Ombudsman finds probable cause vs. ex-DOTC chief Abaya

Ombudsman Conchita Carpio Morales has found probable cause to indict former Transportation and Communications Secretary Joseph Emilio Abaya for graft in conjunction with the maintenance contract of the Metro Rail Transit Line 3 (MRT3).

In a statement on Monday, the Office of the Ombudsman said Abaya may face charges for violating Section 3(e) of the Anti-Graft and Corrupt Practices Act.

Abaya, who was the Department of Transportation and Communications secretary during the Aquino administration, may still appeal the recommendation of the special panel of investigators by filing a motion for reconsideration.

Other former Transportation officials included in the graft case are then-Undersecretaries Edwin Lopez, Rene Limcaoco, and Catherine Jennifer Gonzales; former MRT3 general manager Roman Buenafe; former Assistant Secretary Camille Alcaraz; MRT3 Bids and Awards Committee (BAC) vice chairperson Ofelia Astrera, lawyer Charissa Eloisa Opulencia, Engineering Division chief Oscar Bongon, and Engineer. Jose Rodante Sabayle.

Eldonn Ferdinand Uy of Edison Development and Construction, Elizabeth Velasco of Tramat Mercantile Incorporated, Belinda Tan of TMI Corporation Inc., Brian Velasco of Castan Corporation, and Antonio Borromeo, Jun Ho Hwang and Elpidio Uy of Busan Universal Rail Inc. (BURI) were named as private respondents in the consolidated resolution.

The Ombudsman said Abaya had direct supervision over his employees at the DOTC—now the Department of Transportation (DOTr)—and should have exercised due diligence in ensuring that the MRT3’s maintenance contract would benefit the riding public.

“As then DOTr Secretary, Abaya had supervision and control over the officials under him and was immediately and primarily responsible for all government funds and property pertaining to his agency at the time of the questioned transaction. Occupying an executive position, Abaya is required to exercise diligence in the highest degree in the performance of his duties,” the resolution read.

The plunder charges filed against former DOTC secretary Mar Roxas, former Budget secretary Butch Abad, former Finance secretary Cesar Purisima, former Energy secretary Jericho Petilla, former Defense Secretary Voltaire Gazmin, former Public Works Secretary Rogelio Singson, former Science and Technology Secretary Mario Montejo, and former National Economic Development Authority chief Arsenio Balisacan as members of the Government Procurement Policy Board were dismissed due to lack of probable cause.

Maintenance contract

In October 2014 and January 2015, the DOTC conducted public biddings for the three-year maintenance contract of the MRT3 but failed to attract any potential bidder.

Abaya was prompted to issue a Special Order on Jan. 28, 2015 creating the MRT3 BAC for the purchase of goods and services for the 16.9-kilometer mass railway.

The BAC then issued a resolution in March 2015 recommending a negotiated procurement through emergency cases for the maintenance of the MRT3 under Section 53.2 of the Revised Implementing Rules and Regulations of the Government Procurement Reform Act.

Documents recovered by the investigating panel showed that a single maintenance provider would be responsible for the maintenance of the MRT3 system valued at P2.27 billion, general overhauling of 43 light rail vehicles valued at P1 billion, the P900-million replacement of the signaling system, and P67.94 million of additional works.

Busan Joint Venture, as well as the joint  venture of DM Consunji Inc., Beta Electric Corporation, Baudis Bergmann Rosch Rail Automation GmbH, and Hamburg Consult GmbH and the joint venture of Schunk Bahn-Und Industrietechnik GmbH, and Comm Builders and Technology Philippines Corporation submitted their bids on Oct. 21, 2015.

The BAC found the proposals deficient in the absence of eligibility and other required technical documents.

Busan JV, which eventually bagged the multi-billion-peso contract, was composed of Edison Development and Construction, Tramat Mercantile Incorporated, TMI Corporation, Inc., Castan Corporation, and Busan Unversal Rail Inc. or BURI.

A DOTr negotiating team then recommended that the MRT3 BAC award a long-term maintenance contract to Busan JV, valued at P3.8 billion, following post-qualification proceedings. The project was awarded to the Busan consortium on Jan. 7, 2016.

Unwarranted benefits

But the Ombudsman claimed that Busan JV got unwarranted benefits, based on  several anomalies in the maintenance contract, particularly the eligibility of the consortium members to undertake the project.

“As the Busan JV’s offer was still considered as successful, the potential JV partners must enter into a Joint Venture Agreement (JVA) in accordance with its rules. But they did not. Still, the Busan JV was awarded the contract—yet another violation of the rules,” the Ombudsman said.

Only Uy submitted a “Statement to enter Into a Joint Venture” while the four other firms did not submit any document.

“Since only one potential partner of the Busan JV submitted the required statement, it should have been disqualified from participating further in the negotiated procurement since it lacked an eligibility requirement,” the Ombudsman said.

The Ombudsman panel also claimed it was irregular for the DOTC to allow the Busan JV to submit a mere Certificate of Registration instead of a JVA. The panel also found that the original net worth requirement for its partners was amended, and there was no Bill of Quantities (BOQ).

The net respective net worth of Tramat at P1.9 million and Edison at P383.5 million failed to meet the P1-billion requirement under the DOTC’s Instruction to Offerors, the Ombudsman noted.

At the same time, despite having been instructed to submit a BOQ, it was not included in the joint venture’s financial statements, according to the Ombudsman.

“There are no existing BOQs for the overhauling of the 43 LRVs and the total replacement signaling system components of the MRT3 long-term maintenance contract. Having failed to submit the required BOQ, the Busan JV should have been disqualified outright from the procurement process.”

Thus, the Ombudsman concluded that the joint venture was incapable of handling the MRT3 maintenance and should not have been qualified to implement the contract.

Major lapses

The Ombudsman echoed the findings of the Commission on Audit that the DOTr had “major procurement lapses” such as the poorly planned purchase of 48 new LRVs from CNR Dalian. The coaches carried a price tag of P3.76 billion, but even a single car has yet to be utilized.

“Despite four years in the procurement process and total payments of P527,761,083.00 (equivalent to 14 percent of the contract price) to Dalian, the LRVs remain inoperational and unaccepted by the DOTr as of reporting date due to glitches in the power supply and signaling system. These resulted from ... poor planning and other major procurement lapses,” the Ombudsman said, quoting the COA 2016 audit report.

Abaya “cannot simply evade such responsibility by invoking reliance on his subordinates, especially considering that the subject contract is one with a scope and magnitude affecting a big portion of the commuting public in Metro Manila,” according to the Ombudsman.

“By allowing the award of the contract to the Busan JV despite the attendant glaring irregularities, Abaya deliberately ignored applicable laws, rules and regulations, and standard operating procedures, falling short of or disregarding the required competence expected of him in the performance of his official functions,” it said.

Abaya’s lawyer, Ricka Gonzales, said their camp has yet to receive a copy of the Ombudsman’s resolution but that her client will determine his next course of action once they have a copy of the decision.

“We have received the news through media that the Office of the Ombudsman has decided against former DOTC Secretary Jun Abaya and his team. We find this decision unfortunate, considering that Sec. Jun clearly laid out his defense against the poorly-crafted and unsubstantiated complaint filed by the DOTr,” Gonzales said in a separate statement. —VDS/KBK, GMA News