Poll automation tie-up faces legal fix

MANILA - The partnership between Smartmatic International and local partner Total Information Management (TIM)—the consortium that won the bid to automate next year’s polls—was only for show, which could expose it to legal questions in the future.

That the consortium was only a charade to comply with the nationalization law was confirmed during Monday’s hearing in the Senate’s Blue Ribbon, where erstwhile warring partners Smartmatic and TIM and the Commission on Elections (Comelec) officials were summoned to shed light on the rift.

The Comelec is required to award the poll automation project to an entity that a local firm controls.

After announcing last week its concerns over its actual lack of control in the automation project, TIM withdrew from its partnership with Smartmatic. A brouhaha ensued, thereafter, since TIM's actions put the implementation of the automated elections in precarious state.

But last Friday, the two firms agreed to set aside their differences by proceeding with the incorporation of the joint venture corporation that will allow them to have a legal personality to enter into a contract with the Comelec.

The Comelec and the consortium are set to sign the P7.2 billion contract to automate the May 10, 2010 national polls anytime this week.

Token local partner

Under questioning by Senator Francis Escudero, TIM president Jose Mari Antuñez admitted that the rift was prompted by the one-sidedness of its joint venture agreement with Smartmatic.

While the new corporation to be formed by the two is supposed to be a 60-40 partnership, with TIM as the local partner enjoying the controlling share, “the truth is they [Smarmatic] have to do 90 percent (of the project) and TIM, as the value-added partner, 10 percent,” Antunez said.

This prompted Blue Ribbon chair Senator Richard Gordon to comment that TIM is only a “token partner.”

Escudero noted that while TIM may have the majority share in the corporate structure, it actually “has no control.”

Comelec chair Jose Melo basically agreed, saying that the poll body initially sought an exemption from the 60-40 percent requirement for those who will bid in the P11.2 billion automation project. But the poll body failed to get the exemption from the Department of Finance.

Hinting of a possible legal problem in the future from the set-up, Escudero urged the Comelec to have a contingency plan in case the automation project hits another bump.

Another Megapacific scam?

This revelation cropped up as UP law professor Harry Roque warned that the joint venture agreement (JVA) between Smartmatic and TIM is another "Megapacific scam" in the making.

Roque said his analysis of the documents show that Smartmatic and TIM “did not have a valid JVA when they made the bid.”

Citing Melo’s own admission, Roque said the joint venture did not submit the required documents during the bidding process that establish “due existence, composition and scope of their agreement.”

One sign of this was the disagreement between Smartmatic and TIM on which has control of the money, he said.

Second, Antuñez also admitted to having “irreconcilable differences” with his Smartmatic counterparts.

Third, these irreconcilable differences were patched up between them only last July 3, 2009, or 23 days after the deal was awarded to them on June 10,2009.

“All of this means that there is no valid joint venture between TIM and Smartmatic since these two entities supposedly composing the joint venture has had no community of interest in the performance of the subject matter from the very beginning,” said the lawyer.

Roque said this goes against the Supreme Court’s ruling which invalidated the P1.2 billion Mega Pacific automation contract.

'No Mike Arroyo links'

Also on Monday’s hearing, Smartmatic and TIM flatly denied having any links with First Gentleman Mike Arroyo or to any influential individuals.

But Smartmatic international sales director Cesar Flores confirmed that it will push through in tapping the Aboitiz firm 2GO in the deployment and storage of the 82,000 electronic voting machines it will provide to Comelec.

The Aboitizes and the First Family are known to be close. Flores said Smartmatic found 2GO’s “quotation” for the project as the most competitive. But fears have been raised the machines might be tampered with before election day.