THROWING AWAY PUBLIC FUNDS

Can a Cabinet Secretary just wave away hundreds of millions of pesos in public funds sunk into a government project in computing its asset valuation for purposes of ascertaining its rental rate, and say his Department is not interested in recovery of the money for ROI purposes?
This is now an issue I am pursuing with the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) after I discovered how it fixed the asset valuation for the Iloilo Convention Center (ICC) at only P330 million when it set the minimum bid more than a year ago.
From records I have in hand, no less than P750 million in public funds, with nearly half of it coming from the Disbursement Acceleration Program (DAP), were disbursed for the construction of this project initiated by Senator Franklin Drilon.
I have exposed this project as grossly overpriced, and the procurement for the contract was apparently rigged. The memorandum of agreement between the land donor, Megaworld, and the Department of Tourism, set the cost of the ICC at only P200 million. Drilon had planned to jack up the price to P1 billion; the exposes stopped him 3/4 of the way. The ICC is not finished after P750 million.
For over a year, TIEZA peddled the management contract for the ICC using P750 million as the asset value for over a year. Each bidding for the contract ended in failure. That’s not surprising. Because the cost is much too high, and the rental rate will be based on it. Even just set at 10% of the asset value, the rental would be an astronomical P75 million a year.

Ultimately, the TIEZA Board revised the terms of reference for the contract. During a meeting in January 2015, then DOT Secretary Ramon Jimenez reportedly told the Board that the DPWH through then Secretary Rogelio Singson had manifested it was no longer interested in recovering its share in the project of P320,000,000! That paved the way for the TIEZA Board to reduce the asset value at P330 million representing the corporate funds disbursed for the project.

The TIEZA Board set the minimum, or floor, bid for the contract at 1% of the asset value, which would translate to P3.3 million annually.

Even then, the winning bid amounted to only P1.9 million annually! It’s a “bagsak-presyo” bargain. At that rental rate, the government cannot even recover 10% of the supposed P330 million asset value in 100 years! What kind of business decision is that?

This is now concrete evidence that the whole ICC project was just intended to be a conduit for the DAP pork barrel funds for Drilon! It was never intended to be the showcase of Ilonggo culture and history that would serve as magnet for conventions and visitors to Iloilo City!

I have asked TIEZA Assistant Chief Operating Officer Jetro Francis Lozada for the minutes of the meeting in January 2015 in which Secretary Singson reportedly told the Board the DPWH was no longer interested in recovering its investments. Singson had no right to throw away public funds just like that!

After more than a month, TIEZA hasn’t furnished me the documents I requested. Is this a cover-up in the making? I am sure the Duterte administration will strongly object to that kind of official behavior.

This time, Drilon will have to give an accounting to the people of the Philippines!

 

SMEX Convention Center makes obvious overpricing of Iloilo Convention Center

I visited the SMX Convention Center for the first time yesterday to view the exhibits for the CONEX 2017 Trade Exhibition of the United Architects of the Philippines.
As soon as I entered its portals, I was overwhelmed by the enormity of the facility — with four floors and costing only P900 million.
I had long compared SMEX Convention Center with the Iloilo Convention Center, for which the government had spent a total of P740 million so far, and still only 85% completed.
The SMEX Convention Center has a total leasable space of 21,000 square meters. ICC has only around 6,400 square meters in leasable space. The difference is big, but ICC cost more to build. Of course, much of the construction cost didn’t go to the construction.
This makes the corruption in the ICC stand out like a sore thumb.
It’s time the Duterte administration reopens the investigation into the anomalous project.

The washing of the feet

Today is Maundy Thursday, and Christians all over the world commemorate the Last Supper that Jesus Christ had with his disciples. It was the night before He was to be hanged on the Cross, which He already knew will happen, and the man who had betrayed Him was also at the table. Jesus took bread and wine in an act that transformed them into His flesh and blood. He was giving Himself as a supreme sacrifice to show us He was giving up His own life for our salvation.

But there is another meaningful event that took place that night, something that many Christians overlook or simply fail to appreciate. It was the act of Jesus washing the feet of His disciples. It was a great act of humility that Jesus did to set an example that He had wanted every believer to follow: Service to others. And even though He knew Judas had betrayed Him, he didn’t leave the traitor out. Jesus also washed the feet of Judas.

Indeed, most people fail, or even refused, to understand the washing of the feet as their mandate to help and serve others, and even forgive their enemies. Peter protested when it was his turn to have his feet washed. Jesus was master and mentor. The act of washing his feet was humiliating. But Jesus overruled Peter. If He, Jesus, who was master and mentor, could wash the feet of His disciples as an act of service, then how much more his disciples and ordinary mortals? It was servant leadership at its height.

This is an important point for reflection as we commemorate Maundy Thursday. Many of us live without regard for the welfare of our fellow human beings. We live only for ourselves. Many make so much money and do not even think for a second how part of that money can feed the hungry or heal the sick. And Jesus gave His life for us; how many of us are willing to die in the service of others? The sad truth is that only a few — too few — will think about putting themselves in harm’s way even if this will save others.

Our political leaders, too, ought to reflect on the example set by Jesus. They call themselves “public servants” but do little to give meaning to that title. In fact, many political leaders prey on the people, stealing from the public treasury horrendous amounts of money that should be spent to improving people’s lives. Few of them come close to the model set by Jesus for servant leadership.

The sell-out of the Iloilo Convention Center, Part 2

It’s been more than two years now since I appeared before the Senate Blue Ribbon committee that looked into the anomalies of the Iloilo Convention Center (or “Icon”). I brought with me a trolley suitcase filled with documents that established the irregularities that took place. But the Liberal Party-dominated Senate didn’t want the truth to come out. Hence, they railroaded the investigation to prevent me from disclosing more.

That didn’t stop me from digging for more evidence. And these last two years yielded a bountiful harvest of documents that proves my case. From the procurement stage (bidding) for the structure until the bidding for the lease, operate and manage (LOM) contract, the Icon was marred by violations of the law at almost every stage.

It is now clear the Icon was conceived and designed by Senator Franklin Drilon as a conduit for one of the biggest public frauds in our nation’s history. It was designed, with the cooperation of other agency officials, to enable Drilon to skim off hundreds of millions of pesos coming from the Disbursement Acceleration Program (DAP).

It started with the idea of Megaworld donating a 1.7-hectare lot in its Iloilo Business Park in the old site of the Iloilo airport in Mandurriao, Iloilo City.

Based on the development plan prepared by Megaworld, the lot that sat between two first-class hotels — Richmonde and Marriot — was clearly intended to be the site for a convention center.

But Megaworld wasn’t then in a hurry to finish the Iloilo Business Park because the business climate didn’t make it feasible as yet. Drilon, however, wanted Megaworld to get things to move faster. The construction of Richmonde was going slow at the time. Clearly, Megaworld wanted the business environment to improve before going full-swing with its development work. Drilon had other ideas.

This was when Drilon broached the idea to Megaworld of a swap: Megaworld will donate the 1.7-hectare land, and the government, through the Department of Tourism and TIEZA, will build a convention center. It was understood that after the Icon is finished, the management contract will be awarded to Megaworld. It was a perfect arrangement. Megaworld would have its convention center at no expense, and have the anchor project to attract more visitors to its Richmonde and Marriot hotels.

How do I prove that the deal was for Megaworld to supposed to have its cake and eat it, too?

On May 5, 2014, TIEZA issued this Notice of Award for the lease, operate and manage the Icon to Megaworld after holding its first public bidding for the contract.

Screenshot NOTICE OF AWARD MEGAWORLD

 

For still unknown reasons, the contract with Megaworld was never perfected. But what this proves is that TIEZA was lying when it said that its previous public biddings all resulted in a failure. The issuance of a notice of award means that a successful bidding was consummated. It means a post-qualification evaluation had been conducted, and the bid submitted by Megaworld was found to be the most responsive bid.

And this shows that all the while, Drilon et al were only engaged in a “moro-moro”. Megaworld was indeed going to operate and manage the Icon. It’s just that the contract was not perfected. I have asked TIEZA Assistant Chief Operating Officer Jetro Nicolas Lozada for a copy of the BAC resolution and other papers to enlighten the public on what happened. In his email two days ago, he said he referred my request to the Special Bids and Awards Committee.

Drilon has a lot of explaining to do. Why did he push for the construction of a convention center far beyond the original construction cost of P200 million and then just agree to have it managed by Megaworld? In effect, Drilon used public funds for a structure that would benefit Megaworld if the plan had stuck to the original script. What was the consideration?

This issue about the Icon is far from dead. It merely hibernated after the Liberal Party forcibly drowned out the truth on November 13, 2014. We will expose every aspect of the anomalous project until the Duterte administration fully understands the magnitude of the corruption committed by Drilon. This is a total waste of public funds which Drilon generously scooped out from the Disbursement Acceleration Program (DAP).

Truth is what Drilon fears most

In case you didn’t notice, Senator Franklin Drilon has been awfully quiet about the exposes I have been making on his anomalous projects in Iloilo City and Bacolod City.
As a public official, he has a moral duty to explain to the people why these anomalies happened in the first place. That is the doctrine of accountability and transparency. These projects are his “brainchildren”, as he would put it, and he must answer allegations that these are substandard, overpriced, or otherwise disadvantageous to the Filipino people.
But if there is one thing that Drilon fears, it is the truth.
He knows his thundering voice cannot quell or suppress the truth.
What he is doing now is bury his head in a hole the way an ostrich does, oblivious to the fact that his butt is exposed in public view.

The sell-out of the Iloilo Convention Center (Part I)

Just as I expected, the grossly-overpriced construction cost of the Iloilo Convention Center scared away potential private-sector operators, including the Megaworld Corporation, forcing the Tourism Industry and Enterprise Zone Authority (TIEZA) to literally offer the P750-million facility touted as “world-class” at a basement price just so it could find a willing management contractor.

This came out just last week in a letter sent to me over the weekend by Jethro Nicolas F. Lozada, Assistant Chief Operating Officer, Asset Management Sector of TIEZA. Mr. Lozada wrote this letter in reply to an email I sent to TIEZA more than a month ago inquiring how on earth did TIEZA come up with an asset valuation for the ICC for only P330 million in the terms of reference (TOR) for the public bidding for the lease, operate and manage (LOM) contract.

As a result of this desperation to turn over the ICC to a private management operator, TIEZA was also forced to sign a contract with Premier Islands Management Corp. to pay only a measly P74,054,268 over a period of TWENTY-FIVE (25) years. On average, TIEZA will be paid only P2,962,170.72 annually. On a monthly basis, that’s equivalent to P246,847.56.

PIMC is owned by Alfonso Tan, owner of the Hotel del Rio where Drilon always stays when he is n Iloilo, and a big contractor who has cornered many of his mega-projects in Iloilo. They are close friends.

For such a huge public investment, mostly from the Disbursement Acceleration Program (DAP) through facilitation by Senator Franklin Drilon, this amount is peanuts, a clear give-away, a sell-out of taxpayers’ money. The return on investment (ROI) on the public funds wasted on the project is not even 10% over a period of 25 years. The average period for payback, defined as the number of years to recover the initial capital outlay, for buildings and similar commercial structures is four (4) years.

How did this happen?

First, the total capital outlay for the ICC was outrageously high. A convention center to be feasible must only cost in the vicinity of P200 million. Which was precisely what was originally pegged in the Memorandum of Agreement (MOA) between Megaworld Corporation and the Department of Tourism (DOT).

As revealed by TIEZA’s Lozada, “TIEZA in its first two attempts to privatize the operation and management of ICC tried to recover the total expenditure amounting to about 750M, which resulted in two failed biddings because bidders cannot commit to the financial requirements of TIEZA.”

Lozada added that the two failed biddings forced TIEZA to revise the financial requirements. “As the only property for privatization in Tranche 2, it was marketed more extensively than the first two attempts, but still resulted in a failed bidding,” he wrote in the letter dated March 22, 2017.

Confronted with this situation, TIEZA had to bring down the total construction and development cost as much as possible. It had to scrap key components of the ICC that were not yet implemented. This was worth P88 million. TIEZA had to lower the minimum bid.

On January 15, 2015, then DOT Secretary Ramon Jimenez manifested before the TIEZA Board “that DPWH was not really interested in recovering their expenditures and that there is no obligation for TIEZA to recover its share.” The “share” of DPWH at that point was P332 million from DAP which was infused into the project by Drilon.

“TIEZA, in the end, still decided to recover its 330M expenditure on ICC, while the total expenditure by the DPWH, primarily for the purpose of development and construction of the ICC, was excluded upon the decision of the TIEZA Board as suggested by the DPWH Secretary,” Lozada wrote.

Interestingly, the TOR for the last public bidding which was eventually won by Premier Islands Management Corp. put the minimum annual fixed revenue at 1% of the asset valuation. TIEZA put the asset valuation at P330,000,000, which means that the annual fixed revenue, or rental payment, should be P3,300,000. The contract awarded to Premier Islands Management Corp., however, fixed the amount at P1.2 million for the first three years, escalating periodically. At its highest, the annual fixed revenue on the 25th year is P1.772 milion.

Not only did TIEZA undervalue the asset that is the ICC; it also under-priced it in violation of its own TOR!

At that price, store space in the city’s big malls come a lot cheaper than what Premier Islands Management Corp. is paying TIEZA. This is damning evidence of the sell-out of the ICC, for which P662 millon in total public funds were spent, at the behest of Drilon! Of course, TIEZA had no choice but dump the project even at such a big loss. It was only forced upon the agency by Drilon. It had no hand in the inflation of the project cost which was originally set at P200 million.

(To be continued)

Panimu-ot

What is “panimu-ot” in English?
Honestly, I am struggling to find an exact translation.
But this Hiligaynon word is a very precise word to describe how a person relates with other people and affects how he or she is perceived as an individual.
And this is what appears to be an important factor for political leaders seeking election.
It is an invisible magnet that attracts people (voters) to throw their support for a particular candidate.
Yes, it is intangible, and not money, not power, not position, could bring “panimu-ot” to a politician’s person.
It is more akin to credibility and empathy and humility brought together and raises the level of trust and confidence in a leader.
“Panimu-ot” comes to mind when people talk about the leadership of Boboy Tupas as congressman of the 5th district.
Cong. Boboy is kind, soft-spoken and humble. He is hard working and genuinely cares for the people. This is the reason why, even against all odds (with the power and money of his brother Junjun thrown against him in the last elections), Boboy won by a landslide over his opponent, sister-in-law Atty. Gel Tupas.
The effect of “panimu-ot” is magical. I saw this happen during my stint as Provincial Administrator of Iloilo under the late Gov. Niel Tupas Sr.
Gov. Tupas is the best example of “panimu-ot” at work, which was what endeared him to the people.
His second son, Boboy, is seen as the improved version of the father in terms of “panimu-ot”.
And I predict that this is the personality trait that will bring him to more success as a political leader not only in Iloilo province but in the entire country as well.