Mark Lapid, DOT execs from 3 administrations sued over Boracay Water contract

MANILA, Philippines – A graft complaint was filed against tourism officials of the administrations of Gloria Macapagal-Arroyo, Benigno Aquino III, and President Rodrigo Duterte over an alleged anomalous contract with Boracay Island Water Company (Boracay Water).

Rod Padilla and Roberto Gelito, who identified themselves as residents of Boracay, filed the complaint before the Office of the Ombudsman on May 8, a copy of which was obtained by media on Friday, May 18.

The complaint is filed against  Mark Lapid, who served the Arroyo administration as head of the Philippine Tourism Authority (PTA) and its later incarnation, the Tourism Infrastructure and Enterprise Zone Authority (TIEZA), under the Arroyo and Aquino administrations.

Among the others named in the complaint are former tourism secretaries Ramon Jimenez and Wanda Teo, who served the Aquino and Duterte administrations, respectively; Tourism Promotions Board (TPB) head Cesar Montano; and the current board of the Tourism Infrastructure and Enterprise Zone Authority (TIEZA), including Teo’s husband, Roberto.

Boracay Water

In their 12-page complaint, Padilla and Gelito alleged that the PTA under Lapid “demonstrated a clear bias” towards the Manila Water Company Inc (MWCI) in the award of the contract to operate the waterworks and sewerage system of Boracay.

The complaint said that that the PTA was able to get a loan from the Japan International Cooperation Agency (JICA) to build and operate Boracay’s water and sewerage system. It was first operated by the Boracay Waterworks and Sewerage System (BWSS).

In 2009, a year after he was appointed to head the PTA, Lapid entered into a joint venture agreement with MWCI for the “development, financing, design, engineering, construction, upgrade, testing, commissioning, management and maintenance” of the BWSS facilities.

According to the complaint, there were many irregularities in the joint agreement.

The complaint said the MWCI submitted an unsolicited proposal, which the PTA accepted. Under the rules, the PTA should have asked the MWCI to submit tender documents – a summary of services, pricing, and other conditions – and then open it to other private parties for comparative proposals.

The complaint pointed out that according to the process of a joint venture agreement, the PTA should approve the tender documents first before publishing an invitation for comparative proposals. After the invitation, other private companies should have 30 days to submit their comparative proposals.

The complaint said that process didn’t happen, as the invitation was published before the approval of tender documents, and the contract was awarded to MWCI even before the 30-day period had lapsed.

“It is undeniable from the above that respondents PTA Board of Members and Officers meticulously planned and craftily executed the award of the project to MWCI, notiwthstanding non-compliance with the substantivre and procedural provisions of the Joint Venture Guidelines,” the complaint said.

'Anomalies'

After the contract was signed, the PTA and MWCI incorporated a third company, Boracay Water, which was was given the “sole right” over Boracay’s water and sewerage facilities.

The complainants said that Article XII, Section 11 of the Constitution prohibits exclusivity of franchise over public utilities.

The ownership structure of Boracay Water became 80% for the MWCI snd 20% for the PTA “which effectively makes it an MWCI subsidiary with MWCI controlling the majority of the shares,” according to the complaint.

It translates to a P240 million-ownership stake of MWCI and P60 million in the case of  PTA which, the complainants said, was just an offset.

“PTA did not only surrender its water rights and water facilities to the joint venture for free, but it was further indebted to Boracay Water in the amount of P60 million which will be paid by PTA through deductions from its concession fees,” said the complaint.

“In effect, the respondents defrauded PTA into paying for something that it already owns – the water rights and water and sewerage system,” the complaint said.

'Sweetheart deal’

The complaint said that Boracay Water recovered its concession fees to the government through its consumers' water bill payments.

“This is grossly disadvantageous to the consumers who are shouldering the expenses of the 80% owned joint venture company of MWCI. The concession fees whould be absorbed by Boracay Water and not passed on to the consumers of Boracay Island,” the complaint said.

Boracay Water continues to operate in Boracay, playing a crucial role in the rehabilitation of the island after President Rodrigo Duterte closed it down because of environmental and sanitation problems.

PTA was reorganized and became TIEZA in 2009. 

“Until now, respondents including the present TIEZA Board Members, in connivance with one another, have been implementing this anomalous sweetheart deal with MWCI despite the serious environmental issues that Boracay island is facing right now. Respondents have made possible the fraudulent joint venture, and they continue to operate their illegal business, as usual, while the people of Boracay are the ones suffering,” the complaint said.

The TIEZA Board is an inter-agency group, so the complaint also covers former officials who were part of the board during the past administration, such as former  public works secretary Rogelio Singson and former environment secretary Ramon Paje; and incumbent officials Interior Officer-in-Charge Eduardo Año, Interior Assistant Secretary Epimaco Densing, Environment Secretary Roy Cimatu, and Public Works Secretary Mark Villar.

Others included in the complaint are: 

The complaint alleged that the officials violated Section 3(e) of the graft law which prohibits giving parties unwarranted beenfits, advantage through manifest partiality. – Rappler.com

Lian Buan

Lian Buan covers justice and corruption for Rappler. She is interested in decisions, pleadings, audits, contracts, and other documents that establish a trail. If you have leads, email lian.buan@rappler.com or tweet @lianbuan.

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