DOTC execs tagged in $30-M shakedown

By Rainier Allan Ronda, The Philippine Star

Posted at Jul 19 2013 09:46 AM | Updated as of Jul 19 2013 05:50 PM

MANILA, Philippines - The Czechs are fuming.

One of their companies, Inekon, has been blacklisted by the Department of Transportation and Communications (DOTC), barred from bidding to supply trains for the Metro Rail Transit 3 (MRT 3).

The blacklist followed a meeting at the DOTC in July last year, during which, one of those present alleged, department officials asked the Inekon Group executives for $30 million if they wanted the supply contract.

Czech Ambassador Josef Rychtar, who accompanied the Inekon delegation to the DOTC, reportedly advised his compatriots not to engage in corruption.

The amount was allegedly whittled down to $2.5 million. When the Czechs still didn’t give in, their project proposal, first endorsed to the DOTC three years ago by the Czech government, was scuttled and the company blacklisted.

The DOTC was headed at the time by Manuel Roxas II, and the department officials who met with the Czechs were his recruits. They included Jose Perpetuo “Juju” Lotilla, Rene “Timmy” Limcaoco, Catherine Gonzales and Jaime “Jim” Feliciano. All of them are still at the DOTC. Gonzales, who came in as an assistant secretary, has since been promoted to undersecretary.

When Jesse Robredo died in a plane crash and Roxas left the DOTC to take over the Department of the Interior and Local Government, his recruits were left behind, and Inekon remained barred from the MRT-3 project.

Last April, Rychtar met with new DOTC Secretary Joseph Emilio Abaya and related details of the July meeting. There was no action from the DOTC.

Late last month, news reports emerged, citing unnamed sources, that President Aquino’s eldest sister Ballsy, her husband Eldon Cruz, former DOTC head Pete Prado and Steve Psinakis, a son-in-law of the late Eugenio Lopez Sr. and consultant and adviser of First Philippine Holdings Corp. and Benpres Holdings Corp., had asked Inekon for $30 million to facilitate the contract.

An exasperated Rychtar then sent a letter to President Aquino, dated June 29 and received by Malacañang nearly two weeks ago, clearing the Cruz couple and Prado, and raising the same issues he had discussed with Abaya.

Rychtar followed this up with another meeting last Wednesday with Abaya.

I am so mad,” Rychtar told The STAR the other night. “In other countries, an investigation would have been conducted at once.”

He wondered why an administration that purports to focus on the fight against corruption and on taking the straight path or daang matuwid has been slow to act on the issue.

Worse, Rychtar said, “the innocent are the ones getting hurt” – referring in particular to Ballsy and Eldon Cruz.

The ambassador knows the Cruz couple personally and said the stories against them are “completely false.”

Rychtar said he was ready to talk and face probers if needed.

No commissions

In his letter to the President, a copy of which was obtained by The STAR, Rychtar wrote: “The Czech proposal for the MRT3 capacity expansion and modernization is a government-to-government deal which cannot contain any provisions for commissions.”

Over the past three years, according to the letter, the Czech Ministry of Trade and Foreign Affairs had transmitted more than 10 official letters to the Philippine government and submitted to the DOTC “booklets of extensive technical plans and financial proposals in order to comply with Philippine Procurement Procedures.”

“We continue to wait patiently for a response from the DOTC,” the letter stated.

The one-page letter opened with a clarification to Aquino about the “inaccurate and nasty press reports pertaining to the MRT3 capacity expansion.”

“I wish to state that the allegations that members of your family were involved with discussions with Inekon on any projects in the Philippines are simply untrue and malicious,” Rychtar wrote the President. “Neither Secretary Prado nor any member of your family has offered their assistance in any of the projects that my country is pursuing in the Philippines. Your family is well known not to involve themselves on governmental affairs, most especially in the area of procurement.”

Rychtar wrote that he held Eldon and Ballsy Cruz as well as Prado “in the highest esteem.”

The ambassador said he was writing the letter “on both a personal and official capacity” and was prepared to issue a public statement clearing Ballsy and Eldon Cruz, and to declare the Czech government’s “continued interest” in participating in the DOTC program.

“In early April 2013, I was able to secure a meeting with Secretary Emilio Abaya to report an incident between some officials of his department and myself, together with the top management of Inekon,” Rychtar wrote. “While I still have yet to discern who are behind these terrible press releases, I had hoped that Secretary Abaya would have dealt with this issue in a swift and judicious manner before it reached this embarrassing and untenable state of affairs.”

Inekon is one of the top 100 corporations in the Czech Republic and is involved in railway projects in several European countries and the United States.

MRT3 has a fleet of 73 Czech-made modern and air-conditioned rail cars, which were built by another Czech company – CKD Doprovni System of Prague. The rail vehicles are articulated, eight-axle , three-section cars, designed for single-ended operations.

Each train can seat 80 passengers and can carry, under crush loading conditions, 394 commuters at any one time. The MRT3 trains carry 23,000 passengers per hour per direction daily.