I smell a rat

"The joint venture agreement  between BCDA and a Malaysian firm is prejudicial to the interest of our government."


During the Senate hearing of the P5.795-billion budget of the Bases Conversion and Development Authority two weeks ago, the Senate brought up the finding of the Commission on Audit that the BCDA’s deal with a Malaysian firm, MTD Capital Berhad, was prejudicial to the interests of the government.

The deal was for the construction of facilities used for our hosting of the Southeast Asian Games last year.

This transaction involved the bundling of a sports facility with a National Government Administrative Center at the New Clark City on the border of Tarlac and Pampanga.

The COA said that the BCDA erred and possibly committed an anomaly in the deal.

But what was this transaction anyway?

MTD Capital Berhad entered into a joint venture agreement with BCDA for the construction of said facilities. The property was BCDA’s contribution to the partnership.

In turn, the Mayasian firm’s contribution was the construction of the NGAC. But, Santa Banana, BCDA bundled both the NGAC construction under the JVA between the two, and included the construction of the sports facility. The COA found that this was actually a Build-Operate-Transfer scheme embedded in the JVA.

In my previous columns in connection with this deal, I even used the term “corruption.” I suggested that this be looked into by the Senate, the Ombudsman and the President. Why? Read this and weep.

Under the law, a BOT project should be bidded out publicly. In a JVA, all partners contribute. While the BCDA contributed 60 hectares of property, MTD’s contribution was P8.5 billion borrowed from the Development Bank of the Philippines.

The total cost of the project ballooned to P11 billion because the partnership was heavily skewed in favor of the Malaysian firm. The Philippine government paid the P11 billion to MTD. This should not be the case.

Records of the deal show that my nephew Rudolf Philip Jurado, then the Government Corporate Counsel, got a draft of the JVA from BCDA president Vince Dizon. In that draft, the total contract price was P12.695 billion (P4.185 billion for the NGAC and P8.551 billion for the sports facilities).

In that contract review, records showed that aside from concluding that the construction of the sports facilities was actually a BOT scheme and needed public bidding, he also opposed Section 8 of the JVA that required BCDA to reimburse MTD all the expenses it would incur, in addition to its share in the profits.

Jurado then directed BCDA to revise this section to comply with applicable laws and suggested that BCDA not reimburse or pay MTD.

Jurado was not convinced of the legality of the JVA, so he did not issue a Counsel’s Opinion. This is required when a Government- Owned or -Controlled Corporation enters into any contract.

Records showed that on February 22, 2018, despite Jurado’s objection, BCDA still proceeded to execute the JVA with MTD. Worse, a new provision was inserted that granted MTD an additional P2.490 billion for “reasonable costs and returns” for the construction of the sports facility. This was what made the contract price balloon to P11 billion.

Despite all these, the JVA was considered above board and legal by the successor of Jurado, Elpidio Vega. Why? Vega has a lot of explaining to do.

How did this deal come about?

MTD Capital Berhad sent an unsolicited proposal to BCDA to develop and construct the NGAC in New Clark City with a cost of P4.185 billion.

The proposal did not include the sports facilities. But nine days after the receipt of the proposal, BCDA accepted it, and eventually the two entities agreed to include the sports facilities with an agreed amount of P8.51 billion.

A Swiss challenge was set in December 2017, with no entity submitting any document to challenge the MTD bid. This is where the Government Corporate Counsel came in—to provide the Counsel’s Opinion authorizing the BCDA to enter into a JVA. The BCDA also needed to revise Section 8 of the draft JVA to comply with the law.

My gulay, the draft submitted to the Government Corporate Counsel did not provide for the Malaysia firm being given “reasonable costs and returns.” In a JVA, both partners contribute: BCDA its 60 hectares of New Clark City, MTD with P8.51 billion in construction costs. Afterward, the partners would share the profits 50-50.

Thus, it is clear that the deal was heavily skewed in favor of the Malaysia firm, and grossly prejudicial to the interest of the government.

The questions are many. Why did BCDA even enter into this agreement in the first place? What was in it for BCDA? Why did the new counsel claim that the deal was aboveboard?

As I said previously, I smell a rat.

Topics: Bases Conversion and Development Authority , Commission on Audit , MTD Capital Berhad , Government Corporate Counsel , Vince Dizon
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