BRIBE-TAKERS' CARTEL
The voluminous INT probe reports — while frustratingly incomplete because investigators did not interview DPWH officials and politicians named as members of a “cartel” of bribe-takers — raise important questions on the scale of collusion and corruption in infrastructure projects that cost billions of pesos. A huge chunk of these funds are loans that will eventually be billed on taxpayers.

Unfortunately, local oversight of how infrastructure funds are spent is terribly sparse and spotty that the officials of implementing agencies, the budget department, and even the Commission on Audit cannot really be sure what proportion of government’s annual infrastructure budget is spent according to authorized purposes.

Between 2000 and 2008, the Public Works department alone awarded more than 27,500 contracts worth P138.5 billion. The contracts, which averaged about P5 million each in value, were tendered and awarded by 191 DPWH engineering district offices and other implementing offices to 1,791 contractors.

The third biggest contract listed on the DPWH website — Package C.4: South Luzon Expressway Service Road (East and West) valued at P524.5 million — was awarded by the DPWH’s Urban Roads Project management office to Cavite Ideal in May 2005, one of the firms debarred by the World Bank.

China State, also debarred, won the fifth biggest contract — Contract Package C.5 — Quirino Highway (NLEX Junction to North Fairview) valued at P486.3 million — in August 2005. Again, the contract was awarded by the DPWH’s Urban Roads Project management office.

Hanjin, which escaped sanctions because there was not enough evidence against it, won the 13th biggest contract — Completion/Construction of Subic-Cawag-Balaybay Road, Phase II (Segment IV) in Subic, Zambales valued at P349 million — from DPWH Region 3 in October 2006.

Among the companies that escaped Bank sanctions because they did not participate in the two disputed tenders for NRIMP-1, Wee Eng won the 11th biggest contract — Concreting of Surigao-Davao Coastal Road (Marihatag-San Agustin Section) in Surigao del Sur valued at P373.8 million.

The project was awarded by DPWH Region 13 in December 2007, or after the INT had wound up its interviews with respondents and witnesses on the alleged collusion in the first phase of the National Roads Improvement and Management Project or NRIMP-1.

MODUS OPERANDI
From the INT’s account of its investigation and “records of interviews” with the respondents and witnesses, the picture that emerges is a syndicate or “cartel” that instructs contractors on their exact bids to simulate a genuinely competitive tender. The cartel members have even gone as far as submit fake bids and pre-qualification documents to make it appear that a foreign company was taking part in at least one international competitive tender.

According to the INT report, the cartel, through public-works officials, can even artificially inflate approved budget for contracts to increase potential pay-offs to various parties. It can also punish contractors who refuse to take part in the collusive scheme or renege on agreements by disqualifying them from taking part in future tenders.

After three rounds of tenders between 2002 and 2006, the collusive scheme has grown to involve not just small or marginal players but some of the biggest local and foreign roads contractors operating in the country, based on the list of 15 companies and one person that the INT had sought to sanction back in May 2008.

APPEAL MOTIONS
The World Bank sanctions board eventually debarred eight companies and one individual in January 2009. Two debarred Philippine firms, E.C. de Luna and C.M. Pancho, have announced separate plans to file motions to appeal the sanctions ruling, the last stage in administrative proceedings that the INT conducts, to determine violations of the Bank's procurement guidelines.

The INT believes that World Bank money that could have been diverted to illegal payoffs in the NRIMP-1 projects was at three to four times the initial estimates.

“In the two Packages examined in this matter, tangible losses from Bank funds would have been nearly $10 million had they been carried out,” the INT report said. “However, INT believes that the entire NRIMP-1 Project has been corrupted, putting at least $30-45 million of the entire $150 million loan at risk.”

Indeed, the World Bank staff first became suspicious that irregularities were afoot as early as January 2001, less than a year after the $150 million loan for NRIMP-1 was approved.

Then DPWH Secretary Florante Soriquez proposed to repackage of the contracts into five sub-contracts. The Bank’s task team leader then, Denis Robitaille, rejected the proposal and wrote to Soriquez: “It seems that the repackaging is being proposed only to fit the capacity of certain size of contractors.”

In June 2002, William Paterson, who succeeded Robitaille, objected to the DPWH’s report on the pre-qualification of bidders for the first round of tenders later that year because, among others, “joint venture partners were improperly rated”; “some firms were inappropriately declared ineligible for multiple contracts”; and “some bidders’ pre-qualification application assertions appeared questionable.”

The outcome of the tenders for two components of the roads improvement project in October and November 2002 bolstered Paterson’s suspicions of collusion. The winning bids “both came in more than 25 per cent above the agency estimate and had relatively fewer bidders,” he wrote in an internal email in January 2003. “A local Senator has been pressing for (a disputed) bid to be accepted and accused the BAC (bids and awards committee) chairman of interference when the BAC began to investigate.”

In April 2003, Paterson asked the INT to come in and investigate. The Bank’s anti-corruption unit sent investigators to interview some of the contractors in August 2005.