WB: Ombudsman knew road case 3 years ago

By CARMELA FONBUENA, abs-cbnNEWS.com/Newsbreak | 02/24/2009 3:46 PM

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The Ombudsman was on radio this morning being interviewed by Anthony Taberna and she said, "Tunying naman. Hindi na nga kami natutulog. When I arrived, there were 21,000 cases. We solved 18,000 of those."

Well, well, well. It turned out that she included dismissed, archived, etc cases in the 18,000 her office supposedly solved.

And now this news from the world Bank, whose processes and procedures are as multi-layered as a honeycomb. Or as Bert Hoffman would put it, "Our processes are rigorous." I think so too.

And she is caught lying again. Liar, liar, pants on fire....

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Contrary to the Ombudsman Merceditas Gutierrez's claim that her office knew of the irregularities in the World Bank-financed roads project only last November 2007, the multilateral bank said Tuesday that the anti-graft agency was aware of the issue three years ago.

As early as May 2006, World Bank investigators have personally briefed a staff of Ombudsman Gutierrez on the corruption issues involving a portion of a $150 million roads project. Since then, the World Bank had been in touch with the Office of the Ombudsman.

The World Bank investigators and Guttierez's staff met for the second time in January 2008. On February 10, 2009, before the congressional hearings on the roads issue started, the lender provided the Ombudsman office additional documentary evidence.

These meetings were revealed in an investigation timeline that the World Bank released on Tuesday.

World Bank officials met with Senators on Tuesday in an executive session to discuss the bank's reports on the road projects controversy. A press conference was held after the session.

No Action

The May 2006 meeting was to brief the Office of the Ombudsman of the Integrity Vice Presidency's “preliminary findings” based on reports it received. The World Bank's Integrity Vice Presidency is also referred to as the INT office.

Apparently, the World Bank has been receiving leads as early as 2003 on the irregularities surrounding the Philippines National Roads Improvement and Management Program (NRIMP), a project that seeks to upgrade the country's road networks.

The World Bank’s investigation timeline did not specify who the INT investigators met with from the Office of the Ombudsman in those meetings. But it appears that the Office of the Ombudsman sat on the preliminary findings provided by the lending agency. She has denied this.

Based on her testimony in last week's Senate hearing, Gutierrez directed administrative office Mark Jalandoni in November 2007. It was only after her office received World Bank’s Referral Report, which summarized in 9 pages the investigative findings of its INT.

The Referral Report is among the confidential World Bank documents leaked to the media.

It has already been one year and six months since her office first learned about the irregularities.

Second meeting

Two months after the Ombudsman’s office received the Referral Report, the World Bank investigators again met with Gutierrez's staff in January 2008 to “further discuss the case" and "offer additional assistance."

The second meeting occurred before the World Bank issued in May 2008 the Notice that it is initiating administrative sanctions against the involved Filipino and Chinese contractors.

The sanctions process gave the contractors--upon receiving the Notice--the chance to respond to World Bank’s allegations. The World Bank Sanctions Board heard the case in November 2008.

It found a "major cartel involving local and international firms" bidding in the roads project. In January 2009, World Bank debarred seven firms and one individual involved in the roads project from participating in future World Bank projects for engaging in collusive practices.

E.C. de Luna Construction Corp. and its owner Eduardo de Luna was permanently debarred—the strongest possible action that the World Bank can impose on firms or individuals involved in its own Bank-financed projects.

The others were debarred from four to eight years--China Road and Bridge Corp., China State Construction Corp. and China Wu Yi Co. Ltd., China Geo-Engineering Corp., Cavite Ideal International Construction and Development Corp., and CM Pancho Construction Inc.

Another firm that participated in the Philippines roads project, Korean Dongsung Construction Co. Ltd., was debarred earlier in August 2008. Dongsung did not contest the accusations against it.

On February 10, 2009, World Bank provided additional documentary evidence to Office of Ombudsman, the investigation timeline said.

World Bank also offered further assistance, including an offer from the vice president of the INT team to personally meet with the anti-corruption agency.

This was the third effort from the World Bank to assist the Office of the Ombudsman in its investigation.

Documentary Evidence

The World Bank Sanctions Board based their findings on documentary evidence and on numerous interviews. These focused on analysis of the procurement process that the firms participated in.

The reports of the Sanction Board are confidential.

However, the INT reports on its interviews with witnesses were leaked to the media. It sparked a high profile controversy because it dragged First Gentleman Jose Miguel Arroyo. He was identified by one participating contractor to be involved in the irregularities.

The documentary evidence that proved the irregularities, however, were not leaked.

The bidding documents are the primary evidence that the INT always looks into in corruption cases, Hofman explained in a press conference after the Tuesday executive session with senators.

In the World Bank's powerpoint presentation to senators also the released to the media, World Bank showed an example of a bidding document where irregularities were identified. Two supposedly different companies had nearly similar telephone numbers. Only the last numbers were different. The sentences and even the typographical error were also the same.

The presentation also identified other evidence of collusion--unnatural numbers, sequential bid securities, identical prices, inflated prices, and rotating winners among others.

Aside from the timeline, the World Bank presentation refrained from talking about the Philippine case.

Three years

It has been almost three years since initial meeting between Gutierrez's staff and the World Bank investigators. While World Bank has completed its proceedings and punished the erring contractors, the Office of the Ombudsman is yet to complete its investigation.

The World Bank's INT is an administrative fact-finding body that could decide only on matters concerning its own operations. Permanent debarment is the strongest action it can take against corrupt contractors and individuals.

However, only governments can prosecute the corrupt contractors and individuals. This was why the World Bank shared the Referral Report to the Philippine government.

"The process [of the World Bank] is administrative in nature. It concerns only the issue of whether firms and individuals should be eligible to be beneficiaries of World Bank funding in the future," said World Bank country director Bert Hofman in an opening statement before the Senators.

"This administrative process is not intended to be, and indeed cannot ever be, substitute for a determination by a member country as to whether the actions of such firms and individuals in a World Ban-financed program or project give rise to breaches of that member country's law," Hofman added.

Since 1999, the World Bank has investigated 3,000 allegations of fraud and corruption involving its projects worldwide. A total of 351 firms and individuals in 24 different countries have been debarred either permanently or temporarily. (Read related story here.)

In other countries, World Bank reports have helped governments punish corrupt governments officials, constructions firms, and even World Bank employees. Upon request, it also allowed its employees to testify in court trials.

All that the Ombudsman needs to do is ask.

Protecting Taxpayers Money

While the World Bank funds infrastructure projects in member countries like the Philippines, it is the taxpayer who will eventually shoulder the cost of the projects.

In this case, the roads project that involved the sanctioned firms was worth $33 million.

Hofman said the World Bank investigation sought to "protect the taxpayers' money.”

"The World Bank is bound by its founding instrument, the Articles of Agreement, to ensure that the funds it provides its member countries in support of development are used economically and efficiently and for their intended purposes," he said.

"Through the application of sanctions we do, of course, intend to deter firms and individuals from misusing funds provided by the World Bank. It is important to remember here that the funds the World Bank lends are funds of the borrowing member country," he said.

The World Bank cited the corruption issues it has unearthed in the first phase of the NRIMP for efforts eventually taken by various Philippine government agencies to strengthen the country's anti-corruption and transparency measures in succeeding foreign funded projects.

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