TOLD YOU SO: As early as last June, a month after the Supreme Court voided the NAIA Terminal 3 contract awarded to Philippine International Air Terminals Co., we suggested some things the Arroyo administration could do about the graft-ridden project.

What we said then applies with more force now that the German firm Fraport AG is exploiting our country’s very low rating with respect to graft and corruption in an effort to gain the upper hand at the negotiating table for compensation.

What we said then is worth repeating if only to drum into some criminal minds the message that the Philippines, whatever some foreigners think of it, is not for sale!

There are two tasks at hand: (1) to possess, control and operate Naia-3, and (2) to prosecute the public officials and private citizens involved in this illegal transaction.

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LOGICAL MOVES: With respect to taking over and operating Naia-3, the logical, doable and politically correct moves of the government should include:

1. Conducting a financial and technical audit by an impartial and internationally reputable firm. The results should be confirmed by the Commission on Audit chairman himself and made public before 2004.
2. Bidding out the space planning and allocation of concession spaces to internationally-reputable airport operators. This will rationalize the distribution of concession spaces, regardless of Piatco’s commitment to some concessionaires.

This will ensure that no shopping mall area is created. If we insist on a mall, as Piatco intended, it is doubtful that the US Federal Aviation Authority will permit airplanes departing from Naia-3 to land anywhere in America.

3. Charging Piatco rentals for the use of the land occupied by its incomplete terminal.

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AUDIT CRITICAL: The audit should not be the usual clerical check-receipt-against-books. It is one requiring an auditor, backed by an engineering team, to check if expenses match what was actually put into the terminal.

For example, if Piatco’s books say it spent $75,000 on an electrical switchgear, the auditor should check the receipts. If in order, the engineering team should check if the switchgear was installed and if it is brand-new and appropriate for the purpose. It should be type-tested equipment from qualified suppliers.

Documents show that one of Piatco’s equipment suppliers, Fuji Haya Electric, bought switchgear with components from Asea Brown Boveri. The finished product as assembled did not have the required type-testing certificate. It only had a certificate from ABB, which, as supplier, could not certify to the final assembly of the components by FHE.

Assembly is so critical that it poses a safety risk. Should the system fail, the terminal could go up in flames, or the entire airport lighting system could go down.

Not being an ISO company, FHE should not have been a supplier in the first place, given the lives at stake in the terminal. Lucky for FHE, though, that Jesus Munoz, who runs FHE, is reportedly a close friend of Jeffrey Cheng of Piatco.

No wonder Piatco has been refusing government’s physical entry into the terminal and blocking Trade Secretary Mar Roxas’s moves to start the audit.

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BLOATED CLAIM?: The compensation justly due Piatco is likely to fall way below the $550 million it is claiming. Of this, Fraport wailed to the International Center for Settlement of Investment Disputes (not the World Bank) that it wants $425 million.

Piatco did not build the terminal itself, but engaged Takenaka Corp. of Japan. Takenaka was to turn over to Piatco a complete and operational terminal for $323 million. If Piatco claims it spent $550 million, but only $323 million was Takenaka’s turnkey price, where did the $227 million go?

Further, if Fraport claims it spent more than $425 million, but a complete and operational terminal was only worth $323 million, where did the $102 million go?

That is not the worst of it. Piatco/Fraport did not actually pay Takenaka in full. Takenaka has an outstanding unpaid bill of some $90 million.

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FIGURE THIS OUT: Piatco/Fraport also made a major change order when it told Takenaka not to build the underground tunnel specified in the bid documents. Piatco persuaded public officials to agree to replace it with a much cheaper, but more dangerous, surface road. That was another $18 million saved by Piatco.

As of its delivery date set at Dec. 16, 2002, Piatco left 42 major unfinished work items and refused to spend for completing the terminal. But Piatco has millions for public relations.

We saw this computation in the papers: $323 million turnkey price, MINUS $90 million unpaid to the contractor, MINUS $18 million for the missing underground tunnel, MINUS $??? for unaccounted deviations and unfinished work, EQUALS $215 million at most.

If Piatco wants $550 million, and the terminal cost it only $215 million at most, where did the $335 million go? Was it actually spent? Did it go to multimillion-peso public relations men like Alfonso Liongson? How many Liongson contracts are being covered so Piatco has refused the audit demanded by then Secretary Gloria Tan Climaco in the first quarter of 2002 and by Secretary Roxas in the third quarter of 2003?

If Fraport claims it infused more than $425 million, and the terminal is $215 million at most, where did the $210 million go?

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POLITICAL DRIFT: This is not the first time the government has to decide whether a facility should be acquired or not. But it has to contend with its swollen budget deficit, its credit rating and public opinion.

Because of public necessity for a new terminal, President Arroyo formed on June 25, 2003, a Cabinet Oversight Committee. Unfortunately, she placed politicians in this lucrative committee at a time so close to the 2004 elections.

Political interests battled to prevent the stench of the Piatco contracts from polluting the air. Will political interests again subvert public interest, especially when close maternal friendships come into play and the smell of money and the promise of opposition votes waft by?

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ALLEGED EXTORTION: Fraport’s suit before the ICSID looks like a bargaining leverage to the tune of at least $200 million that we taxpayers would have to shoulder.

Sometimes that is called extortion. All three branches of the government should rally and put Fraport and its local counterparts, plus their cohorts, in their proper places.

The House of Representatives and the Senate should issue a joint resolution supporting the Philippine stand in battling Fraport all the way.

The Supreme Court should consider ruling with finality on Piatco’s motion for reconsideration, and throw it out for reiterating old arguments.

Malacanang should stand firm. The Solicitor General should muster all the patriotic legal forces at his disposal and defend the country’s interest.

The Deputy Ombudsman, ordered to investigate the scandal five months ago, need not look far. There are signatures on the contract documents. There are minutes of meetings approving contracts. There are letters that have all become public.

And there are public allegations that a lawyer close to the Palace was trying to extort millions of dollars from Fraport.