POSTSCRIPT / December 10, 2002 / Tuesday


Philippine STAR Columnist

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GMA’s time wasted by cronies’ infighting

FOUR-CORNERED FIGHT: With no less than four power blocs fighting over just one issue — the Piatco deal — you can just imagine the viciousness of the Palace wrangling that distracts President Gloria Macapagal Arroyo as she tries to run the country and stay ahead in the popularity charts.

The Piatco deal involves control of the nearly completed $657-million Naia-3, referring to Terminal-3 of the Ninoy Aquino International Airport. Piatco stands for Philippine International Air Terminals Corp. which now holds the contract to build and operate the new terminal.

This is a high-stakes game. Whoever wins control of Naia-3 will rake in billions from the operation of the premier international airport. It will also mean millions for influence peddlers and whoever in government helps the eventual winner.

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POWER PLAYERS: We have listed four groups, all close to President Arroyo, locked in battle over Naia-3:

First is a powerful Makati law firm that has placed its point men in key positions in the Judiciary and the Executive and continues to give legal advice to the First Family.

Second is presidential flagships adviser Gloria Tan-Climaco, an auditing guru said to have the backing of perennial US presidential candidate and tycoon Ross Perot.

Third is a group of EDSA II participants now allied with Transportation and Communication Secretary Leandro Mendoza whose predecessors signed the controversial revisions to the contracts now being rejected by the Palace.

Fourth is a bloc identified with the old-rich Ayala group and the so-called Civil Society. The Ayala group is in an aggressive land acquisition and development binge.

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SPLIT P.A.L. OPERATIONS?: A necessary side player is taipan Lucio Tan, owner of Philippine Airlines whose decisions on PAL’s international operations will impact significantly on the viability of Naia-3.

The airline has merged its domestic and international operations in Terminal 2, which was meant to become the hub of all local airlines but which most of them found too expensive. Only PAL is using Terminal 3, and only after it has consolidated its operations there to save money.

Having rationalized his Terminal 2 operations, Tan frowns on Piatco’s insistence that PAL split its operations and move its international flights (only) to Terminal 3. Such a transfer will be good for Piatco or whoever ends up operating Naia-3, but financially disastrous for PAL.

We see PAL fighting for survival and moving to have Piatco and the government see its point — that it does not make sense for the flag carrier to split its international and domestic operations. And Tan happens to be the type who would cease operation if forced to make a irrational business decision.

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OTHER JUICY DEALS: The power blocs zeroing in on Naia-3 played key roles in the campaign to unseat former President Erap Estrada and helped create a situation leading to the constitutional ascension of then Vice President Arroyo to the presidency.

The impetus of the successful campaign and the confluence of succeeding events kept them on the side of GMA. But now the same groups appear to be quarreling over the juicy Naia-3 contract.

The Piatco deal is just one of several fat contracts that have drawn the conflicting interests. There are several others, such as the Metro Rail Transit train service running on EDSA between North Triangle in Quezon City and Taft Avenue in Pasay City.

The MRT is basically the turf of DoTC, now under Mendoza. But with Climaco appointed overseer of strategic projects (whatever that means), she has found reason to poke her finger into it.

With the plan to link the North Avenue terminal of the MRT to the Monumento terminal of the first-ever Light Rail Transit (LRT-1) in Caloocan City by building a rail line atop EDSA connecting the two points, the project has become another bone of contention between Mendoza and Climaco.

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GMA REPUDIATES DEAL: President Arroyo appeared to have decided the fate of Piatco when she declared days ago that its contract with government was null and void.

As only the courts may rule on the validity or nullity of contracts, the President’s action was interpreted in some quarters as an intrusion into judicial territory, or worse, a sly attempt to influence a case pending with the Supreme Court on the validity of the contract.

We think the President was acting within her legitimate realm, except that her stand may have been misstated or misunderstood.

The Piatco contract was signed between the government and Piatco. We see the President’s statement denouncing the contract not as a judicial pronouncement but as a unilateral repudiation of the contract by the government. One party, the government, was withdrawing or laying the basis for withdrawal from the Naia-3 deal.

The President actually has no choice but to repudiate the contract after being apprised of the many onerous provisions, most of which were substantial and illegal deviations from the original contract.

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SENATORS BACK PALACE: The plot thickened when the President’s declaration was followed by three Senate committees whose draft report said basically the same thing — that the Piatco deal was legally flawed and should be voided.

With the Palace and the Senate committees — blue ribbon, public works, and constitutional amendments, revision of codes and laws — recognizing the same serious defects in the contract and arriving at the same conclusion that the contract should be voided, we see the contract eventually being taken away from Piatco.

If the Senate approves the report of the three committees thrashing the contact, it may be seen by some quarters as also attempting to influence the Supreme Court case.

One problem with the President’s stand being presented as voiding the contract is that either way the Supreme Court acts on the petition questioning the Piatco deal, both the President and the tribunal will suffer.

If the high court rules that the contract is valid, such a declaration would be a slap on the President. On the other hand, if the tribunal voids the contract, some sectors are liable to complain that the high court was influenced by Malacanang.

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EUROPEANS WORRIED: The tainted, tangled Terminal-3 transaction has spooked the European business community, already stung by the European Community’s closure of its embassy in Manila owing to reported terrorist threats.

The European business sector is particularly concerned about the cases of Piatco and the Manila Electric Co. The utility film is also caught in a judicial bind, having been found by the SC to have “overcharged” its more than three million customers by P28 billion in billings.

In both enterprises, the key foreign investors involved are Europeans. Meralco has Spanish firm Union Fenosa as a minority investor, while Piatco has Fraport AG of Hesse, Germany. The bulk of the money sunk into Naia-3 reportedly came from Fraport.

European Chamber of Commerce and Industry executive vice president Henry Schumacher, a German, said foreign investors were concerned over the SC’s “meddling” in what should be strictly a private business matter.

“Investors put in money on the assurance that they will get a reasonable return on their investments,” he said, adding that an investor’s guaranteed ROI through a fixed formula is a normal business practice. “Such formula should not be changed in midstream.”

The ECCI official expressed optimism that the problem will be solved amicably and that the investors will be able to recoup their capital.

“The European business sector is hoping that Fraport, which has put in about 90 percent of the money in building the new airport terminal will be able to get a return on its investments,” Schumacher said.

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(First published in the Philippine STAR of December 10, 2002)

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