SUSPENSION? NOT REALLY
It’s easier to figure out why the DPWH is not winning any points in the public-perception department. After all, the DPWH had the second lowest rating among state agencies in terms of perceived sincerity in fighting corruption, according to a Social Weather Stations survey last year.

And so hardly anyone blinked when DPWH Secretary Hermogenes Ebdane admitted last January 21 before the House committee hearing on the World Bank sanctions that the DPWH’s temporary suspension of the seven construction firms in question did not really mean anything. It was just, he said, a pre-emptive move designed to protect the government’s image.

Responding to a question by Rep. Ronaldo Zamora, Ebdane said: “Since the issue has affected public opinion and that the dignity of the government and the department is at stake, we, maybe we have faltered but without any malice or intent with malice.”

“We initiated that if only to make a point,” he added. “Anyway, for the next few days there are no scheduled biddings except the one that was held today. It will not in any way physically affect their name.”

Ebdane has also said that he is forming a special panel to investigate the allegations of bid rigging. But given his admission at the House, there may be few surprises in that special panel’s findings.

At the hearing, Ebdane also said the DPWH was ready to discuss the matter with the debarred firms, and admitted the department may have committed a legal blunder in unilaterally suspending them.

“We are also in coordination with the parties involved and we will consider their inputs,” he said. “In fact, if there is a need to do some flexibility — if only it is within the law — we are more than willing. We are taking note of your advice since really we have gone maybe a little overboard.”

In response to the World Bank’s move, the DPWH had announced that it would temporarily suspend the seven construction firms from participating in biddings for government projects for 15 days, during which the department would conduct its own investigation and decide on more permanent measures.

An extension of the temporary suspension could have huge potential consequences on the construction firms, as well as on DPWH. Six of the seven debarred firms are some of the biggest and most successful contractors for government infrastructure projects.

Cavite Ideal International Construction, CM Pancho Corp., EC Luna Construction Corp., China Road and Bridge Corp., China State Construction Corp., and China Geo-Engineering Corp. bagged 27 percent of the total value of civil-works contracts of ongoing or completed foreign-assisted projects between 2004 and 2006 evaluated by Construction Industry Authority of the Philippines and Philippine Domestic Construction Board (CIAP-PDCB).

The six firms are among the top 20 contractors for foreign-assisted projects during the same period, according to the 2007 CIAP-PDCB Constructors Performance Evaluation System report.

Two debarred firms, China Wu Yi Co Ltd and Dongsung Construction Co Ltd of Korea, were not covered by the CPES report, which tackles about a tenth of the total government infrastructure projects in the Philippines.

THE WORLD BANK PROBE
The World Bank’s Evaluation and Suspension Officer, who evaluates evidence gathered by the INT, issued the notice of sanctions to bidders suspected of collusion in May 2008. That began a process for the bidders to refute the allegations but not to confront the INT’s anonymous witnesses.

Except for Dongsung Construction, all the debarred construction firms contested the allegations of collusion, and presented counter-evidence to the World Bank.

The notice “presents evidence that the respondents had engaged in corrupt, collusive and other fraudulent practices in connection with multiple rounds of bidding for two road construction and rehabilitation contracts under this World Bank-financed project,” according to the sanctions board’s decision.

Indeed, the INT investigators were convinced that Filipino government officials and politicians were involved in the elaborate collusive scheme.

The notice of sanctions, according to the sanctions board, indicated that the debarred firms’ allegedly fraudulent actions “include participation in a collusive scheme, also involving politicians and government officials, whereby awards were directed to particular contractors in exchange for bribes, kickbacks and payments designated losing bidders.”

The notice “alleges that each Respondent had additionally engaged in corrupt practices either as a principal in a joint enterprise the intent of which was to offer bribes to public officials, or as a secondary party who ‘aided and abetted’ the principals in the payment of such bribes.”

The debarred contractors, though, has this going for them: The World Bank’s sanctions board, after hearing the INT’s evidence, decided there was not enough proof of fraud and corruption. And while it upheld the INT’s findings of collusion, it concluded that the evidence “did not establish that it was more likely than not that the Respondents had engaged in fraudulent practices separate from the collusion.”

“In addition,” read the board’s decision, “the Sanctions Board concluded that the INT had not presented evidence sufficient to establish that it was more likely than not that these Respondents had engaged in corrupt practices.”

Under World Bank rules, corrupt practices mean “the offering, giving, receiving, or soliciting of any thing of value to influence the action of a public official in the procurement process or in contract execution.”