WORLD BANK investigators looking into alleged collusion and corruption in Bank-funded road projects came very close to catching the conspirators while meeting to fix the bids, according to the Notice of Sanctions Proceedings dated March 2008 that summarized the Bank’s findings.
It happened on November 7, 2006, when the Department of Public Works and Highways (DPWH) held an auction for a civil-works contract on a section of the Surigao-Davao coastal road, one of the many sub-projects of the $150-million National Roads Improvement and Management Project-1 (NRIMP-1).
A day before, Timothy Carrodus, one of the Bank’s investigators, received an email warning him that the tender was going to be rigged. The email writer told Carrodus the bidders, together with two public works department officials, were meeting at seven a.m. the following day at the Hyatt hotel to firm up the bids they would be submitting during the auction scheduled later, that same morning.
Unfortunately, Carrodus did not realize there were then two Hyatt hotels in Manila and so failed to make it to the right hotel on time.
Nonetheless, Carrodus was given a key piece of information that convinced him the email writer was a knowledgeable insider: advance information on who would win the tender. “Tomorrow’s winner is CM PANCH!” wrote the informant, who used the email address firstname.lastname@example.org.
During the November 7 bidding, C.M Pancho Construction Inc. offered the lowest bid, beating a joint venture of P.L. Sebastian Construction and R.D Interior Jr Construction, Algon Engineering Construction Corp., Wee Eng Construction Inc., and China Road & Bridge Corp.
Weeks later, Carrodus met Clemente Pancho, head of C.M. Pancho’s estimation department, who said that neither he nor any of his staff attended any pre-auction meeting to fix the bids. Told about the email that Carrodus got from a prescient informant, Pancho “attributed the source’s knowledge of the outcome of the bidding to rumors,” according to the INT’s summary of the November 22, 2006 interview with Pancho.
Interviewed by the PCIJ, Clemente Pancho said he neither aware nor did he attend the reported pre-auction meeting at the Hyatt. “Carrodus was here the day before” he said, “If there was a meeting there, wala siyang nakita (he did not see anything).”
The company lawyer who joined Pancho’s interview with the PCIJ added: “The email was unauthenticated. We are not sure but the email could have been corrupted.”
If the email writer were relying on more than rumors, however, then the incident underscored the power and brazenness of the coordinators and members of the alleged cartel. The participants in the collusive scheme had attempted to rig the bid right under the very noses of the World Bank officials who had come to Manila to monitor the tender and interview more contractors and industry players.
In fact, it was the second time that the email writer successfully predicted bidding results. Three months before, in August 2006, Carrodus also received a series of emails from the same source warning that the bidding for three contracts in Negros island and Surigao and Davao provinces would be rigged.
On the morning of the bid on August 6, the email writer said the three tenders would be won by China Geo-Engineering, China Road & Bridges, and China Wu Yi. When the bids were opened later that morning, the results were indeed as predicted.