 26, 2018 “no longer allows prospective bidders with pending cases against the government to participate in all its biddings.” A DOTr press release explained why:

“U-Sec. for Legal Affairs and Procurement Reinier Paul Yebra said Sec. Arthur Tugade’s instruction is in line with the principles under R.A. 9184, the Procurement Reform Act, for streamlined bidding process.

“’Commonsense lang naman ‘yan. May kaso nga, may problema, bakit mo naman hahayaan na kumita pa gamit ang pera ng taumbayan? Prospective bidders who want to do business with government must have a clean record and a history of good dealings with the government. It’s that simple,’ said Secretary Tugade.

“U-Sec. Yebra said the DOTr is duty-bound to ensure that all prospective bidders are properly screened towards the goal of preventing opportunities for corruption.

“Accordingly, Yebra said all prospective bidders are required to submit a Certification under oath that they have no pending case(s) against the government. This Certification shall be included in the Bid Data Sheet that DOTr requires for all its projects.

“Failure of a bidder to comply with the requirement or submission of a false Certification shall constitute grounds for automatic disqualification.”

The NBI recommended dummying raps against Megawide and GMR at the Dept. of Justice in November. The Anti-Dummy Law penalizes persons and entities that fraudulently serve as front to obtain state franchises. The Constitution forbids foreigners from public utilities, like airports, except as 40-percent minority at most.

Impleaded were five Megawide Filipino execs. As well, 11 foreigners, including the chairman, COO and directors of the consortium. The NBI filed a separate case at the Ombudsman against MCIA general manager-CEO Steve Dicdican. Graft was alleged in contracting Megawide-GMR.

The P17.5-billion Cebu airport deal began in 2013. It was among Megawide’s five of the Aquino administration’s nine major infra-works. The four others were: Integrated Transport System-Southwest Terminal, P2.5 billion; Modernization of Philippine Orthopedic Center, P5.98 billion; School Infrastructure Phase-1, P16.42 billion and Phase-2, P3.86 billion. In 2017, the new DOTr awarded Megawide-GMR the expansion of Clark International Airport for P9.36 billion.

Still, Dominguez and Chua found Megawide undercapitalized for the 25-year Manila airport project. In returning the papers to endorser Tugade, they said Megawide’s yearend 2019 equity of P18 billion was short. Thirty percent, or P32.3 billion, is required for the P109-billion work.

Megawide insists it is fully compliant and qualified. Dominguez told them to come in after the original proponent of seven conglomerates backed out last July, its execs say.

MIA Authority director Nakpil retracted last week his vote for Megawide’s original proponent status. He said he was “misled (in previous board meetings) into believing that the proponent complied with all the requirements under the Build-Operate-Transfer Law.” A specialist in aviation, airport and aircraft security, Nakpil sits as private sector rep.

Rep. Jericho Nograles saw graft in the grant of the OPS privilege without ascertaining the legal, technical and financial aspects. Rep. Jesus Suntay said there were no consultations with MIA stakeholders like the 14,000 employees who are to be laid off. Megawide belatedly offered to absorb the personnel.

MIA has no space for additional runways to take in more flights and solve delays. Rapid-exit taxiways can improve on-time aircraft movements. The Arroyo and Aquino administrations already paved taxiways to the T-shaped runways.

The MIA Authority has P47-billion equity and P4-billion annual revenue. With that, it can expand its facilities on its own, Nograles said. Subcontracting should be by public bidding: anybody can watch the proceedings.

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