MANILA, Philippines (UPDATED) – The Department of Transportation (DOTr) filed a graft case against former transportation secretary Joseph Emilio Abaya and Busan Universal Rail Incorporated (BURI), the maintenance provider of the Metro Rail Transit Line 3 (MRT3) whose contract was terminated.
In the complaint filed before the Office of the Ombudsman on Monday, October 23, the DOTr said that the Abaya-led agency in 2015 facilitated the creation of special purpose company BURI, which then took over the maintenance contract won by Korean firm Busan Transportation Corporation.
Busan won the P3.8-billion contract to provide system maintenance, signaling systems, and overhauling services to the MRT3.
But the DOTr under Abaya – then the Department of Transportation and Communications (DOTC) – allowed the creation of a separate company, which was BURI.
"Interestingly and disturbingly, on the same day that the project was awarded to Busan, Camille Alcaraz, as Chairperson for Bids and Awards Committee (BAC) and Assistant Secretary for Procurement, requested the Securities and Exchange Commission (SEC) to facilitate the registration of a special purpose company consisting of the members of Busan for the Contract Award of the project," the complaint reads.
According to the DOTr, Busan's shares in BURI were diluted to only 4.7%. Four other firms were involved: Tramat Mercantile Incorporated (28.9%), TMICorp Incorporated (23.6%), Edison Development and Construction (28.9%), and Castan Corporation (13.9%).
Transportation Undersecretary for Legal Affairs and Procurement Reinier Yebra said recent MRT3 glitches were the result of the underperformance of BURI – a company which wasn't supposed to be the maintenance provider in the first place.
"It has everything to do with the current degradation and the poor service and the unreliable trains of the MRT3. Busan won the contract with DOTC – it has the experience, it has the required capitalization. Instead they formed BURI, where Busan – the Korean giant company – only got 4.7% and became a nominal shareholder. That in itself, we believe, is anomalous and should be looked into," Yebra said.
In the complaint, the DOTr blames BURI entirely for all the glitches, saying these were "preventable defects and not design defects" that "could have been averted had [the MRT3] been properly maintained." (READ: DOTr considers blacklisting MRT3 maintenance provider)
"BURI is confident that it will be able to answer and negate any charges against the company or its officials," BURI's lawyer Charles Mercado said.
The DOTr said DOTC officials under Abaya violated several procurement and bidding rules, and that their acts amount to graft.
"BURI is a newly formed corporation [which] does not only lack the required years of experience, but more importantly has not, for all legal intents and purposes, joined the bidding at all," the complaint reads.
The complaint does not allege that kickbacks were pocketed, but Yebra said it is worth investigating why the DOTC found it necessary to create BURI.
Abaya is being held accountable for "allowing or tolerating the commission of those deplorable acts through his own act and/or ommission."
The former DOTC chief vowed to clear his name.
"Our decision has always been guided by our conscience and our compliance with procurement laws and laws with regard to the procurement of the maintenance provider. We look forward to clearing our name before any appropriate body," Abaya said.
Aside from Abaya, the following former and current transportation officials were also named respondents in the complaint: former undersecretary for operations Edwin Lopez, former undersecretary for planning Rene Limcaoco, former undersecretary for procurement Catherine Jennifer Gonzales, former MRT3 general manager Roman Buenafe, former BAC chairperson Camille Alcaraz, BAC vice chairperson Ofelia Astrera, as well as BAC members Charissa Opulencia, Oscar Bongon, Jose Sabayle, and Maria Cecilia Natividad.
BURI officials Eldonn Ferdinand Uy, Elizabeth Belasco, Belinda Ong Tan, Brian Velasco, Chae-Gue Shim, Antonio Borromeo, Jun Ho Hwang, Elpidio Silvestre Uy, William dela Cruz and Eugene Rapanut were also named as respondents in the complaint.
Termination of contract
The DOTr sent BURI a notice of termination of contract on October 17. The government has so far paid the company P921 million out of the P3.8 billion stipulated in the contract. Yebra said they are studying their legal options to possibly recover some of the money paid.
BURI has also sued Transportation Undersecretary for Railways Cesar Chavez for non-payment of P176 million worth of fees.
Chavez earlier said he is awaiting clearance from the Commission on Audit (COA) to pay BURI the fees.
"Bakit kailangan masinop sa pagsusuri ng billing? Para matiyak na original ang spare parts, at hindi rin galing sa 'cannibalized' o kinuha lang na piyesa sa ibang bagon. Ito ay para sa kaligtasan ng mga mananakay," Chavez said last September.
(Why do I need to be thorough in assessing the billing? To make sure that the spare parts are original, and not "cannibalized"or just taken from other coaches. This is for the safety of commuters.)
With the termination of BURI's contract, Yebra said the DOTr could resort to negotiated procurement due to an emergency case, which was what Abaya did in 2015 that led to the awarding of the contract to Busan.
Before Busan, APT-Global was the maintenance provider for the MRT3 on a month-to-month basis. It was held responsible for the glitches and breakdowns of the MRT3 in 2015, and was even fined P211 million.
"What we can assure you is we have the public interest on top of mind. That is the reason we're doing all of this, kaya pati [sa] paghanap ng replacement, ang laging nasa utak namin (that's why even in the search for BURI's replacement, our priority is) how do we assure the safety of the riding public? They've had enough, we've had enough," Yebra said.
Senator Grace Poe, chairperson of the Senate public services committee, said the complaint "rests on solid grounds."
For the senator, BURI had been incompetent as maintenance contractor.
"This should not have happened if Secretary Abaya and his men exercised due diligence in checking whether or not BURI was capable of handling such a huge responsibility and in ensuring the safety of the public," she said in a statement.
Poe added that she expects Ombudsman Conchita Carpio Morales to find the complaint sufficient and charge the officials before anti-graft court Sandiganbayan.
"This is another opportunity for the Ombudsman to show its independence and resolve to fight corruption in all levels, regardless of political affiliations, past and present," the senator said. – Rappler.com