'Powerful people' pressuring TIM?

MANILA - Last week, a top official of poll automation project’s local partner Total Information Management (TIM) got calls from a well-connected businessman.

A source familiar with the poll automation project of TIM, which has 60 percent equity in the winning consortium, told abs-cbnNEWS.com/Newsbreak that the TIM official was told to “cooperate” since “powerful people are being offended.”

The calls came at the time TIM was stalling in signing the incorporation papers for the registration of its joint venture partnership with Barbados-based Smartmatic with the Securities and Exchange Commission (SEC).

TIM was then bargaining for greater control in the automation project. The source said TIM was being relegated to a nominal role as the proposed SEC incorporation papers and previous submissions to the Commission on Election (Comelec) gave Smartmatic control over key aspects including the financial and technical aspects of the project.

Smartmatic and TIM bagged the contract to automate the May 10, 2010 polls with a bid of P7.2 billion.  It bested six other consortia that sought the right to automate the polls.

TIM first suspected that something was cooking up when an associate saw a member of a well-connected clan and a very influential man in a huddle with a Smartmatic official. The encounter happened in a Makati City coffee shop, according to the source who is intimately familiar with TIM's succeeding decisions.

Abs-cbnnews.com/Newsbreak, however, could not independently confirm the coffee shop encounter.

The calls from a member of a powerful clan bolstered TIM’s suspicions, the source said. TIM has become wary that it could be an unwitting partner to some irregularities, which was why it was pushing for some control in the joint venture. “That made TIM to decide to quit last Saturday.”

On Monday, TIM president Jose Mari Antunez informed Comelec about its decision.

Comelec, the referee

The Comelec decided to step into the issue. On Tuesday, it was able to create an opening of dialogue between the squabbling partners.

The breakthrough came after Commissioner Nicodemo Ferrer convinced the en banc Tuesday morning to summon the two warring firms and try to reconcile them.

But it took sometime before Comelec chair Jose Melo relented for Comelec to act as referee. In an interview with ANC on Monday, Melo, who was visibly upset over the developments even implied that TIM was putting their “private interests above that of the national interest, which is the election.”

Comelec sources told abs-cbnnews.com/Newsbreak that Melo and Ferrer engaged in a heated discussion whether the poll body should intervene in the mess. Melo was against Comelec intervening, while Ferrer argued the poll body should try to patch things up.

Ferrer won the argument.

In that rushed meeting, Smartmatic and TIM officials laid their cards on the table before the en banc. TIM officials questioned Smartmatic’s total control on the technical and the financial aspect of the project.

Smartmatic countered it had the expertise on the technical aspect, a Comelec source said. The foreign firm added that it was only protecting its interests when it insisted that the chairman of the board be the sole signatory in cases of disagreements on disbursements.

A source who was present in the meeting said Ferrer proposed that the two parties allow Comelec to act as referee in issues where they could not agree, like in the financial and the technical aspect.

“Commissioner Ferrer strongly suggested that whatever the Comelec’s decision is, should be respected by the parties,” another Comelec source told abs-cbnNEWS.com/Newsbreak.

Sought for comment, Ferrer said “both sides appear to be agreeable, and we gave them until Friday for their final decision.”

Ferrer said he strongly batted for a more active Comelec role in the dispute “since it will be us, not the bidders, who will face the embarrassment and the brunt of the public’s ire if automation does not push through.”

He suggested that issues that might crop up between the Smartmatic and TIM “could be dealt with as the need arises.”

In a separate text message, Antunez said TIM’s lawyers will meet Wednesday to discuss the Comelec proposal. He begged off from giving additional statements, saying there was a gag-order.

Who has control?

The automation projects in the Philippines require that a bidding foreign firm should partner with Filipino firm on a 60:40 basis, in favor of the local partner.

Smartmatic would provide the required 82,000 machines nationwide and the Precinct Count Optical Scan technology for the 2010 elections.

This is the first elections project of the local TIM but the second for Barbados-based Smartmatic. Last year, Smartmatic provided the Direct Recording Electronic machines that were used in Maguindanao for the elections in the Autonomous Region in Muslim Mindanao (ARMM), and was the transmission server of the results for the entire region.

Before TIM threw in the towel last Saturday, it wrote Smartmatic that “it cannot agree that the chairman be given the authority to sign checks singly in case of issues or disagreements. This is contrary to the nature of a true joint venture and would expose us to possible liabilities for violations of existing laws.”

Smartmatic was supposed to nominate the joint venture’s chairman of the board who would have encompassing powers, especially on financial matters.

TIM also had concerns over how the earnings from the project would be divided between the two venture partners. However, Antunez and other sources declined to provide more details.

The local firm was also concerned that Smartmatic would have entire control in the technical aspect of the automation.

The draft contract of lease with the Commission on Elections for the automated polls stated that Smartmatic, “as the provider with the greater track record in automated elections, shall be in charge of the technical aspects in the counting and canvassing software and hardware, including transmission configuration and system integration.”

Smartmatic would also be “primarily responsible for preventing and troubleshooting technical problems of the elections.”

On Monday, TIM president Jose Mari Antunez told the Comelec it is withdrawing from its partnership with Smartmatic. Antunez cited “irreconcilable differences” with Smartmatic.

In a press statement Tuesday, Smartmatic spokesperson and international sales director Cesar Flores disputed TIM’s argument that they could no longer patch up their differences.

“At no point we felt we have reached an irreconcilable point,” Flores said, citing a letter from TIM dated June 26 noting “they (TIM) still want to sign the contract.”