Fraport to sue Philippines again on NAIA-3 case

By Jess Diaz, The Philippine Star

Posted at Mar 24 2011 11:00 AM | Updated as of Apr 01 2011 03:00 AM

Fraport official said it wants $800 million as compensation for its expenses in NAIA-3

MANILA, Philippines - German firm Fraport is suing the Philippines again before a World Bank arbitrationcourt in Washington in connection with the controversial Ninoy Aquino International Airport (NAIA) Terminal 3 in Pasay City.

Fraport local partner Philippine International Air Terminals Co. (Piatco) built the passenger terminal now being operated by the Manila International Airport Authority.

Fraport senior vice-president Peter Henkel told the House committee on transportation yesterday that his company would re-file its arbitration case against the Philippines next week with the World Bank’s International Center for the Settlement of Investment Disputes.

He said the case was dismissed in 2007 but Fraport, an airport services firm, filed an appeal with a higher World Bank body, which ruled in December that the German “was denied its right to be heard.”

Since the ruling was made, he said they have written Executive Secretary Paquito Ochoa Jr. and other concerned officials suggesting that the two sides should meet “to avoid more costly litigations.”

“But we have not heard from any of them. Thus, we are re-filing our case next week, though that will not prevent us from talking,” he said.

Responding to questions from reporters after the hearing, Henkel said Fraport would seek payment of as much as $800 million.

He recalled that in 2003, when Fraport and Piatco filed their original case with the World Bank’s arbitration center, they sought reimbursements amounting to $565 million.

He said that the amount should have ballooned to nearly $800 million, including interest.

The hearing of the House transportation committee chaired by Leyte Rep. Roger Mercado was prompted by two resolutions urging the panel to inquire into cases filed by Fraport/Piatco and the government against each other, and the status of NAIA 3.

Cagayan de Oro Rep. Rufus Rodriguez and his brother Maximo, who represents the party-list group Abante Mindanao, introduced the resolutions, which also urged the two parties to explore an amicable settlement so as not to further prolong litigation.

The Mercado committee found out that cases abroad have already cost the government $56 million in fees of the foreign lawyers.

Mercado asked Deputy Executive Secretary Teofilo Pilando, who attended the hearing, to inform Executive Secretary Ochoa and other concerned officials that Fraport plans to revive its case against the government and that the German firm had suggested talks on a possible settlement.

The government claims that NAIA 3 was overpriced by as much as $300 million. The Senate investigated the controversy and discovered certain huge payments, which senators suspected were laundered funds.

One payment was for $2 million and was made to a person identified with the husband of a Malacañang official.

It was supposedly for “public relations” purposes, though the payee was not a PR practitioner, and for “liaison work” with concerned bureaucrats.