MANILA, Philippines (UPDATED) - The Filipino and German builders of the controversial airport terminal NAIA-3 are in hot water after the Department of Justice recommended the filing of anti-dummy law violation charges against their officials.
On Jan. 21, the DOJ announced that it has recommended the filing of criminal charges against several corporate officers of Fraport AG Worldwide Services, Inc. and Philippine International Air Terminals Co. Inc. (Piatco).
Among those to be charged are
- Cheng Yong
- Peter Henkel
- Jason Cheng
- Jefferson Cheng
- Rita Bonifer
- S. Samin Aydin
- Lilia Cheng
- Hachiman Yokoi
- Gil Camacho
- Katherine Agnes Arnaldo
- Joerg Seyffart
- Marife Opulencia
- Mary Antonette Manalo
- Ricardo Castro, Jr.
- Hans Arthur Vogel
- Dietrich Stiller
- Noemy Dacanay
Justice Undersecretary Francisco Baraan said Fraport used fronts or dummies to circumvent the anti-dummy law.
“Ginamit nila itong front para itago yun actual shareholdings nila sa Piatco,“ Baraan said.
DOJ said Fraport itself admitted at a Washington-based arbitration tribunal that its direct and indirect stake in Piatco and cascade companies has reached 61%.
The Philippine Constitution and the Anti-Dummy Law bar foreigners from owning more than 40% of key facilities in the country, including airport terminals.
The anti-dummy law penalizes the use of the Filipino dummy to evade "any constitutional or legal provision requiring Philippine citizenship as a requisite for the exercise or enjoyment of a right, franchise or privilege and the profiting of any alien thereby"
If found guilty, Fraport officers face imprisonment.
The resolution also denied the 7 petitions filed by some of the respondents asking for the review of the resolution of the Office of the Chief State Prosecutor on March 15. This also paved the way for the filing of a criminal information in court.
What was violated?
In its 2007 decision, the Washington-based International Center for Investments Dispute (ICSID) ruled that Fraport violated the anti-dummy law of the Philippines not because of its 61% aggregate stake in Piatco and the cascade companies.
On Dec. 2006, months before the ICSID decision, a prosecutor at the Department of Justice, which was then under the leadership of Secretary Raul Gonzales, dismissed the anti-dummy charges against Piatco and Fraport officials.
However, ICSID noted that the Filipino firms in the Piatco consortium and their German counterparts in Fraport have executed secret shareholder agreements that would effectively allow Fraport to have managerial, operational, and financial control of NAIA-3 once commercial operations start.
The secret shareholder agreements were resorted to since it was Fraport that ended up making the financing arrangements with multilateral creditors to raise the much-needed funds after construction of the 10-part airport facility has been well underway.
Fraport sued the Philippine government at the ICSID for its $425 million compensation claim. The suit was based on the bilateral investment treaty between the Philippine and German governments.
In Dec. 23, 2010, ICSID annuled the original tribunal's decision, which favored the Philippine government, due to technical issues. Fraport can sue the Philippine government again to pursue its compensation claim.
However, Baraan insists that Fraport’s request for Arbitration will likely be denied by the ICSID. He said this recent DOJ resolution showed that Fraport’s dealings in doing business in the country was illegal.
“This could be used as one of the main arguments that the Philippine government can use in the arbitration case to contest the claim of Fraport,” Baraan stressed.
In 1997, Piatco won the right to build and operate NAIA-3, an international terminal meant to decongest existing passenger and cargo facilities at the Manila airport, the country's main gateway.
Fraport, which manages the Frankfurt airport, later joined the consortium as the foreign partner.
The Arroyo government voided the NAIA-3 contract after allegations of wrongdoings, including the breach of anti-dummy law, surfaced. The Supreme Court upheld this.
Graft charges were then filed against government officials who took part in approving the questionable contract and succeeding amendments.
The anti-dummy law charges filed against the officials of both Piatco and Fraport were then considered as the Arroyo government's way of sending a message to the international investor community that wrongdoings are not tolerated in the country.
Years dragged on and the legal battles wore off both sides. All those time, NAIA-3 stood idle as international airport terminals NAIA-1 and 2 burst at the seams. Several compromise agreements were discussed but never finalized. - with reports from Lala Rimando, abs-cbnNEWS.com