Govt loses P521m in NFA import deal that favored Vietnam
The Philippine government lost P521 million in November last year after the National Food Authority entered into an allegedly irregular rice importation deal with Vietnam, according to official documents obtained by the Manila Standard Today.
NFA officials signed the deal involving 500,000 metric tons of Vietnam rice despite an offer to supply cheaper rice from the Royal Thai government, the documents showed. The Vietnam rice was valued at $462.25 per ton as against the Thai’s $462 per ton or 25 cents cheaper, documents showed.
Opposition and militant lawmakers raised an outcry over the rice deal, saying that the NFA officials led by Administrator Orlan Calayag may be liable for graft or plunder charges for having entered into a deal favoring Vietnam.
House Senior Deputy Minority Leader Neri Colmenares, Bayan Muna Rep. Carlos Zarate and Anakpawis Rep. Fernando Hicap lambasted NFA’s Calayag for alleged violation of Republic Act 9184 or the Procurement Act. MST tried several times to get in touch with Calayag for comment but he couldn’t be reached.
“There is indeed rampant overpricing on rice imports and that there seems to be a glaring favoritism for Vietnamese rice imports,” Colmenares said. “This is legalized smuggling.”
Records showed that NFA opened on Nov. 26, 2013 the sealed bids of the Royal Thai Government and Vietnamese government for the supply of 500,000-metric tons of white rice, 25 percent brokens. Cambodia was also invited to bid but did not make an offer.
The rice import was to serve as a “buffer stock” for December 2013 until March 2014, before the summer crop of Philippine farmers, which are normally harvested in April and May.
The Royal Thai government, through Director General Surasak Riangkul of the Department of Foreign Trade Ministry of Commerce, invoked the memorandum of agreement it signed with the Philippine government, allowing the Thai to make a counter-offer, documents showed.
But Calayag ignored the Thai government’s offer and immediately awarded the contract to Vietnam on the same day that the sealed bid was opened and the winner was announced, according to documents.
In a Nov. 26, 2013 letter to Calayag, Riangkul said: “Please refer to the MOA signed in June 2011 between the Royal Thai Government and the Philippine Government, which states that ‘The Philippine Government shall invite the Royal Thai Government to submit offers to the Philippine Government. The price, offered by Royal Thai Government shall be reviewed and evaluated by the Philippine Government.’
“Should the price quoted be acceptable to the Philippine Government, it shall accept the offer and proceed with the procurement of the commodity. If the price is not acceptable, the Parties shall immediately proceed to negotiate an acceptable price until an agreement is reached. The Parties shall endeavor to reach an agreement within a period of 10 days after the start of the negotiations,” Riangkul told Calayag.
“In this regard, after the disclosure of the bidding result for 500,000 MTs of white rice 25% brokens on November 26, 2013, the offered price by the Thai side is slightly higher than the Vietnamese price offer. With a view to realize G-to-G (government to government) trade between the two countries under MOA and to support food security in the Philippines after the adverse effects from the Typhoon, we would like to re-offer our price, US$462 per MT for your consideration,” Riangkul said.
Citing the US Department of Agriculture’s Grains Report, Colmenares said the prevailing market price from Nov. 16-22, 2013 was $377.86 per metric ton, or $84.39 cheaper than what Vietnam sold.
Colmenares said there was indeed overpricing of the rice imports since the NFA did not take charge of delivery and could have bought at $365 instead of $462.25 per metric ton.
“In their most recent importation of 500,000 metric tons of rice, would it not be more advantageous for the government if the NFA only considered the bid of Thailand which is at least $0.25 less than that of Vietnam? What is more alarming though is that it seems that the NFA violated not only the Memorandum of Agreement (MOA) between the government of Thailand and the Philippines but RA 9184 or the Procurement Law just to favor Vietnam,” Colmenares said.
Zarate, for his part, said it was “anomalous” that Calayag only sought the legal opinion of the Office of the Government Corporate Counsel on Nov. 29, three days after the contract was already awarded to Vietnam.
On Dec. 5, Government Corporate Counsel Raoul Creencia sustained the NFA position that the basis for bidding should be RA 9184, “hence Thailand could no longer lower its offer and negotiate thereafter,” as the MOA required.
“The transaction with Vietnam at face value is very suspicious. First, why should we get from Vietnam when Thailand’s offer is cheaper? Secondly, why didn’t the NFA get the rice from the port instead of Vietnam delivering the rice to the various warehouses in the provinces?” Colmenares asked.
Colmenares said Vietnam added more charges for direct delivery to NFA warehouses that pushed up the total price of the import.
Hicap argued that even “assuming arguendo” that RA 9184 was Calayag’s basis, he would have violated the same law.
Hicap explained that under RA 9184, the NFA should have published invitations for an international tender, which would then allow not only Thailand, Vietnam and Cambodia, but even Myanmar as well as India and Pakistan, which are also rice exporters.
“Due to these circumstances, it is not only rice overpricing is possible but this facilitates smuggling as well because Vietnam can now just deliver extra tons of rice into the ports and/or to private warehouses on its way to delivering to NFA warehouses,” Colmenares warned.
“It is not true that the NFA would lose money if it directly delivered the imported rice. Vietnam would not have agreed to deliver it if they are not going to earn millions. Add to this the fact that the Vietnamese are the ones spending for the hotel and plane fare of our rice inspectors sent to Vietnam which helped increase the price, not to mention the clear conflict of interest when our watchers are being wined and dined by the one being watched,” Colmenares said.
“This new development should be investigated further because it is not only the Philippine government that is disadvantaged but ultimately the one bearing the brunt of this overpriced rice is the Filipino consumer,” Zarate stressed.
Zarate earlier called for the resignation of Calayag for being a US citizen and for the rampant rice smuggling in the country.
Hicap on the other hand said that “our membership in the World Trade Organization (WTO) allows the entry of rice and will destroy our farmers’ livelihood. NFA administrator Orlan Calayag practically admitted this and the fact that with our country’s entry to the WTO, smuggling agricultural products became legal. Malacanang should terminate our entry into the WTO especially since it violates the Constitution.”
The Senate committee on agriculture will be holding a hearing on rice smuggling and food security on Monday.