More questions on BCDA deal

"My gulay, this Malaysian firm must be favored."



As a follow-up on my Thursday column on the “Questions on BCDA (Bases Conversion and Development Authority) deal with MTD Capital Berhad of Malaysia” as I go over the alleged Joint Venture Agreement (JVA), there are some more questions in connection with this deal that bothers me.

To place everything in proper perspective, let’s look at the timeline.

MTD Capital Berhad of Malaysia sent an unsolicited proposal to BCDA, a government owned-and-controlled-corporation (GOCC), to develop and construct the National Government Administrative Center worth P4.185 billion in Capas, Tarlac. The unsolicited proposal does not include the construction of the Sports Facilities, also in Capas.

Nine days from receipt of the proposal on Oct. 30, 2017, BCDA accepted the proposal, and negotiations followed using BCDA JVA guidelines.

During the negotiations, BCDA and MTC Capital Berhad agreed to include the construction of the Sports Facilities for P8.51 billion.

A competitive challenge or what is called a “Swiss Challenge” was set on Dec. 17, 2017. No entity submitted any document to challenge the unsolicited proposal. Subsequently, BCDA awarded the project in favor of MTD Capital Berhad.

BCDA and the Malaysian firm prepared a draft JVA which was still a draft, pursuant to BCDA JV guidelines, Commission on Audit guidelines on JVA, and GCG Memorandum Circular No. 2018-2, which subsequently were sent to the Office of the Government Corporate Counsel (OGCC) for review and issuance of Counsel’s Opinion, which are among the functions of the OGCC.

In that draft JVA, it did not provide for “a return of investment (ROI)” which will entitle MTD Capital Berhad to receive “reasonable costs and returns” from BCDA for the construction of the Sports Facilities in the amount of P2.49 billion. The JVA draft also does not provide for the division and sharing of profits of the Sports Facilities, which will entitle the Malaysian firm to receive 50 percent of the profits of the Sports Facilities for, Santa Banana, 25 years!

The OGCC then issued a contract review dated Jan. 30, 2018 stating that:

1. The construction of the Sports Facilities is a build-operate scheme embedded in the joint venture agreement;

2. The construction of the Sports Facilities is covered by the BOT (Build-Operate-Transfer) law and not by laws on joint ventures; 

3. The construction of the Sports Facilities is subject to public bidding; and

4. Section 8 of the draft JVA on the construction and payment of the Sports Facilities should be revised to align with the laws on joint venture agreements.

What was in Section 8 of the draft JVA that must be revised? The draft JVA requires the BCDA to pay and/or reimburse MTD Capital Berhad the cost of the construction of the Sports Facilities for 5 years (yearly installments). The contract review of the OGCC dated Jan. 30, 2018 requires the BCDA to revise this Section 8 to align with the law on joint ventures, and that is for BCDA not to pay the Malaysian firm the cost (P8.51 billion) of the Sports Facilities, since this is the contribution of MTD Capital Berhad in the joint venture.

My gulay, in joint ventures, a partner does not pay the contribution of his partner in the partnership! The construction of the Sports Facilities pegged at P8.51 billion is the contribution of the Malaysian firm in the joint venture, while BCDA contributed its 40-hectare land in Capas, Tarlac. So why should BCDA or the government for the matter pay for the contribution of the Sports Facilities? But, BCDA will pay anyway. That’s why I said, how lucky is the Malaysian firm that it is favored. Santa Banana!

I’ve done some research, and I found that A.B. Batuhan, a member of the board of directors of BCDA, sent a letter to the editor of another newspaper on Dec. 4, 2019, saying among other things that the construction of the sports facilities is a build-transfer scheme. My gulay, that’s clear enough!

What is a Counsel’s opinion anyway, and what is a contract review?

Note that a Counsel’s opinion by the OGCC is required under BCDA JVA and COA guidelines. Under paragraph 6.3 (1) of the BCDA JVA guidelines, No. 11 of Article VIII, “Prior to the execution of the JV Agreement, the OGCC, DOJ (Department of Justice), or other entity prescribed by law issuances as the statutory counsel of GOCC shall issue the corresponding Counsel’s Opinion. Santa Banana, in other words, this Counsel’s opinion is the key for the BCDA to sign the JVA, and not the contract review.

After the OGCC issued the contract review Jan. 30, 2018, the draft JVA was returned to BCDA. Do you know what happened? BCDA inserted Section 4.9 (b) in the draft JVA that the income of the Sports Facilities will be divided equally (50-50) by BCDA and MTD Capital Berhad. As I asked, what is in it for BCDA?

In short, Santa Banana, the Malaysian firm will now be entitled to 50 percent of the income of the Sports Facilities for the entire term of the JVA―25 years, and extendable for another 25 years.

This provision was not in the unsolicited proposal submitted and agreed upon by the BCDA and the Malaysian firm. This provision was not even in the terms of reference (TOR) and subject to Swiss Challenge on Dec. 11, 2017. Likewise, this provision was not in the JVA draft that was sent by BCDA to the OGCC for review. This leads to the question, why?

Likewise, BCDA inserted P2.2 million in Section 8.1 of the draft JVA and (once all such advances have been repaid) the balance of such annual installment shall be payable to the winning party to cover its “reasonable cost and returns.”

With these insertions, MTD Capital Berhad is now entitled to receive from BCDA P2.49 billion―the excess of P2.2 billion x 5 equals P11 billion) as its return of investments for the construction of the Sports Facilities. My gulay, this Malaysian firm must be favored.

This figure (P2.2 billion) and sentences which were inserted by BCDA were not in the unsolicited proposal, and neither were they in the terms of reference (TOR) during the “ Swiss Challenge” and neither were they in the draft JVA that was sent by BCDA to the OGCC for review. Santa Banana, these make the BCDA deal all the more questionable and needs looking into by President Duterte!

With the insertion of provisions that will favor the Malaysian firm, I ask this question: What’s in it for BCDA and the OCGG issuing statements that the deal is transparent and in compliance with the law and legal requirements?

On the part of BCDA, I ask: What makes MTD Capital Berhad so favored to get so much from the BCDA deal? On the part of the OGCC, I also ask what made it change its tune to claim that the BCDA deal was legal and in compliance with the law? As I said, I smell a rat, Santa Banana! 

* * * 

With the resumption of protests at Hong Kong, we can only speculate what Beijing will do next. Note that Hong Kong is now ruled in its legislative council by the majority of pro-democracy legislators. This makes it unlikely for Beijing to do anything to quell the protests.

The big question I now ask is: Will Hong Kong return to its former glory as the financial hub of the world and an unparalleled shopping venue? This I doubt with so many residents of Hong Kong owning business like restaurants and jewerly shops now migrating to Taiwan.

Whatever happens to Hong Kong, its old glory of Hong Kong will never be the same again, Santa Banana!

Now whether China President Xi Jinping will maintain the “one country two systems” in the former Crown Colony is another subject to speculation. With the victory of pro-democracy residents of Hong Kong, they will not continue as a democratic autonomous region. And that will be a big problem for China.

* * *

I was not at all surprised with the Philippines hitting rock bottom in a study of no less than 79 countries of 15-year-old students getting the lowest education ranking, scoring the lowest in reading and second lowest in both math and science. Just how Filipino students fare in English in another question.

I lament the findings because my parents were both teachers, and I, too, was a professor at the Ateneo de Manila before it became a university, teaching English, history and literature.

In analyzing this lamentable condition of education in the Philippines, I attribute it to many factors―the quality of teachers, which has become sub-standard; the school curriculum, which has made the use of the national language as a medium of instruction: and the utter neglect of the government of the country’s education. There are also those who say that the nutrition problems of Filipinos is also to blame.

With these confluence of events, I now urge President Duterte, Congress, and all educational institutions, both private and public, to come together and find out what’s wrong, and to prioritize what can be done.

My gulay, I recall there was a time when Filipinos excelled in English, which became the envy of Asians. But, with so much nationalism, the national language prevailed. That’s why I say, there is need to review everything in our education system.

Topics: Emil Jurado , Bases Conversion and Development Authority , BCDA deal , MTD Capital Berhad of Malaysia , Joint Venture Agreement
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