Supplier of 'antiquated' military choppers was favored: witness

By Ryan Chua, ABS-CBN News

Posted at May 20 2015 03:39 PM | Updated as of May 21 2015 01:49 AM

But officials say chopper purchase was aboveboard

MANILA - The P1.25-billion contract to supply the Philippine military with refurbished utility helicopters was ''tailor-fitted'' for a company favored by certain officials of the Department of National Defense (DND), according to a person who claimed to have personal knowledge of the deal.

Rhodora Alvarez, a government employee who had close ties with Thach Nguyen of aircraft supplier Rice Aircraft Services Inc. (RASI), told the Senate Blue Ribbon committee that the UH-1 chopper specifications were designed so that only RASI could meet them.

These included a mechanism for maintaining the helicopter's main body, which other companies do not have.

''This is to prove to you the allegation that the project was tailor-fitted,'' said Alvarez, who said she served as a link between RASI and Department of National Defense officials when the deal was being negotiated.

''Alam nila na si Rice ay mayroong available helicopters. Ang hindi nila alam, hindi naman pala ito world-class. Hindi naman pala ito fully refurbished, at hindi naman ito best in the world.''

(They knew Rice had available helicopters. What they didn’t know was that those were not world-class, not fully refurbished, and not the best in the world.)

Nguyen was RASI's former representative in the Philippines. He now faces a lawsuit in the United States for misrepresenting himself as a state department official.

Alvarez said Defense Undersecretary Fernando Manalo, chairman of the agency's special bid and awards committee, used to be an agent for RASI. Manalo denied this.

Alvarez also said the choppers delivered to the Philippine Air Force in 2014 were of low quality.

For instance, she said none of the helicopters was able to fly when the military recently launched an all-out offensive against Muslim rebels in Mindanao.

Undersecretary Pio Lorenzo Batino said the DND is conducting an internal probe into the matter.


The contract for supplying 21 helicopters went to the joint venture of RASI and Eagle Copter Ltd. through a negotiated procurement after several unsuccessful public biddings.

Only seven choppers were delivered to the Air Force, however. The contract was terminated after RASI and Eagle Copter failed to deliver the other units on time.

Senator JV Ejercito questioned the awarding of the contract to RASI -- albeit already with a partner -- which joined the public biddings but was disqualified and later found to have submitted fake documents.

Alvarez said DND Assistant Secretary Patrick Velez even blew his top when he found out RASI submitted fake documents such as financial statements. But the deal still pushed through, she said.

Velez told the committee that the agency did not know the documents were fake during the bidding and even when the negotiated procurement was made.

''What was already submitted by the joint venture were contracts by Eagle Copters and financial documents of Eagle Copters,'' he said.

''That's the reason we were not able to look into that.''


It was unclear why Alvarez, an employee of the Bureau of Internal Revenue, came out to speak on the issue. At the hearing, she said she was doing it for the country.

Senators, however, required her to submit a sworn statement supporting her claims.

Manalo said Alvarez only wanted to extort money from RASI.

''Noong madiskubre ng Rice ang malaking pera na ginastos niya na hindi niya ma-explain, suddenly, nag-demand siya na, 'Bigyan n'yo ako ng 15 percent. Otherwise ipapakansela ko ang kontrata' (When Rice discovered huge amounts she spent but could not explain, she suddenly demanded 15 percent from the project, otherwise she would have the contract cancelled),'' he told reporters after the hearing.

Manalo also said Alvarez was among those who defended the deal with RASI when DND officials met to terminate the supply contract after the deliveries were not made on time.

''Hindi 'yon ang picture ng taong magsasabi na masama ang helicopter (That’s not someone who would say the choppers are bad),'' he said.


Defense officials, meanwhile, stood by their decision to purchase refurbished UH-1 helicopters that a senator described as antiquated, saying they followed the right processes in buying them and that the choppers are in good condition despite being old.

Velez said the choppers are in ''operational condition and can be upgraded to improve their capabilities.''

''The AFP (Armed Forces of the Philippines) does not buy obsolete equipment,'' he said.

Velez also said there was no intention to defraud the government when the choppers were bought, and that the DND only wanted to address the capability gap in the poorly equipped AFP despite its limited budget.

''That is not a crime,'' he said. ''That is our collective responsibility.''


Wednesday's hearing was prompted by a resolution calling for a probe into the purchase of 50-year-old helicopters, which for some lawmakers defeated the purpose of the military's modernization program.

Senator JV Ejercito, who filed the resolution, pointed out in an earlier interview that the German-made helicopters are older than retiring military personnel.

They were put on sale after being decommissioned by Germany's military.

''It just doesn't seem right that we are on a modernization program and yet we are buying antiquated 50-year-old helicopters,'' he said at the hearing.

''These are zombies already. They were in a graveyard in Germany.''


Manalo said lack of time was one of the reasons the contract was awarded to RASI-Eagle Copter in a negotiated manner after several failed biddings.

He stressed that the process was aboveboard, and that RASI-Eagle Copter was not a favored supplier. He also vouched for the quality of the choppers

''I would like to reiterate that contrary to the allegations the UH-1 helicopters delivered to the Philippine Air Force were all in good condition, reliable, and compliant with the requirements of the Philippine Air Force,'' said Manalo.


Still, Senator Francis Escudero noted the contract was still given to RASI-Eagle Copter despite its questionable record and failure to deliver the other choppers on time.

''Shouldn't someone be held responsible for this? This is already negligence on someone's part,'' he said.

Ejercito also said he has spoken with some Air Force pilots on what they thought about the refurbished choppers.

One of the helicopters reportedly needed to have a change of engine after only three months in operation.

''When we asked the ordinary pilots who will be using these on a day-to-day basis, they said they were not confident in flying these refurbished helicopters,'' Ejercito said.

Air Force officials maintained, however, that the helicopters are working well and even better than other units in their fleet.