ILOILO CONVENTION CENTER: Mother of all DAP scams


Press release

January 30, 2020

Front view

 

ICC lease contract ‘onerous’ – Mejorada

 

The lease contract awarded to an Iloilo-based company to operate and manage the Iloilo Convention Center four years ago is “onerous, lopsided and grossly disadvantageous to the government”, former Iloilo provincial administrator Manuel “Boy” Mejorada said.

In a six-page complaint filed with the Office of the Solicitor General on Tuesday, Mejorada said the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) can expect to generate only P74 million in rentals over a period of 25 years, which is less than 10 percent return-on-investment (ROI) based on total expenditures of around P750 million.

Mejorada asked Solicitor General Jose Calida to conduct a review pursuant to a directive of President Rodrigo R. Duterte to look into onerous contracts between the government and private entities.

The contract should be “rescinded, revoked and nullified”, Mejorada said.

“This contract is the mother of all scams,” he said.

Mejorada also wrote a similar letter to Tourism Secretary Bernadette Romulo-Puyat.

In his complaint, Mejorada said the lease, operate and manage (LOM) contract signed by and between TIEZA and Premier Islands Management Corp. on March 11, 2016 violated the terms of reference (TOR) issued for this purpose.

The TOR, for instance, used only P330 million as the “asset valuation” for the ICC, which is less than half of the actual expenditures, he said.

He said the actual expenditures of P750 million came from then TIEZA Assistant Chief Operating Officer Jethro Nicolas Lozada.

He said TIEZA removed the P300 million that was spent for the project from the Disbursement Acceleration Program (DAP) in order to bring down the asset value and make the lease payments feasible to potential bidders.

“There was no legal basis in just writing off the P300 million from the books of TIEZA for the ICC,” he said.

It appears that then DPWH Secretary Rogelio Singson waived off the recovery of the DAP money spent for the project during a meeting of the TIEZA board, he said.

“That is a blatant violation of COA rules and regulations in the disposition of public funds, an act constituting economic plunder,” he said.

Moreover, he questioned the adoption of P330 million as asset valuation.

With the actual expenditures placed at P750 million, and the write-off of P300 million, there is still P120 million that is not accounted for, he said.

It is common practice among real estate developers to recover the capital investments after 4 to 6 years, he said.

“That means within that period, a 100% recovery of the capital is achieved,” he pointed out.

In the case of the ICC, the total amount of fixed annual revenues and percentage share of gross sales won’t even reach 10% after 25 years, Mejorada said.

Mejorada said this asset valuation doesn’t take into account the value of the 1.7-hectare lot on which the ICC stands.

At a conservative price of P30,000 per sqm., the lot itself was worth P510 million, he said.

“In real terms, the real value of the ICC for purposes of computing the ROI should be P1.25 billion,” he said. “And that is a conservative amount,” he added.

Mejorada said the TIEZA violated the TOR in awarding the contract to PIMC.

“First, the indicative fixed annual revenue of 1% of the asset valuation was P3.3 million for the first year,” he said.

However, the contract set the fixed annual revenue for the first year at only P1.2 million, he said.

He said the percentage share from gross revenues in the ICC operations was fixed at 15% for each year.

But in the contract, the percentage share was only 5%, he added. (30)

 

 

About Manuel "Boy" Mejorada
Manuel "Boy" Mejorada is a journalist and social media activist. A former Iloilo provincial administrator, he is now waging a crusade against corruption and narco-politics.

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