Another day, another scandal for Arroyo
By Joel D Adriano
MANILA - Another scandal, another official investigation and likely the same
result: no convictions and no impact on Philippine President Gloria
Macapagal-Arroyo's staying power. Arroyo's government is now embroiled in yet
another high-profile corruption controversy, this time involving her husband, a
clutch of private companies and the World Bank.
In mid-January the multilateral lending agency released a blacklist of three
Philippine and four Chinese construction firms that it banned from
participating in future World Bank-funded infrastructure projects due to
alleged collusion in bidding for recent projects. A World Bank investigation
found the firms were
involved in a "major cartel" that tried to rig bids in their favor for the
National Roads Improvement and Management Program, or NRIMP-1.
Cavite Ideal International Construction and Development Corp and C M Pancho
Construction Inc were both banned from future World Bank projects for four
years, while EC de Luna Construction and its sole proprietor, Eduardo de Luna,
were both barred indefinitely, representing the first permanent ban on a
contractor the bank has handed down since 2004.
The barred Chinese firms included China Road and Bridge Corp, China State
Construction Corp, China Wu Yi Company Ltd and China Geo-Engineering Corp. The
US$33 million loan scheduled for the road projects was canceled before funds
were disbursed, the World Bank said. The barred companies are known to be close
to the government, winning over 17.2 billion pesos (US$366 million) worth of
state road, bridges and irrigation contracts from July 2005 to June 2008.
The NRIMP-1 projects, entailing the construction and rehabilitation of 1,400
kilometers of roads, had received $150 million worth of World Bank partial
financing beginning in 2000. The projects have since been particularly prone to
corruption. In August last year, the multilateral lender put South Korea's
Dongsung Construction Company Ltd on a blacklist for "fraudulent and corrupt
practices" - charges the company did not contest.
In a statement, John Adams, the World Bank's vice president for East Asia, took
an indirect jab at Arroyo's record when he said: "Misuse of public money ...
deprives the poorest people of the development funds that are so vitally needed
and it undermines public confidence in public and private institutions."
Although the scandal has focused primarily on private sector foul play, an
official twist has emerged involving Arroyo's husband, Jose Miguel Arroyo,
marking the latest corruption allegations to swirl around the controversial
first gentleman. Filipino legislators and the ombudsman have launched
full-scale inquiries into the World Bank allegations.
Opposition Senator Panfilo Lacson first implicated Arroyo in the scandal,
citing information from one of the her husband's alleged appointment books that
showed he met with EC de Luna Construction's owner over 20 times in 2002.
During the senate hearing, Lacson described Luna as the "mystery man" behind an
alleged 70 million peso bribe to land part of the multi-billion peso World
Bank-financed infrastructure project.
He claims to have a key witness that will back up his claims that contractors
paid top public officials, including from the Department of Public Works and
Highways. Luna has denied any wrongdoing during senate hearings, admitting that
he met with the first gentleman on just three occasions. Palace officials have
downplayed the bribery allegations against Mr Arroyo, arguing that the meetings
are not proof of foul play.
However, the World Bank has made available material from its internal
investigation which mentioned an unnamed Japanese contractor who held a meeting
with Mr Arroyo and a former senator where bribes were discussed. "From that
meeting, it was impressed on him that [bribe] money was important to do
business in the Philippines," the report said, according to a copy obtained by
a local television news channel.
The ex-senator, whose name was not divulged in the document, told the Japanese
contractor "that money would have to be paid as high up as the president,
senior government officials, and politicians in order to do any further
business in the country".
The Japanese firm, after making two unsuccessful bids on World Bank-financed
road projects it subsequently claimed it didn't actually make because the
firm's president's signature was forged on the offer, has since exited the
country.
That murky account is so far the only direct evidence linking the President's
husband to the still-unfolding bid rigging controversy. Three other
interviewees in the senate hearings gave testimony that indirectly linked Mr
Arroyo to the alleged bid manipulation.
Scandal-plagued
Arroyo's administration is no stranger to scandal.
Congress is currently looking into a reported bribery attempt by Securities and
Exchange Commission officials to extort money from Legacy Inc, a local
financial company. Similar investigations are underway of alleged bribery of
Department of Justice prosecutors to acquit suspects in a recent high-profile
drug trafficking case.
Both Arroyos have been accused by the political opposition of corruption. Those
allegations have included most prominently a $329 million broadband
infrastructure contract tendered to China's ZTE Corporation. Arroyo was later
forced to cancel the deal after irregularities, including allegations that her
husband requested multi-million dollar kickbacks, were exposed by opposition
lawmakers.
"Corruption has become pervasive, persistent and prolific. And the president,
instead of fighting it, has become its prime protector," said former senator
Vicente Paterno.
He contends the reason corruption scandals have not brought Arroyo's government
down is due to her appointment of several senior former military and police
officials to the bureaucracy. Senior military officials have been involved in
orchestrating past People's Power protests that have brought down different
Philippine government's on corruption and abuse of power charges.
"Nearly 60% of the 4,000 positions from directors to under secretaries
belonging to the career executive service are occupied by her appointees. She
has appointed more than 80 assistant secretaries and undersecretaries whose
positions are not even provided by law," Paterno said.
With the three pro-administration political parties, Lakas-CMD, Kampi and the
Nationalist People's Coalition, in her camp, Arroyo holds sway over 172 of the
Lower House of Congress's 238 congressmen. Arroyo-aligned lawmakers are now
again bidding to fast-track constitutional changes that would allow Arroyo to
extend her term beyond in 2010, when according to term limit provisions in the
current charter she must step down.
Arroyo was first catapulted to power in 2001 when corruption allegations
galvanized popular protests that eventually drove president Joseph Estrada from
power. During Arroyo's nearly eight-year tenure, the World Bank, Transparency
International, and local business surveys have all ranked corruption as a major
inhibitor of the country's development, including its ability to attract badly
needed foreign investment.
The Index of Economic Freedom, prepared by the Washington-based Heritage
Foundation think-tank and right-wing newspaper The Wall Street Journal, ranked
the Philippines 104 out of 183 countries surveyed in terms of economic freedom.
The country scored the lowest in the survey's corruption ratings, which noted
the difficulty in enforcing contracts, protecting intellectual property rights
and the vulnerability of the judiciary to political influence.
For her part, Arroyo has repeatedly vowed to stamp out endemic corruption but
done little to actually combat the scourge. She has since October 2004
consistently received negative approval ratings in quarterly surveys conducted
by the Social Weather Service polling agency. Now the World Bank scandal will
add more fuel to those poor popular perceptions.
Joel D Adriano is an independent consultant and award-winning freelance
journalist. He was a sub-editor for the business section of The Manila Times
and writes for Asean BizTimes, Safe Democracy and People's Tonight.
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