Smartmatic-TIM scandal and The Arroyo Connection

True---the Antunez clan is not close with the family of the Arroyos. Yet, what it failed to disclose is, their closeness with the Aboitizes, their business associate and close family friends. But, does this really matter? Yes, because that'll be the key in unlocking the links of the First family into this deal.

We all know how close the Aboitizes are with First Gentleman Mike Arroyo and of Mr. Winston Garcia. These personalities have histories of business deals, one of which is the billion-peso GSIS card contract. GSIS, a government corporation, hired TIM for its GSIS cards. TIM was the technical supplier, while UnionBank, the bank owned by the Aboitiz clan, served as the banking services provider. They all have close personal ties.

Now, is this wrong? No, definitely, it is not. Legally speaking, there's nothing wrong with this except that its morally wrong to monopolize all government contracts under the same clans and personalities belonging to just one group, and a group with strong and very close personal ties with the First Family. This is simply a lopsided business environment.

More than this, why involve close associates of the First Family with a very sensitive issue such as poll automation? Everybody expects the poll automation to provide us with a clean rendering of electoral results come 2010.

Of course, there's no law prohibiting close business associates of the First Gentleman to make profits out of this. But, this is simply too much that even the very mechanisms that allow our voices to be heard are being manipulated, controlled and monopolized by these personalities close to the powers-that-be.

Again, going back to the initial theme of this entry---what went wrong? Where is the First Gentleman in all of these? Who served as his de-facto representatives in the deal?

After getting so much flak before, surely, the First Golfer's Group would want to cover its tracks. Surely, it needs some layers. And one of the layer is simply Smartmatic-Sahi.

If you research on Smartmatic International, it's a multinational company specializing in the design and end-to-end deployment of complex purpose-specific technology solutions. It was involved in the Venezuelan elections and some states in the US. Sure, it has technical muscle.

Now, it says that its contact in the Philippines is Global Contact Philippines. However, for the 2010 elections, Smartmatic International teamed up with Smartmatic Sahi. In August 2008, Smartmatic-Sahi managed the ARMM automated elections. Antonio Murgica, Smartmatic International's Chief Executive Officer even visited the Philippines for this.

As you already know, Smartmatic Sahi is controlled by Cezar Quiambao, Jorge Yulo and the Villas. Sixty percent of this company is controlled by Stratdec, a real and personal property firm. Stratdec has been involved in numerous government contracts, one of which is the LTO computerization. Quiambao, as earlier pointed out, is part of the ABC group of Alderito Yujuico and Bonifacio Sambilla. Now, what is the connection of the ABC group with the First Golfer Group?

Quiambao is not just a golfing buddy of the First Gentleman Mike Arroyo at Wack-Wack Golf and Country Club. He is also the biggest contractor in the Philippines, whom Mrs. Arroyo credited of having "realized the dreams of government to construct roads." Nothing wrong with just being a golf buddy of the First Gentleman, since, FG is a private citizen, no law bars him from fraternalizing with a big-time contractor involved in numerous government deals. Yet, you would agree with me that this is immoral.

So, if you look at the Smartmatic-TIM consortium, you'll find that the Arroyos are involved in both groups--through the Aboitiz clan with TIM and Smartmatic-Sahi with Quiambao. Now, what was the deal breaker if these groups pala share the same connections?

To understand this, let me go back to that meeting when a lawyer of TIM saw a powerful man conferring with an Aboitiz and principals of Smartmatic International. If you read my previous entry, sources identified the man as GSIS President Winston Garcia.

Now, you ask, there's nothing wrong with Garcia being seen with the Aboitizes since they're both from Cebu and their families are very close to each other. And again, there's nothing wrong with Garcia even talking with the principals of Smartmatic since, for all intents and purposes, he's a Filipino and his PR handlers would just simply say that he's quite interested in helping these two companies resolve their differences. Nothing wrong. And I agree.

Yet, the timing is really off. For months, critics of the administration have been accusing Mrs. Arroyo of trying to undermine the electoral process and here comes a very close Palace associate, the head of a government agency, again involved in what is turning out to be a very serious scandal.

What is Garcia doing there, playing counsel for the Aboitizes? Are the Aboitizes part of the consortium? It is not. And what is the meeting for? Reports say the Aboitizes were involved because its freight forwarding company 2GO will be the ones who'll handle the 82,000 counting machines. True. They're suppliers. Are the Aboitizes just concerned with how they'll be paid, since, in the joint venture agreement between Smartmatic and TIM, it's clear that all checks are to go thru TIM. Are you saying that the Aboitizes have an issue with Jose Mari Antunez inspite of being a relative and all?

It's true that the Antunez family and the Aboitizes have close ties. In fact, Julio Antunez works as one of the Aboitiz officials. And who'll bankroll the initial funds for the automation? Is it not Unionbank, a bank which the Aboitizes are involved?

Simply put, Garcia, as some high-profiled businessmen privy to this say, wants to get a piece of the action, although I am wont to believe this. Why? Because that would be too obvious.

Was Garcia there as a rep of the FG group and that meeting, which involved the Aboitizes, was a last ditch effort to persuade TIM to "toe the official line"? Why the meeting to assure? Read on...

The most critical thing of all of these is who financed the performance security bond of 350 million for the project? Is it not TIM through Unionbank? Is it not thru the combined monies of Antunez, Aboitiz and the Quiambaos? And of course, E. Villareal, who's participation in this scandal remains top secret.

So, TIM has the money, the legitimate papers and the technical wherewithal for this project. And the chance to rake in billions from this deal, why withdraw from it?

Answer---because TIM does not want to get entangled later on with the shady characters lurking and trying to get a fast buck in this scandalous marriage of convenience.

Jose Mari Antunez may have been forced to withdraw their involvement shortly after the Senate hearings. He may have thought that its not worth the trouble. If the Senate this early is trying to poke its nose to this uncanny marriage of convenience, better to drop out early rather than face the wrath of the people should anything bad happens in the elections.

Antunez, some sources say, was quite afraid when the Senate probe exposed that even Smartmatic International has dubious corporate papers. Jose Mari, says a close staff, decided unilaterally on behalf of TIM to break the deal. Besides, it was only during the Senate hearings that Antunez learned that Smartmatic International pala was registered in Barbados, a known haven of "dubious companies."

More than this, what made this worst is the suggestion made by Smartmatic to fully control the project, especially the technical work. Atty. Boy de Borja of TIM expressed this much in an interview. If trouble breaks out during the elections, TIM would be dragged into a very costly and very serious battle which, Antunez is really not ready and willing to be engaged in.

That said, it would only be a miracle if this consortium would still push thru. Why? Because the public, especially the Senate, has started its probe and that would simply drag certain powerful people again in the project.

So, the deal breaker was not money---it was the fear of these men of getting entangled with a very public controversy. TIM has so much to lose if people drag it into a messy scandal with its Aboitiz links.

People behind Smartmatic and TIM

The secret in fully understanding this issue is actually knowing the people behind these two companies.

If you look at the corporate papers of Total Information Management (TIM), it is basically a family corporation headed by Jose Mari Antunez. Previously known as Total Interiors Manufacturing Corporation, it has been engaged in the business of door installation, windows, sashes, counters, cabinets, partitions, paint, electric and plumbing materials in buildings.

TIM has a total paid-up capital of 400 million pesos. Jose Mari serves as president, while Lydia Antunez acts as Treasurer, Jacinto Perez as AVP and COO, Jon Mikei Antunez as AVP, Milagros Wales and Roberto Layson as SVPs, respectively.

Jose Mari Antunez belongs to the Basque mestizo Antunez clan.They are relatives of the Ayesa clan of Cebu.

Last year, it lost P6.137 million from its previous income of P13.961 M php last year.

An amendment to its incorporation papers last December 2008 says that TIM has expanded its services to include wireless data network and telecommunications equipment and devices. The reason for the change, says a source, is that was the time that Smartmatic approached TIM to partner up for the poll automation project.

Now, who are the people behind Smartmatic?

Smartmatic is actually registered as Smartmatic Sahi Technology Incorporated which was registered last March 2008. Total paid up capital is 90 million pesos.

Smartmatic Sahi Technology is owned by two groups, of which 60% of it is owned by Strategic Alliance Holdings Incorporated, a company engaged in real and personal estate properties. Meaning, it's a real estate company.

Who heads Strategic Alliance Holdings Incorporated which constitute 60% of Smartmatic?

SEC papers say its Cezar Quiambao, Anthony Quiambao, Julius Quiambao, Bienvenido Quimbao Jr., Giovanni Casanova and Eric Gene Pilapil.

Now, who owns 40% of Smartmatic?

Based again on SEC papers, the directors of Smartmatic are Cezar Quiambao, Saviniano Perez Jr., Jorge Yulo, Juan Villa Jr. and Miguel Eugenio Villa. The Villas, says some sources, are representatives of Ernest Villareal.

If you look at these names, one familiar name crops up----Cezar Quiambao. I wrote about him several times already. He's very close to the First Gentleman and also have friends from the military. He is very popular in government circles since he bags almost all of the computerized contracts in government.

Now, Quiambao is known for being part of the "ABC" group, composed of Alderito Yuyuico, Bonifacio Sambilla and Cezar Quiambao, the group which allegedly serves as "front" for the business interests of the First Gentleman group, which also includes Ernest Villareal.

The "ABC" group is also very close with the Aboitizes.

Now, let me revise my previous entry titled "the real score."

It seems that TIM was just used by the Smartmatic group to make it appear that the consortium is clean. TIM is widely known in the IT industry as a "clean player". It has been engaged in certain government contracts also but TIM always plays "above board."

The goal really of the Smartmatic group is basically leave TIM out of the picture when they get the poll automation contract from COMELEC.

Those foreigners being made to face the media whenever there's an issue about Smartmatic is simply to hide the real players of the company (Quiambao, etal.).

Now, why is the COMELEC threatening to just have a cooperative venture with Smartmatic? Because that's the ultimate goal---to control the automated elections. By edging TIM out of the picture, Smartmatic would have completed its objective of totally controlling the entire automation project.

As I said, whoever has the administrative key controls the conduct and fate of the entire electoral process.

Now, why is TIM pushing for another technical group to spearhead the project? Because the "personnel" and "technical staff" of SMARTMATIC are of dubious characters. Check with the IT industry and you'll find that they are expert "manipulators".

That said, let me reveal in my next entries what really happened during the negotiations between TIM and Smartmatic...Abangan!

Smartmatic and TIM---real score

What is the meaning of administrative control? In separate interviews today with Cesar Flores of Smartmatic and Atty. Boy de Borja of Total Information Management or TIM, DZMM anchor Ted Failon was able to elicit the true cause of the "irreconciliable differences" pointed out earlier by COMELEC chairman Jose Melo to have caused the sudden withdrawal of TIM in its joint venture agreement with Smartmatic.

In essence, it was not money that they're fighting for---its administrative control of the counting machines, meaning, who'll be the main administrator of the entire project. Under the terms of reference, the consortium shall hire a project team to implement the project. TIM wants to hire its own while Smartmatic wants to follow the law and directly manage the project themselves, which, if you closely analyze, is logical. Why hire a third party when Smartmatic is competent enough to operate the entire system?

TIM is adamant that it should have more administrative control since by operation of law, they should comprise 60% of the company to be formed by both companies. For Smartmatic, this is not to be because under the terms of reference by the COMELEC, the company with the technical know-how should spearhead the project and in this case, it should very well be Smartmatic.

It seems prior to the approval of their bid, there was a joint venture agreement signed by both parties which maps out their working relationship. TIM claims that they encountered many problems with Smartmatic in the past yet, they initially agreed on the terms of the joint venture agreement. When the notice of award was issued, that was the time that both parties seriously tackled the issue and the issue of administrative control was raised. Why is this so important?

More than the 7billion peso contract, administrative control of the system means more money for the consortium. Whoever holds administrative control of the system can demand more money from election lawyers and operators. The possibility of manipulation is actually there since it has been proven in previous Smartmatic engagements abroad, that the system is really falliable. We know that human error can actually occur. As what Atty. de Borja suggested in his interview, automation does not guarantee clean elections. Therefore, whoever controls the administration key holds the fate of political candidates, especially the vote tally of national candidates.

TIM has engaged a PR consultant to convince the public that it stands on a higher moral ground, using nationalism as its platform. Yet, there seems to be something wrong here.

Why is TIM so concerned with administrative control? Because that's the very essence of all of these things.

How would TIM recover its initial investment put forth by the ABC group composed of Alderito Yuyuico, Bonifacio Sumbilla and Cezar Quiambao if TIM can't pay them through checks since checks to be issued by the consortium has to go through Smartmatic? Sources say it was this group that frontloaded the initial fund to ensure the grant of the bidding to the consortium. If even checks to be issued are to come pass Smartmatic, that is risky because this will expose the contacts and people really behind TIM.

Likewise, we all know the ties and links of this ABC group with Malacanang. How can Malacanang complete its hold to power if the administrative control over the automated elections is in the hands of foreigners? The main agenda of the palace is total control, even of the elections, and they cannot do that if the systems control is with Smartmatic, a foreign entity without political interests? Control has to be monopolized or centralized by Malacanang; otherwise, it loses more power enroute to 2010 and would really render Mrs. Arroyo as a lameduck.

TIM is actually using the nationalist card to buttress its claims but the core of this issue is the very fact that what Smartmatic actually refuses to do is hand over control of the automated elections to the hands of the ABC group which has very, very close links with the First Gentleman Mike Arroyo. Smartmatic, to be honest, stands on a higher moral ground. It just seems that TIM is, since it created the initiative by withdrawing from the consortium.

Now, what would happen afterwards? Should COMELEC decide to take Smartmatic in a joint partnership agreement which would definitely violate Philippine law? Or COMELEC would just revert to manual counting since most election operators are under the stable hands of the palace?

Again, the issue is administrative control. Whoever controls the elections, controls or can dictate the very fate of politicians in this country. In manual counting, the palace has complete control since it has, under its stable, the most effective and the most efficient election operators. If the automation pushes thru, control will be under a foreign entity, Smartmatic. That's why TIM wants this out of the equation since it wants control even of the technical aspects of the project. Why? Because it serves as the front organization of the ABC group, which, again, let me repeat, has very close links with the First Gentleman. TIM's contention that in case of a problem caused by the system, they'll just be the ones who'll be under scrutiny and possible prosecution is crap. In a joint venture agreement, both parties are jointly and severally liable. The government can run after Smartmatic. TIM just wants to honor its commitment with its external funding partners, which, in this case, are those very close to the First Gentleman.

Control. Money. Power. That's the real score behind the split. Now, who's the more nationalistic? These foreigners or these locals?