World Bank: Miguel Arroyo Part of Bid-Rigging Syndicate

By Angie M. Rosales

Daily Tribune 02/25/2009

Ombudsman Merceditas Gutierrez knew all along that First Gentleman Jose Miguel “Mike” Arroyo and the late Sen. Robert Barbers were named in the World Bank (WB) “referral report” by witnesses who testified to the alleged collusive activities in bid-rigging of road projects in the country. This knowledge came as early as 2006.

She was also given additional information providing leads to the government in evidence-gathering, immediately after being furnished with the WB referral report, contrary to the claims she made before Senate investigators during a hearing into the WB mess last February 12 that she had received the documents only two days before her scheduled appearance in the upper chamber.

A copy of the referral report that the Ombudsman and the Department of Finance previously denied media access, clearly showed that WB findings on the bid-rigging allegations on the National Road Improvement and Management Program I (NRIMP-I) specifically identified Mr. Arroyo and Barbers as the two “Filipino public figures” who have participated in the collusive scheme.

An expanded list of contractors, more than the three local and four Chinese firms, were also named on the list.

Also included in the list were Public Works and Highways officials, former DPWH Secretary Florante Soriquez, Region IV-A Assistant Director Huillio “Boy” Belleza and a certain “Tito” Miranda.

“These names should not be disclosed publicly and should not be attributed to the World Bank as these names are only being provided by INT (World Bank’s Integrity division) to facilitate any potential

investigations conducted by your government into the disclosed matter,” the WB referral report stated.

Gutierrez was also notified by WB officials themselves who met up with her as early as May 2006, of the WB’s administrative fact-finding inquiry findings of allegations of fraud and corruption in the first phase of the national roads improvement and management project-1 (NRIMP-1), in which the Philippines was provided with a loan of $150 million, of which $133 million was released in March 2007.

This was gathered from the referral report, attached with the Nov. 13, 2007 letter by WB Director for Department of Institutional Integrity (INT) Suzanne Rich Folsom to Gutierrez, “hand-delivered” and labeled “strictly confidential” but were furnished to senators during a briefing yesterday afternoon, alongside with other documents – the decisions of the sanctions board, notice of sanctions proceedings and the NRIMP-1 evidence.

Top World Bank official in the Philippines on Tuesday told legislators it was up to the local authorities to prosecute firms the bank had banned for collusion in bidding for projects.

Country director Bert Hofman said the WB was mandated to make sure that its funds are used properly, stressing that its internal investigations and sanctions “ultimately protect the taxpayers’ money” of member countries.

He told a Senate panel investigating the scandal that the WB has already produced a “referral report” given to the finance department for possible follow up in investigating “whether Philippine laws have been broken.”

Sen. Manuel “Mar” Roxas II, who presided the meeting released to the public copies of the WB report after he, along with 14 other senators, signed a manifestation agreeing to release to the public all documents submitted to the committee during its Feb. 12 hearing into the rigging mess.

“This confirmed our earlier assertions that the Ombudsman played deaf and blind into these allegations,” he said.

Gutierrez however insisted that she had her office investigate this immediately “after we received the report from the WB. The only thing is that it was very difficult to investigate when the information given was too little and worse, could not be used,” she said, in her defense.

Although WB officials refused to delve into the “collusion” charges controversy, Roxas told reporters after the briefing that “they stood by their report and gave careful and detailed findings that led them to the issue of the debarment” or the blacklisting of three Filipino contractors.

WB officials, led by Hofman and communications officer David Theis whose previous position was spokesman for INT, regional chief counsel Anthony Toft and senior Communications officer Leonora Gonzales, pointed out to senators that one of the options the WB is considering if the government will not act on their reported rigged bidding is “not to the country lend anymore.”

Sen. Panfilo Lacson relayed this information in an interview, saying that the WB, in effect, issued a veiled threat to was what this struck him during the briefing when WB officials hinted at this.

“They said that if they see that the government will not lift a finger, will take no action on the information they provided us, one option is ‘not to lend (to us) anymore.’”

In page 4 of the said nine-page referral report, the names of Mr. Arroyo, labeled as the “husband of the President” and the deceased senator, were put under the heading “Filipino public figures” – whom witnesses, part of the more than 60 interviews the WB conducted in the course of its investigation, identified along with “contractors, Department of Public Works and Highways (DPWH) officials as having participated in the collusive scheme which was found to have occurred in the territory of the Philippines and therefore likely falls within its jurisdiction.”

“These names should not be disclosed publicly and should not be attributed to the WB as these names are only being provided by INT to facilitate any potential investigations conducted by your government into the disclosed matter,” the report said.

Findings indicated in the referral report said that the “INT investigation adduced evidence of the existence of a collusive scheme amongst the contractors, DPWH officials and public figures concerned in all three rounds of biddings related to the P1.4 billion and P1.6 billion contract packages under NRIMP-1.

“Numerous witnesses testified that a cartel existed in the Philippines, controlling bidding on road projects by international and local contractors. Over a dozen witnesses told INT that a well-organized cartel, managed by contractors and government officials, controls DPWH contract allocation and sets inflated contract prices on projects funded by the Bank and counterpart organizations. (Some of these witnesses themselves cartel participants, others were government officials.) according to these witnesses, Mr. Eduardo C. de Luna, president of EC De Luna, was at the center of the cartel,” the report said.

De Luna, one of the three blacklisted contractors, was alluded to in the Senate hearing on the matter as having close association with Mr. Arroyo.

In the referral report, it mentioned that after Department of Finance (DoF) Secretary Margarito Teves was provided a briefing in Washington D.C. by the WB-INT in April 2006 on the interim findings on bid riggings, Gutierrez followed suit.

“Subsequently in Manila, in May 2006, the Honorable Tanodbayan Ma. Merceditas N. Gutierrez, the Filipino Ombudsman, was briefed by the INT investigators on the methodology used by the INT in the courser of its investigation,” it also said.

Gutierrez made no mention of any briefing with WB during the Senate hearing.

Folsom, in her letter, even reminded Gutierrez on this matter, where the former also specifically told the Ombudsman the “Filipino government may wish, at its discretion, to use this Report as a basis for undertaking its own investigation into the allegations in order to determine whether any laws of the Philippines have been violated.”

“As you may recall, in May 2006, two members from my office, the department of INT, provided you with an oral briefing on the interim findings of an administrative fact-finding (the investigation) that we had conducted into the allegations of fraud and corruption in the first of the Philippines NRIMP-1.

“INT had briefed your office at that time, as the Filipino secretary of finance had indicated to us that your office would be leading any potential investigation into the matter on behalf of the Filipino government,” she said.

Folsom also told Gutierrez that their findings and conclusions in the report are based on their own rules and procedures and should not be used by the Philippine government as a basis for initiating any administrative, criminal or civil proceedings or even be cited in any further investigation.

The bank officials also assured Gutierrez that the “Bank would be amenable to a request for additional assistance from your government, save in that any further assistance provided would have to take into account the need for INT to protect the confidentiality of any sensitive witnesses and to respect any other possible constraints.”

The same report also mentioned that Gutierrez “undertook to conduct a criminal investigation into the matter” adding that Deputy Ombudsman Mark Jalandoni has been appointed to lead the investigation into whether or not any Filipino laws had been violated as a result of the bid-rigging uncovered by the INT investigation.

“So what happened from the time the referral report was given to them, to the DoF and then stamped received by the Ombudsman on Nov. 19? And then additional documents were sent to provide them additional information to further elucidate the referral report? That’s what we want to find out,” said Lacson.

“Who sat on it? If the WB sent those documents in November 2007 why was it she was claiming that she received it only two days before last Thursday’s hearing of the economic affairs committee?” he asked.

“By interest, I made mention to them (WB officials) the copy of the report that I have. These were in fact, snippets contained in the report, but they did not deny it.” he said.

Lacson said they will pursue this matter before the blue ribbon committee chaired by Sen. Richard Gordon where there is pending resolution on the criminal aspect in the WB mess.

“It’s difficult for me to answer for the Ombudsman because personally I feel she did not do her job. She was asked about it, her response was, it was an oral briefing, it was a briefing on the processes and the procedure, that this happened in Washington . This is the May 2006 briefing, this was according to her, it was oral, and therefore reading between the lines I think she assumed it was informal, that it was more on the process rather than on the leads, the findings, or the leads of the investigation. She implied that she was told or asked, “well don’t do too much because the process is still ongoing.” So, the interpretation was that she will not disturb the process because it might ruin the investigation,” Roxas, for his part, said in an interview.