Sunday, August 1, 2010

First Scandal: DPWH Sec. Rogelio Singson involved in midnight deal

This is the first scandal ever to hit the month-old Aquino administration. Let me re-print the article today published in the Philippine Daily Inquirer.

DPWH chief Singson linked to `midnight deal'

By Gil C. Cabacungan Jr.
Philippine Daily Inquirer
First Posted 00:12:00 08/01/2010

PUBLIC WORKS Secretary Rogelio Singson, as then president of Maynilad Water Services Inc., teamed up with then Philippine Amusement and Gaming Corp. (Pagcor) chair Efraim Genuino to push a water concession deal that would have supposedly deprived the government of at least P3.6 billion in water fees.

The deal between Pagcor and Maynilad involving the 3,877-square-meter Bagong Nayong Pilipino Entertainment City in Parañaque City was among the midnight deals that Genuino was said to have been pushing before he left Pagcor in June. But the board of the Metropolitan Waterworks and Sewerage System (MWSS) refused to uphold the deal, and the current Pagcor management has put it on hold pending further investigation.

Controversial DPWH Sec. Singson
Days before President Aquino was sworn into office on June 30, Genuino was purportedly calling MWSS board members to seek their approval for the deal that had been on the drawing board since the first quarter of 2009.

An MWSS board member, who declined to be identified because of the sensitive nature of the matter, said Singson wanted the contract in place before Genuino stepped down because the new Pagcor management might not play ball with Maynilad.

At that time, Singson had already met with Mr. Aquino at his residence on Times Street, Quezon City, and was rumored to be part of the then being formed Cabinet.

Singson’s comment

The Inquirer reached Singson last night for comment.

In a text message, he said that there was “nothing irregular” with the agreement between Maynilad and Pagcor, and that the latter “merely wanted to make sure [its] investors have water.”

He added: “The Pagcor City is within our concession, so we are putting up a reservoir to expand our service to Pagcor City, and the Las Piñas and Cavite areas.

“We just completed a similar reservoir in Villamor Air Base.” Singson said.

The President was asked by text message last night if he was aware of the “midnight deal.”

He replied: “First time I have heard about it. Let me make inquiries.”

According to the draft memorandum of agreement (MOA), a copy of which was obtained by the Inquirer, Maynilad wanted to take over the water concession for Entertainment City. It sought from Pagcor “gratuitous, exclusive, unhampered and unrestricted use of the property.”

Maynilad, which is controlled by Metro Pacific Investments Corp. of Manuel V. Pangilinan and DMCI Holdings, maintained that since Entertainment City was in Parañaque—which is part of its West zone franchise area from the MWSS (the East zone is controlled by the Ayala-owned Manila Water Services Inc.)—it should automatically get the contract.

Claim disputed

But some members of the MWSS management and board disputed Maynilad’s claim. At least two MWSS board members, who asked not to be named for fear of retaliation from the involved parties, said that since Entertainment City was located in a newly reclaimed area, it should be classified as a new and exclusive franchise area of the MWSS.

They pointed out that when Maynilad won the West zone in 1997, the MWSS explicitly named the parts of Parañaque, Manila and other areas of the West zone that were covered in its contract, and stated that the proposed site of Entertainment City was still under water.

They also noted that Quezon City was split into two zones, which was why the contract coverage should not be interpreted mainly by territory.

Bidding required

The same MWSS sources said the water utility should bid out the new franchise area and get the best deal for the government.

They said that at an estimated water consumption of 10 million liters a day, the MWSS could have charged a minimum concession fee of P1 per liter which, for one year, would amount to P3.65 billion, or more than enough to wipe out its debt of P2.5 billion.

To address the concerns of the MWSS management and board, Singson and Genuino obtained a ruling from the Office of the Government Corporate Counsel (OGCC), whose head, Raul Ragandang, is an MWSS board trustee.

The ruling basically upheld Maynilad’s view that since the Pagcor project was in Parañaque, it was covered by its West zone concession area.

In a letter to the MWSS board of trustees on May 19, Singson said: “As you may be aware, the OGCC has passed upon and reviewed the Pagcor MOA twice—in May 2009 and April 15, 2010. We wish to respectfully reiterate that the construction of a pumping station and water reservoir at the Bagong Nayong Pilipino Entertainment City in Parañaque City is part of our business plan and is pursuant to our commitment to deliver safe, adequate reliable and affordable water supply to our customers in the southern portion of the West zone.”

Approval deferred

Despite Singson’s appeals and Genuino’s phone calls, the MWSS deferred approval of the Maynilad-Pagcor MOA in its last board meeting before the change in administration.

The MWSS board members maintained that since Entertainment City was not part of its contract, Maynilad had no authority to enter into a water supply agreement with Pagcor.

The board members also argued that the MWSS should charge Maynilad an additional concession fee for getting a bonus expansion in its coverage area.

Citing as an example a landlord who is charging P10,000 a month for a 50-square-meter apartment, the MWSS source said the rent would go up to P15,000 a month if another 25 square meters were added to the apartment.

Confusing the issue

“I’m sorry that some MWSS officials are desperately trying to confuse the issues. I really don’t know why,” Singson said.

In a subsequent test message, Singson said former MWSS Administrator Diosdado Allado “has been blocking the agreement for some reason.”

“It is only Administrator Allado who thinks Pagcor City is not within Maynilad’s concession area,” he said, adding that Allado’s view “has been refuted by the OGCC.”

Singson also said “even former MWSS Chair Gabriel Claudio believed our position.”

Lightning rod

In less than two weeks in office, Singson has become a lightning rod of criticism from lawmakers who cite his close ties with Pangilinan’s Metro Pacific and construction giant DMCI as a potential source of conflict of interest in his capacity as public works secretary.

Earlier, he was in such a rush to take over MWSS that he informed then Chair Claudio in a letter that he was taking over as head of the water utility. (He later quit the MWSS post, invoking propriety.)

But in his State of the Nation Address on July 26, Mr. Aquino cited Singson for exposing and stopping the release of funds for dubious typhoon rehabilitation projects of the Department of Public Works and Highways, and for quickly resolving the water crisis in Metro Manila. With a report from Jerry Esplanada

So, Mr. President, what is your next step now? Will you still maintain Mr. Singson as part of your cabinet, considering that he is now involved in this?