POSTSCRIPT / December 27, 2005 / Tuesday

By FEDERICO D. PASCUAL JR.

Philippine STAR Columnist

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Family amasses fortune from 'bridges to nowhere'

GOLDEN BRIDGES: Now we have another clue on how “bridges to nowhere” materialized in the countryside while some well-connected individuals were reportedly building golden bridges to the bank.

References for this reprise on the steel bridges program of President Arroyo are a Dec. 21 news item in The Guardian and a Dec. 20 investigative report in the Guardian Unlimited, the website of the UK-based Guardian and the Observer.

The Guardian said the UK government’s Serious Fraud Office is investigating reports of corruption involving British firm Mabey & Johnson’s building allegedly overpriced bridges in the Philippines and Iraq.

The SFO is looking into charges that certain sums were given to Philippine officials and private individuals in connection with £429 million (about P30 billion) worth of bridges. The Iraq portion dwells on alleged kickbacks paid to Saddam Hussein’s regime to win contracts.

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RIGHT CONNECT: It is curious that the Arroyo administration insists on building rickety World War II-design Bailey bridges that cost a lot more than modern and sturdier bridges that are financed by easy foreign loans and grants.

Most unusual is the fact that some 40 of these M&J bridges lead to dead ends, span dry river beds, or are used only by carabaos moving to the greener side of the meadow. Yet the administration keeps approving repeat orders.

Newly installed Ombudslady Merceditas Gutierrez, former presidential chief legal counsel and a classmate of First Gentleman Jose Miguel Arroyo, may want to look closer at the “bridges” case that refuses to go away.

She should at least be interested to know more about a Teodorico Haresco mentioned in the Guardian report, who his Malacanang contact is, and what magic formula he had used to clinch the contracts for Mabey & Johnson.

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GUARDIAN REPORTS: In the Guardian‘s Dec. 20 online story titled “British family firm accused of getting rich by building bridges to nowhere,” David Leigh and Rob Evans reported:

“A little-known family who became one of the richest in Britain have been accused of making excessive profits in an aid project, by building what their critics call ‘bridges to nowhere’.

“A Guardian investigation has discovered that steel bridges costing more than £400m (P27 billion) have been sold to the Philippines by the Mabey family, all secured with UK government-backed loans and grants. But many of the crossings, which were supposed to open up the flood-prone jungle terrain, have no roads to go with them.

“The British construction company, Mabey & Johnson, owned by the Mabey family, has been handed virtually all the supply contracts for the bridges, despite being more expensive than its competitors. Accusations of corruption and overcharging are now being made in the Philippines. Mabey denies any impropriety, saying the allegations are made by rivals or are politically motivated.

“Four hours’ drive north of Manila lies the hamlet (barangay) of San Roque, where poor rice farmers spread their harvest on the ground to dry, and water buffalo (carabaos) are a common sight in the swampy fields.

“Here the new British-made, two-lane highway bridge has been thrown across an irrigation channel. But there is no highway. On one side is a narrow dirt track leading to the village road. On the far side there is nothing but a field.

” ‘You see, it’s just a bridge to nowhere,’ says Ricky Ileto, who is on the staff of opposition senator ‘Ping’ Lacson. Mr. Lacson’s aides have inspected more than 200 bridges, many in remote jungle districts, and allege they have found at least 44 that lead to dead ends, span dried-up streams, merely provide a pathway for water-buffalo, or are otherwise unsuitable.

” ‘We are squandering the foreign loan,’ says Mr. Lacson, a former police chief who ran unsuccessfully against Gloria Arroyo in last year’s presidential election. His team have complained to the Philippines ombudsman, a presidential appointee.

“On Aug. 9, they also wrote to the British ambassador in Manila, Peter Beckingham, calling for the (steel bridges) program to be suspended because of the ‘indiscriminate installation’ of bridges and ‘our country’s worsening debt’. But they never received a response. According to documents released to the Guardian under the Freedom of Information Act, the firm’s chairman, David Mabey, visited the ambassador on Aug. 18.

“The embassy commercial officer’s note says: ‘The Mabey team were in no doubt that the allegations of graft … brought by members of the opposition, were part of an ongoing campaign to discredit President Arroyo … M&J were vigorous in their assurances that they have acted above board … Neither the ambassador nor I have any reason to doubt Mabey’s assurances … It was up to the local authorities to construct approach roads.’

“On Aug. 30, David Mabey got the UK government’s signature on a further £90m (P6.2 billion) loan guarantee, to provide bridges and flyovers on credit. This was the sixth successive big contract M&J had been handed by the Philippine president’s office — in each case without competitive bidding.

“The Guardian has established that Mabey is charging substantially more than its rivals. Its steel superstructures cost about £4,800 (P333,000) a meter, according to Philippines highways department internal figures.

“Records show an Austrian firm, Waagner-Biro, gained one small contract from the Philippines highways department to supply comparable superstructures for only £3,138 (P217,000). A UK consortium, Balfour-Cleveland, is quoting £2,899 (P201,000).

“When Whitehall’s export credits guarantee department signed off the latest Mabey loan, an official note to the trade minister Ian Pearson warned on Sept. 8 that anti-corruption groups ‘will seek to argue that ECGD is acting irresponsibly … and claim this demonstrates ECGD does not take bribery and corruption seriously’. Susan Hawley, of the anti-corruption campaign group Corner House, said yesterday: ‘Given these allegations, it is extraordinary that ECGD have decided to give further support to Mabey & Johnson.’

“The company denies all wrongdoing. In June, David Mabey published a code of ethics, saying Mabey had ‘a policy not to offer, give or accept bribes’.

“In a statement, Mabey & Johnson said: ‘We fully reject any suggestion of impropriety regarding our work in the Philippines.’ The company’s bridges provided access to markets, goods and services to thousands living in poor rural communities. ‘Local political envy and sniping … is very likely to have been the motive behind these allegations … We have never said our bridges are the cheapest, but they do represent, we believe, the best value for money in terms of design, supply, delivery and speed of installation.’ Mabey & Johnson had no knowledge of any approaches for payments, it said.

“Analysis of M&J’s accounts show that the Philippine contracts have returned an exceptionally high rate of profit and turned the Mabey family into Britain’s 141st richest. They have the former Conservative trade minister John Redwood on their payroll as an investment adviser, and donate to the Conservative party.

“In Manila, the company is even better connected politically. Mabey would not name its agent, to whom it has passed millions of pounds in commission. However, he is a businessman, Teodorico Haresco, who is close to President Arroyo.

“Mr. Haresco told the Guardian he had never ‘attempted to exert any improper influences’. The president’s bridge program was rigorously evaluated at a variety of levels in government.

“The Philippines scores badly on the campaign group Transparency International’s annual corruption index, at No. 117 out of 168 countries. The former president Ferdinand Marcos was estimated to have looted $20bn (£11.3bn) from state revenues. The country has now turned into a developing world goldmine for the Mabeys.

“David Mabey, 43, lives in a mansion, Lane End House, outside Maidenhead. He succeeded his 89-year-old father, Bevil, in a relatively small business that originally bought up army surplus Bailey bridges after the second world war.

“By last year, he and his relatives had shot up to No. 141 in newspaper rich lists, with an estimated wealth of £310m (P21.5 billion).

“Analysis of the company’s accounts shows that the dramatic leap in fortunes has come largely from its Philippine contracts, worth £429m (P30 billion) and all funded by UK-backed loans. In the last five years it has booked £137m in trading profits, whereas 10 years ago, it was making less than £3m a year. Mabey & Johnson’s operating profit margins have tripled to more than 30 percent.”

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(First published in the Philippine STAR of December 27, 2005)

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