Orders PH govt to pay Belgian firm P0.8 billion

THE World Bank’s International Center for the Settlement of Investment Disputes (ICSID) ruled January 23 that former President Benigno Aquino III’s unilateral cancellation in 2011 of a Belgian firm’s P18-billion flood-control venture, the Laguna Lake Rehabilitation Project, was illegal and unfair.

It ordered the Philippine government to pay the Belgian dredging firm Baagerwerken Decloedt En Zoon (BDZ) P800 million, or what it had already put into the country—plus interest costs from 2011 to this month—when Aquino scuttled the project in November 2010, a few months after he took office.





The Rodrigo Duterte administration can’t justly ask us taxpayers to shoulder that nearly P1 billion penalty: It was solely Aquino, not the Cabinet nor any other government body, that recommended the cancellation of the project. In contrast, in the case of the government’s cancellation of the PIATCO Terminal III project, which it also lost, the Cabinet, the Solicitor General and even the Supreme Court had collectively decided that that airport project was riddled with graft.

Aquino didn’t even issue any written order to formally inform BDZ that he was cancelling the contract. It was scuttled in actual practice only through Finance Secretary Cesar Purisima’s refusal to sign the documents accepting the Belgian government’s P7 billion grant to fund the project. If Purisima can’t produce documents to prove that Aquino ordered him not to sign the papers, he should be legally liable for gross negligence in office.

Why should we taxpayers pay the cost of Aquino’s hubris and idiocy? Duterte must find ways and means to legally require these two billionaires—Aquino and Purisima—to pay the P1 billion penalty imposed by the ICSID.

The ICSID apparently decided to reduce the P4 billion that BDZ had asked for in damages, on the ground that its actual costs when the project was cancelled, plus interest and other costs, amounted to only P800 million at present value.

Decision announced

While the ICSID has already announced that its decision had been handed down last week, and while I was informed of its gist, its secretariat emailed me: “Pursuant to ICSID Arbitration Rule 48(4), the Centre shall not publish an award without the consent of the parties. To date, the parties in this case have not consented to the publication of the award.”

Aquino’s cancellation of the Belgian project represents the height of his arrogance and stupidity.

The project would have required little cash outlay from the Philippine government, since BNP Paribas Bank would have provided the bulk of the financing at nearly concessional rates, while the Brussels government would have donated to the Philippines P7 billion for the project.

The project was mainly intended to dredge the Laguna de Bay and the Napindan Channel so floodwaters in Metropolitan Manila would have flowed out through the existing waterways faster and easier.

If Aquino had not cancelled the project, it would have reduced flooding in Manila by 2012, the scheduled completion of the project, or four years ago. Former President Gloria Macapagal-Arroyo made it a priority of her administration after Typhoon Milenyo brought massive flooding in Luzon and Metro Manila.

“A much deeper Laguna de Bay would relieve residents of Metro Manila, Rizal and Laguna of the flooding that happened at the height of [Tropical Storm] ‘Ondoy’ and [Typhoon] ‘Pepeng’,” then Laguna Gov. Jorge Ejercito, an ardent supporter of the project, said in September 2010. For defending the project, Ejercito was harassed by Aquino’s supporters, leading to his ouster as Laguna governor for overspending in the 2004 elections, the only governor ever removed from office for such violation. A group of Southern Luzon and Metropolitan Manila congressmen even signed a resolution supporting the project and asking Aquino to let it go through.

Seven government departments, agencies and interdepartmental bodies evaluated the project for three years, and endorsed it for immediate implementation in 2010. Bangko Sentral ng Pilipinas governor Amando Tetangco Jr. said in his approval, required under our central banking regulations, of the project’s foreign funding: “Its purpose is to improve the Lake’s capacity as a catch basin to reduce flooding in nearby towns and cities.” Aquino’s Justice Secretary Leila de Lima, in her August 2010 legal opinion, found nothing wrong with it: “The project cannot be construed as a midnight deal since it is covered by official development assistance from the Belgian government.” The Laguna Lake Development Authority general manager whom Mr. Aquino appointed, supported it—and was fired for his assessment.

Belgian prime minister

Even the Belgian Prime Minister Yves Leterme (who later become deputy secretary general of the Organization for Economic Cooperation and Development, or OECD) vouched for the project’s integrity, and even submitted to Aquino an independent engineering firm’s evaluation of the project. “As I understand from the report of this expert, the project can be an undeniable improvement for the Metro Manila area and alleviate flooding, improve local transport infrastructure and increase water capacity,” Leterme wrote in a letter to Mr. Aquino in March 2011.

Leterme appealed to Aquino to allow the Belgian contractor to respond to the allegations against the project. Aquino snubbed Leterme, and did not even bother to reply to his letter.

Instead, Aquino ramped up his opprobrium against the project, and claimed that it was a “big joke” since it would “just move silt to another portion of the lake.”

That was an utter lie. The 150-year-old BDZ is one of the biggest and most respected firms in the dredging industry. The project very clearly specified that the dredged material would be deposited in designated sites off Taytay-Angono and San Pedro, which in fact would become reclaimed land where waste-water treatment facilities would be built.

Why did Mr. Aquino cancel such a crucial project? Because of his irrational, apoplectic bias that everything his predecessor President Arroyo, did or planned was corrupt. Just a few months after he assumed office, Mr. Aquino claimed that the project was a “midnight” corrupt deal of the Arroyo administration. The mainstream press of course toed the Palace line, and Aquino even got the leftist organizations, especially Bayan Muna and Akbayan representatives in Congress, to echo his baseless allegations.

After five years in which Aquino’s operatives went over the project’s files with a fine-toothcomb, and even tried bribing and coercing purported whistleblowers, not a single iota of evidence has been unearthed to support the claim that the Laguna de Bay dredging project was riddled with corruption. No wonder the government lost the case at the ICSID.

The cost to us though isn’t just the P1 billion in damages the ICSID has imposed.

The cancellation of this crucial flood-control project will go down in Philippine history as the country’s most tragic, most shameful episode in which P1 billion in in taxpayers’ money will be paid, hundreds of lives were taken, hundreds of thousands of flooded Filipinos put in misery because of the irresponsible ill-will of a President toward his predecessor.

Make Aquino and Purisima pay not just for their arrogance and stupidity but also for the suffering they’ve caused the nation.

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