AFP chopper supplier confirms whistleblower asked for 15% cut

MANILA, Philippines  – The suppliers of the controversial Air Force combat choppers turned the table against agent-turned-whistleblower Rhodora Alvarez on Tuesday, July 7, raising more questions about the allegedly anomalous contract.

Alvarez had alleged that the contract was tailor-fitted for the United States-based company Rice Aircraft Services Incorporated, but the firm’s project manager, Matthew Rice, instead accused Alvarez of “extortion.”

In the continuation of Senate hearings on the allegedly anomalous deal, Rice dismissed Alvarez’s declarations that love for country compelled her to expose alleged corruption in the Department of National Defense (DND). 

Rice said Alvarez is only getting back at them for refusing to give in to her request for a large commission.

In seeking to expose Alvarez’s motivation for her exposé, Rice provided details that corroborated claims Alvarez made in her affidavit submitted to the Senate blue ribbon committee.

Senator Joseph Victor Ejercito, who sponsored the resolution calling for the investigation, had been suspicious of Alvarez’s motivations himself.  

“You’re saying you are here for the Air Force to have new and modern choppers. That will be a little bit hard to believe,” he said.

“What happened is you had a falling out [with RASI],” Ejercito added.

But as the hearing focused on Alvarez’s motivaton, Senator Teofisto Guingona III argued that the whistleblower’s motivations are not so important if she’s telling the truth about corruption in the bidding processes of the defense department.

It’s important to investigate, Guingona added, considering the amount of money going to military modernization at a time that the country is boosting its defense capabilities to defend the West Philippine Sea (South China Sea). (READ: Controversies, delays in multi-billion AFP modernization and )

“Regardless of the motive, our goal is to find out if the process was followed. Regardless of the motive, was there corruption? Was the government official in charge of the bidding received bribes?” Guingona said. (READ: Armor vests for Zambo troops still sitting in warehouse)

Commission 

Rice confirmed during the hearing Alvarez asked for a 15% cut from the P1.2 billion project cost. It matches the amount that Alvarez said she, defense officials, and military officers were to share as kickbacks.

“She informed my dad, Bob Rice, of her intention to receive 15% of the contract as part of her commission,” Matthew Rice said during the 4th hearing on the chopper deal. Company president Robert Rice is his father.

“Once we denied her this request – 15% was too much – she began to back off and insisted that she wanted 3% for commission,” Matthew added.

Alvarez accused the DND of tailor-fitting the chopper contract by supposedly requiring features that only RASI could meet. She focused on the feature Service Life Extension Program (SLEP), which she said should not be a requirement because it should only be an add-on.

Defense Secretary Voltaire Gazmin was allegedly promised a 7% kickback – about P84 million – while Defense Undersecretry for Finance Fernando Manalo was also supposed to get 5% of the total project cost to cover his and his men’s commissions, based on an affidavit that Alvarez submitted to the Senate committee in June.

It’s a total 15% commission for the Filipinos if Alvarez’s 3% commission would be added. She did not deal with Gazmin directly, but she said the defense secretary’s signatures in documents that adjusted the contract to favor RASI could only mean he was involved in the contract fixing.

Both Gazmin and Manalo denied her allegations. 

Beyond the word war

Beyond the word war during the Senate hearing, senators found the contract questionable. They scored the propensity of the defense department of going into negotiated bids and emergency procurements. (READ: Air Force chopper deal ‘disturbing,’ says Senate blue ribbon chair)

Here are the established facts:

• RASI joined 3 public biddings for the contract, but repeatedly failed to meet basic documentary requirements. It still managed to win the contract when the defense department opted for a negotiated bid, an option that is allowed after 3 failed biddings. The US-based company participated as a joint venture with the Canadian company Eagle Copters.
• The joint venture of RASI and Eagle Copters were only able to deliver 7 of the 21 choppers. In the wake of the controversy, the DND terminated the contract, meaning it won’t anymore accept and pay for the rest of the choppers. RASI is appealing the ruling.
• At least 4 of the 7 choppers delivered from August to December 2014 already showed engine defects. The engine of at least one Huey had to be changed entirely. Two had engine leaks, while another chopper wouldn’t start.

While the suppliers distanced themselves from the alleged anomaly surrounding the deal, they were not able to discuss during the hearing why their choppers had engine defects. Rappler approached Robert Rice after the hearing but refused to grant an interview.

Senator Ejercito earlier said that Air Force pilots personally told him that they are afraid to fly the aircraft.

Alvarez’s colorful story

The e-mail exchanges between RASI and Alvarez show that she requested for the 15% commission in October 2014. Her story was first published by the Manila Times newspaper in March 2015 or five months after her request was denied. 

The department moved to terminate the contract after the controversy erupted. Only 7 of the 21 choppers were delivered although RASI said all 21 were already at their facility in Clark.

Alvarez has presented a colorful narrative of how she got involved in the contract.

She met former RASI representative Thack Nguyen when he went to her office at the Bureau of Internal Revenue to get some documents. They had become friends since and Alvarez started helping him secure other requirements for the bidding process.

Rice said Alvarez exposed Thack’s fraudulent activities and then supposedly offered her services instead. They had a good relationship until the falling out. Thack is reportedly in jail in the US.

“Alvarez took Nguyen’s job. He was very angry,” said Rice.

Rice said Alvarez threatened to discontinue the contract after they refused her request for 15% commission. RASI also refused to give her 3% commission because she supposedly failed to liquidate her representation expenses.

Alvarez claimed Robert Rice also threatened her life when he told her, “I’m gonna shut you up.” Rice explained he only meant he was going to discontinue sending him money. 

Parties and travels

They showed photos from her Facebook page to show her parties and frequent travels, alleging that she used RASI’s money to support her lifestyle. She also supposedly shortchanged RASI’s local employees by taking a cut from their salaries. 

Alvarez said she exposed the deal when she discovered from her own research that the deal was actually anomalous and disadvantageous to the country.

But she also displayed a document that RASI said she is not supposed to have a copy of, suggesting that she has been getting help from defense insiders.

The Rice father and son scoffed at her claims, grinning or making faces as Alvarez talked about love of country.

“I’m the whistleblower here,” said Robert Rice.

RASI also showed photos of its offices and facilities in the US to debunk Alvarez’s claims that they only have small-time operations and thus not qualified for the contract.

The Americans spoke of her two-day visit to the US to check out their facilities but “was  so jet-lagged” that she woke up at 4 pm. She was only supposedly able to visit the RASI office when their employees had left.

They showed photos of her as a passenger of the questionable aircraft, seeking to cast doubts on her claims that they’re not fit for the Air Force.

In response, Alvarez said the choppers are only fit for search and rescue operations and not for the more challenging maneuvers that combat choppers have to do during operations. – Rappler.com