PIATCO Tried to dupe Aquino on Terminal 3

By Jarius Bondoc

August 2, 2010

No photoThe NAIA Terminal-3 scam spanned three administrations. It nearly tainted a fourth one, the just-inaugurated P-Noy team. This was just before last week’s victory of the Philippine government in the Singapore lawsuit filed by contractor Piatco.

Storm began to stir in 1996 under Fidel Ramos when Filipino-owned Piatco stole the deal from an existing proponent. Instead of erecting a facility in 30 months as contracted, undercapitalized Piatco trawled for a financier and snagged German airport builder-operator Fraport. The first thing Piatco-Fraport did upon partnering in July 1998 was to renegotiate onerous terms from the month-old admin of Joseph Estrada. In all, over the next two years, they wangled four major revisions to reduce their costs and increase potential incomes. Only then did a structure begin to rise, very shoddily. Within three months of Gloria Arroyo’s takeover in 2001 more bribes changed hands for approvals of yet lesser quality construction. Piatco-Fraport hired a three-month “PR consultant” for a “fee” of over a hundred million dollars that actually went to the latest officials. The shit hit the fan; domestic and overseas lawsuits were filed to free the Philippines from the lopsided contract.

Early last month word spread around that the International Chamber of Commerce in Singapore was about to rule in favor of RP. Reportedly a tycoon who wants to buy out Piatco frantically sent emissaries to the week-old Noynoy Aquino tenure. Their mission: to dupe the new admin into settling out of court. Time wasn’t on their side. The Aquino team was too busy familiarizing itself with an inherited mess to listen to carpetbaggers. Besides, it was steeped in its campaign vow of clean government. Still Mr. Aquino must be told of the double agents in his inner circle. Starting today state solicitors, once sidelined by co-opted superiors for striving to win RP’s case, will brief the new President on the 14-year-old scam. Perhaps the Truth Commission will also investigate the culprits. For, not only did billions of pesos change hands, but RP’s reputation in Europe also was blackened. Public officials and private lawyers had connived to cover up misdeeds via money laundering and document counterfeiting in Manila and abroad. Lives have been lost.

Bloodstains on the Piatco-Fraport scandal are among the Arroyo regime’s hundreds of unsolved murders of jurists, journalists and militants. Hendrick Guingoyon, the judge trying the Terminal-3 expropriation, was assassinated in August 2005 in the midst of talks for just compensation for Piatco. In December the following year Assistant Solicitor General Nestor Ballocillo and his son were shot dead on their way to work. Ballocillo had been arguing in court that Piatco-Fraport were entitled to recompense of only $144 million, based on their submitted incurred expenses. Piatco was trying to collect $540 million, and Fraport $425 million, but he insisted the difference had gone to bribes and thus non-reimbursable. After one such hearing a grenade was lobbed at Jose Bernas, lawyer of Terminal-3 original proponent Asian Emerging Dragons Corp. He survived the blast.

Extortionate government bosses had hindered the case from the start. Despite the odds, the state and private lawyers fought on to win five major battles. First was in the Department of Justice, which annulled the deal for technical, financial and procedural flaws. Then, they got the Senate Blue-Ribbon committee to gather evidence of fraud and recommend indictment. The Supreme Court upheld both findings. Fraport ran to the International Court for the Settlement of Industrial Disputes in Washington DC, to make the Philippines pay up, but the ICSID declined to rule after noting the German firm’s violation of anti-dummying laws. Lastly, Piatco pressed its own collection before the ICC-Court of Arbitration in Singapore, which also pointed up legal breaches. Perhaps the only time Piatco-Fraport scored was when the court ordered the government to pay an initial P3 billion for expropriating the unfinished terminal; but then, the money allegedly went to the fund releasers. MalacaƱang during Arroyo’s term kept signaling RP counsels to backpedal. Still Solicitor General Alfredo Benipayo persisted in having the deal voided. The US lawyers White and Case nearly resigned yet won the Washington lawsuit. Lead Philippine lawyer, retired justice Florentino Regalado, left the case midway. At one point Arroyo received an ultimatum from German Chancellor Angela Merkel to settle the issue; she ignored her.

Hopefully all this will come up in the briefings for P-Noy. It might sway him to include the Terminal-3 rip-off among the Truth Commission’s investigative assignments. Also, to include the 800 or so political murders under the Arroyo regime as priority.

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