Senate report: Binay ‘milked’ Makati building of P1.38B

MANILA, Philippines – Vice President Jejomar Binay was allegedly behind a “grand conspiracy” to plunder as much as P1.38 billion ($31 million) in public funds from the Makati City Hall II parking building. 

The Senate blue ribbon subcommittee came to this conclusion in its partial report, which 10 senators signed as of Monday, June 1. The report said that Binay should be charged with plunder for an “alarming pattern of overpricing,” and for his alleged involvement in a kickback system where he supposedly got 13% of the project cost. 

Senator Aquilino Pimentel III, chairman of the panel, wrote that the subcommittee found that the parking building was overpriced from a low of P1.12 billion ($25.24 million) to a high of P1.38 billion ($31 million). The 11-storey building cost P2.28 billion ($51.197 million).

The report said that the amounts of overpricing were way above the threshold of P50 million ($1.12 million) for plunder. 

“Such massive accumulation or acquisition of ill-gotten wealth, carried out from 2008 to 2013, could only be plunder,” the report stated. 

“The Subcommittee believes that there was a grand conspiracy to milk the construction of the Makati City Hall II parking building for every peso that it could yield, through massive unmitigated overpricing.” 

The 46-page report was the product of a 10-month Senate inquiry that spanned 20 hearings, the chamber’s longest-running probe in history. Only Pimentel, and Senators Antonio Trillanes IV and Alan Peter Cayetano have been actively participating in the investigation that Binay rejects as a tool to undermine his 2016 presidential candidacy. 

The subcommittee found Binay liable for signing on to phases 1 to 3 of the 5-phase project as Makati mayor. The Vice President was Makati mayor for 21 years. 

Also recommended to be charged with plunder are:

1. Binay’s son, Makati Mayor Jejomar Erwin “Junjun” Binay Jr – signed as the agency head for phases 4 and 5
2. Members of the Makati Bids and Awards Committee (BAC) – Marjorie De Veyra, Lorenza Amores, Gerardo San Gabriel, Pio Kenneth Dasal, and Ulysses Orienza
3. Efren Canlas, chairman of Makati’s favored contractor Hilmarc’s Construction Corporation
4. Robert Henson, Hilmarc’s president
5. Orlando Mateo, owner of Mana Architecture & Interior Design Co, which bagged the Contract of Architectural and Engineering Services 
6. Binay’s finance officer Gerardo “Gerry” Limlingan and Binay’s longtime secretary Eduviges “Ebeng” Baloloy, who were supposedly involved in the kickback system

The report suggested that businessman Antonio Tiu and Laureano Gregorio Jr be investigated for possible involvement in the “grand conspiracy.” Tiu claims to be the owner of a 350-hectare property in Rosario, Batangas, known as “Hacienda Binay.” The committee said that Binay was the “real owner” of the property. (READ: Senate report: Study forfeiture of ‘Hacienda Binay’)

The Ombudsman is already investigating a plunder complaint filed against the Binays over the parking building last year. It suspended the younger Binay pending investigation but the Binays questioned this before the Supreme Court. 

The Court of Appeals also froze the Binays’ bank accounts over alleged unlawful activities during the construction of the building. The Anti-Money Laundering Council (AMLC) is investigating the bank transactions of Binay and his supposed dummies. 

‘Institutionalized bid rigging’  

The Senate came to the conclusion of overpricing by using real estate industry standards, and citing the opinion of independent quantity surveyors and architects. It said Cuervo Valuers & Advisory Incorporated appraised the cost of the building at only P891 million ($20 million). The report also referred to the 2012 Davis Langdon and Seah Construction Costs Handbook. 

“Using the Valuation Approach, Makati City constituents paid P2,280,089,780.94 for a building with a market value of only P891,020,401.80 (as of the 4th quarter of 2013). In short, there was an overprice of P1,389,069,379.14,” the report said. 

The report also branded as “internal contradictions” the Binays’ statements that the structure was “a green building” and a “world-class building” when it found that it had no such certifications. (READ: ‘World-class’ prices for Binay’s parking building)

The Senate panel found that there was an “alleged institutionalized bid rigging” for the parking building, and other infrastructure projects during the term of Binay. It used as basis the September 2014 testimony of Engineer Mario Hechanova, former head of Makati’s General Services Department, and vice chairman of the Makati BAC. 

“Our infra projects, Mr Senator, from the time the plan was made and the time the mayor signed the plan, there are already contractors assigned to these,” Hechanova said. 

“As mayor, Vice President Binay knew everything. Being the mayor, he knows all that happens in his government,” he added.

The report cited the testimony of another witness, businessman Marcial Lichauco, who said he was even trapped inside an elevator in Makati City Hall supposedly to prevent him from bidding for the firefighting equipment of the city government. 

The subcommittee also found that Binay received payoffs through a “3-bag kickback system.”

It referred to the testimony of former Makati vice mayor Ernesto Mercado, who said that he delivered 3 bags containing Binay’s 13% share of the project – one each to then Councilor Junjun Binay for the Binay family, to Baloloy for Binay’s “personal needs,” and to Limlingan for Binay’s 2010 vice presidential campaign. 

As for the Bids and Awards Committee, the panel said it conspired with Binay, and based on Hechanova’s testimony, got a monthly allowance from the mayor worth P200,000 ($4,489) to “fix all the bidding.” 

On the construction of the building itself, the Senate said it found the following violations and anomalies: 

• Lack of annual procurement plans 
• Violation of the National Building Code – the building permit did not contain an estimated cost of the project 
• No overall plan, and no idea of the total cost of the building before the groundbreaking 
• Spending P793 million ($17.8 million) on phases 4 and 5 when the building was already declared “habitable and ready for use” after phase 3 
• Excessive structural design – no soil investigation report to show the need for additional foundation reinforcement 
• Excessive expenses in structural work 

Citing pronouncements of the Commission on Audit (COA), the report said cutting the project into 5 phases was questionable. 

“Maybe because this infrastructure project was divided into phases, which were submitted to audit separately, it did not become apparent to the COA auditors that these expenditures were unnecessary, redundant, and excessive,” the report said. 

‘Raffle off COA auditors’ 

The report also recommended an investigation of COA resident auditors for failing to discover the “red flags” that the agency’s main office found in its special audit of the building. 

The senators recommended that COA consider abolishing the resident auditor system, and replace it with a raffle system for the periodic rotation of reshuffling of auditors. 

The following are the red flags the COA identified: 

• The project was implemented with undue haste as there was no construction plan yet when it was bid out and awarded to Hilmarc’s. 
• The variances between the approved budget for the contract and the bids of Hilmarc’s for the 5 phases were only less than one-fourth or 1% of the budget.
• There was no valid approved budget for phase 3 when the city started the procurement process.
• The parking building was already habitable and ready for use after phase 3 but money was still spent on phases 4 and 5.  
• The approved budget and the contract cost show very significant variances above COA estimated cost for phases 3 and 4.  

The report only covered the Makati parking building but the committee vowed to continue looking into other anomalies of the Binay political dynasty. – Rappler.com