The LP is squarely behind the MRT 3 mess

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THOSE who know about dates and chronology of events know too well that the genesis of the MRT 3’s slide to hell began in earnest in 2012. That was the year a group of LP operatives mostly from Pangasinan incorporated a cottage industry called PH-Trams with a vile but grand design – bag the lucrative operations and maintenance (O & M) contract of the MRT 3.

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It was just like contracting a quack clinic to fight the Ebola nightmare. But that did not matter. The LP flunkies knew that all handicaps of the cottage firm PH-Trams would be obscured by their LP affinity. The confidence was on firm ground. Several weeks after the incorporation of PH-Trams, it bagged the more than P500 million a year contract to operate and maintain the MRT 3.

There was a subsequent revelation that added stink to the sweetheart, lucrative deal bagged by PH-Trams: that the uncle of the wife of then LRTA Administrator Al Vitangcol 3rd was one of the incorporators. But what the heck. What was the LP in power for.

At a recent Senate hearing on why the MRT 3 is now one of the worst urban rail systems in the world, DOTC Secretary Joseph Abaya, one of the most powerful figures in the LP, skipped the part about the cronyism and corruption that led to awarding the contract to PH-Trams. He predictably spun the tall tale that Sumitomo of Japan was kicked out in favor of PH-Trams of the LP and Pangasinan because the former committed the following:

It asked for a higher O&M fee

It declined to back a new O&M contract with a financial warranty

It allegedly stole spare parts from MRT 3’s own trains which it later resold to MRT 3 as brand new.

If true, the three were indeed serious breaches that were enough to blackball Sumitomo. In the same Senate hearing, Abaya’s charges were, however, refuted point by point. Sumitomo’s O&M contract had a financial warranty. The contract with PH-Trams was probably P450 million costlier than Sumitomo’s, according to a senator. More, Sumitomo, during its term at the MRT 3 guaranteed the operations of 20 trains and 40 coaches during peak operating hours, a commitment which it fulfilled until the DOTC and the LRTA schemed to scrap its contract in favor of cottage/crony firm PH – Trams.

Sumitomo’s contract had a general commitment called “single point of responsibility” which was embedded to ensure that a sufficient number of trains and coaches were operating safely and efficiently especially during peak hours. That commitment, according to private partners of the MRT 3, vanished from the O&M contract after the takeover of PH –Trams in 2012, and its just-as-incompetent successor in 2013, the other crony firm APT-Global.

Abaya also withheld from the senators these two relevant timelines. That cottage firm PH-Trams was awarded a multi-million contract barely a couple of months after its incorporation. And that Sumitomo was kicked out barely 12 days before its O&M contract ended in 2012. The irrational exuberance to throw out an established global company in favor of a crony firm was breathtaking in a negative way.

The O&M contracts to PH-Trams and APT-Global were structured, noted some senators, to make the MRT 3 fail and fail miserably. Note that the contract with Sumitomo placed the entire responsibility on Sumitomo: maintenance, service, overhauling and replacement of rails and parts, etc.

The PH-Trams and APT Global contracts were limited to maintenance. Vital work such as rail replacement and overhaul of trains and the provision of communication systems will be contracted out separately in an upcoming public biding. Currently, the DOTC is in charge of other vital work as it chopped the original total package of Sumitomo. In effect, the DOTC, by scrapping the contract of Sumitomo, made the O&M cost costlier by around P450 million a year, according to senators.

The structure of the post-Sumitomo contract was the reason cited by APT-Global in not accepting the responsibility for the spate of MRT 3 accidents, which totaled 17 after a disastrous overshoot of a train last August 13 that seriously injured 38 passengers. APT Global said its work was limited to maintenance so the DOTC should be asked to explain the engineering and communications breakdowns.

There was no single point of responsibility in the contract and the crony firm can bungle its job and get away with it.

The DOTC recently released a memo that confirmed Abaya’s worst nightmare – about the O&M contractor using cannibalized parts which are supplied back to the MRT 3 trains and passed off as brand-new. The problem was Sumitomo was not the culprit. It was the crony firm and current maintenance contractor APT-Global that was named in the DOTC memo.

The DOTC has misgivings about the crony firm. The crony firm has misgivings about the DOTC. But there would be no public fight, no public unloading of dirty laundry. The events and circumstances that led to the firing of Sumitomo and the contracting of PH-Trams and APT Global will be dirty enough to bring down several prominent figures in the LP and there would be no public revelation of those events and circumstances.

The focus of the DOTC right now is on two issues. Buy new trains and use P54 billion to buy the economic rights of two state-owned banks – Land Bank of the Philippines and Development Bank of the Philippines — in the MRT 3 under a so-called Equity Value Buyout (EVBO) scheme.

But as with the contracting of the PH-Trams and the APT-Global, both moves are contentious and fraught with legal issues. Can the DOTC and LRTA use government money to buy new trains for a rail company partly owned by private interests? The government cannot use public money that would directly benefit private interests, according to law. The EVBO will not change anything in the corporate structure as the private owners’ shares will not be settled.

In the Senate hearings, the sense of the senators was this. Use the P54 billion for priority projects. Better, get out of the MRT 3 and allow the private sector to run it without the heavy hand of the state.

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29 Comments

  1. Blake Rodriguez on

    But of course, no action is going to be taken on this. At the very most, a half-hearted probing. THe LP seems to enjoy some form of invincibility with Aquino in position.

  2. Whatever happened to Aquino’s daang matuwid? Now that his LP stalwarts are said to be behind this whole MRT issue, all of a sudden this righteous battle cry is forgotten?

  3. As long as Pnoy’s allies and these government officials make use of MRT as their milking cow, its operation and maintenance will never improve. These officials wouldn’t care about the safe for the commuters since they do not ride those trains anyways!

  4. Pnoy and his LP buddies should take the MRT. They should experience the kind of hell the general public is experiencing every time they take the train.

  5. Daang matuwid is a hypocrisy and PNOy’s LP is the biggest scammer of all with DAP the mother of all scams.

  6. Transport Sec. Joseph Emilio Abaya is trying his best to divert the MRT-3 issue. The railway’s frequent accidents and breakdowns are due to corrupt non-upkeep. But he claims that the Department of Transportation and Communications needs to buy out the private builder-owner MRT Corp. for failure to upgrade the line

  7. The buyout for MRT3 evolved from DOTC Secretary Jun Abaya for the last months when the dilapidated relation of the government to MRT Holdings and MRTC are vanished despite the fact that MRTC’s Bob Sobrepena’s interview with a famous media network. Senate hearing ensued and both parties lay down their cards for the Senate and the Filipino people to clearly understand the background of the case; likewise, the train system breakdowns and the drama of the maintenance provider. MRT3 buyout by the government seems to be the option at hand ever since? The DOTC’s only pretending to buy MRTC but they’re just buying 27 billion worth of bonds to complete the 100% ownership. The government is waiting for the 2015 budget of 54 billion to process the same.

  8. Ngayon talagang pursigido sila na bilhin yung MRT kesa magpursigi na ibigay yung serbisyo na binabayaran ng mga commuters. Napakagaling naman po talaga oh. May dapat na talagang matanggal dyan sa DOTC na yan eh. ay nako

  9. Maximo Macatuggal on

    Well funded na ang Libel Party, mukahng gusto pa nila ng additional dahil sa mga pinaplano ni Secretary Abaya. Aba maawa anmaan kayo sa libu-libong tao na sumasakay ng MRT araw araw.

  10. As we have seen, the confidence of Abaya, et. al. in their party was well-founded. They continue to enjoy the President’s trust, exhibiting not just confidence but unprecedented arrogance, blaming the private owners of the MRT when the world knows full well that DOTC not only usurped maintenance responsibilities in 2012, but consistently prevented inspection by the technical people of MRTC, all the while refusing to speak with the private owners. Then with the air of ‘magkano ka ba’, declares that government is ready to buy out the MRT even if the whole world knows that the P54B they are flashing around isn’t enough to buy the privately-owned bonds. Then, drawing from his experience of extorting from contractors, he threatens us with increased fares if the buyout doesn’t push through. Abaya even makes insensitive comments like how riding the MRT is a matter of choice when the populace at large have no other choice. While highly unlikely, Aquino should dump him. He is an embarassment to the LP and the country.

    • It’s clear that pABAYA is only in it for the kickback he gets whenever he claims the monthly “maintenance fee” for APT Global (clearly LP-related). The millions paid to this company is clearly not being used at any maintenance-related work. So where does it go? Shall we check LP’s funds right now?

  11. opinion reader on

    Hanggat may tatsulok at LP ang nasa tuktuk, di matatapos itong “gulo”. “Gulo”-mismagangement ng mga inilukluk ni Pnoy sa mga sangay ng gobyerno na ang pangunahing mandato eh ang pag sisilbi sa publiko. Kawawang Juan dela Cruz!, araw-araw na nag tiis sa mahabang pila sa MRT, at mga mga gray area sa implementation sa LTO, LTFRB na sadyang nililito ang mamayan para makapag multa sa magulong pulisiya at mga lintek na “administrattive orders” na yan.

    Kaya ngayon, panay ang banat nila kay Vice Binay, para mapag takpan ang lahat ng kapalpakan nila, simula sa DAP, sa hepe ng PNP, sa MRT. Dahil gusto nila na di-manalo si Vice Binay, para ika nga eh tuloy ang ligaya. Ayaw nilang saplitin sa kamay ni Vice Binay kung sya man ang mahalal na pangulo ang sinasapit ngayon ni GMA sa kulungang-hospital…

    Naway gabayan tayo ng POONG maykapal sa darating na halalan!!

  12. This is the result of those people in the government who indulge so much on idolatry of power and money. The victims are the poor people who are the commuters. Have you not seen Secretary inspecting the MRT with someone tagging along with umbrella, unlike Grace Poe who really make it a point to join the line of the commuters. Some people in the government are pretending to be pro people but their actions speak otherwise.

    • That’s the time pABAYA told everyone that riding MRT was OUR choice like he was saying it in OUR faces that it is in our own doing that we are making our lives a lot complicated. Duh?!? As if we have any other choice than to ride the hellish MRT to get to work or school and get back home at the end of the day.

  13. Roldan Guerrero on

    MRT Commuters alone can be a huge crowd to start with for a People`s Power. These daily commuters who are forced to ride on TRAVELING COFFINS,deprived of a safe public conveyance as a result of corruptions in broad daylight, could trigger the launching of massive protest to dislodge the Protector of criminals and plunderers who is living comfortably in Malacaniang. The Filipino People, must now without delay, do it before its too late!

  14. renato s. irlanda on

    Suggestion:
    Mimeograph your above article and have copies given to the people queing up for a ride in the mrt3. Whilee standing in line , the riding public will know why they are being screwes and who the hell are screwing them
    Budget a ream per station and ill bet you that there will be a groundswell who will demand that those screwers out to be screwed too in the nearest penitentiary

  15. sir Marlen, 110% correct ka diyan sa sinabi mo, idagdag mo pa, na isa sa
    major incorporator/director ng phTram ay si Federico Remo, na nung
    sumali at lumagda siya bilang director ng phTram ay nanunungkulan din
    bilang E.V.P. ng govt, financial bank ang PhilExim. Nang magsimula
    mapansin ang anomalya sa Kontrata sa MRT ay dagliang nag retire
    sa PhilExim nito Mayo 2014, at nakatangap pa ng bonus at pension
    mula sa banko ng gobyerno.
    Ang phTram ay minaniobrang ginawang Global Apt, dahil pumutok na
    nga ang Anomalya at marami ng naguusisa bakit pinayagang pumalit
    kay Tes/Sumitomo gayong kabago bago lang, walang eksperyensa,
    wala ring sapat na kapital, Para maging kapanipaniwala dagliang
    nakipagsanib kunyari sa isa pang kumpaniya at nagpalit anyo,
    pero sa paper si Marlo de la Cruz parin at sila Remo ang mga
    direktor. Kahit na nagka windang windang na ang MRT at patuloy
    na inu-usisa ang nasabing anomalya, walang takot si DOTC
    sec Abaya sa pagpapalabas ng maling inpormasyon para itago
    ang anomalya na pilit ding sumisingaw.
    Gaya sa LTO, na mula nung late 2010 hangga 2014, naniningil sa
    registration ng para sa plaka at sticker ganung wala namang naibibigay
    na plaka at sticker, saan napunta ang mga ibinayad sa LTO. Masyadong
    garapalan ang pagsisindikato sa sangay nayan.

  16. What one can expect if the granting ofnthe MRT3 contract was based on greed of raking the moneynin their own pockets rather that providing safe and efficients service. Jail the culprit; jail PNoy too.

  17. Paying millions out of public monies after mangling and rescinding infratstructure and public service contracts doesn’t concern this incompetent administration as long as their cronies are the beneficiaries. It’s the hallmark of PNoy’s governance. Appointing politicians instead of technocrats, as was done by the Arroyo administration, results to the preservation of party interests, instead of the nation’s. Roxas, Abaya, two powerful LP officials, lord it over on PNoy’s decision-making process thus his decisions are clouded with political color. These cabinet advisers tend to recommend more socially and politically acceptable suggestions to PNoy clearly for public acceptability conscious on their inherent political ambitions come 2016. The Yolanda rehabilitation mess and the 4P’s dole-outs clearly attests to their politicking.

  18. When PH Trans grabbed the maintainance contract from Sumitomo it was Mar Roxas who headed the DOTC. Since MRTC is the operator of Mrt3 is headed by Robert Sobrepena a known GMA ally Mar wanted to marginalized by taking out Sumitomo without thinking the intricacies of the maintainance agreement. The worst part was when an more inexperience Abaya took over. They antagonize Inoken the original makers of the trains. It would now be impossible for APT Global to repair any of the train because they can not buy spare parts from Inoken. It also a surprise that Drillon Senate does not want to blow this issue because they might unearth that a brother in law is involved.

  19. sir correct kau dyan odont know if pinoy knows what happening or maybe nagbibingibingihan lamang imagine billion pesos anyway election is coming remember the $30M na nabulgar kawawa talaga ang pilipinas sana magising ang ilang mga may matinong pagiisip sa AFP para tapusin na kababuyang ginawa nila sa ating mahal na PH

  20. victor m. hernandez on

    MRT is rotten due to bad management. The government is inutile in bringing bad managers and malicious contractors to court or take them out of service, at least. This government is inutile. And the corrupt are laughing their way to the bank.

  21. We have seen how the heavy hand of government has almost destroyed MRT3. This government does almost nothing for the people. It just conspires to get the people’s money out of government and into friendly hands. We need an honest government that will put the welfare and good being of the public as the goal. Government should not be running or directing any company operations. This must be removed from government. Government should be focused on running government. Sectors such as transportation should not have a company run government or influenced by government. Government has a duty to regulate safety issues only. We have a long way to go before the government is removed from all directorship, ownership and management positions of what should be private companies.

  22. Dick S. O'Rosary on

    Everyone is so concerned with bashing the vice president that this isnt getting any airtime at all. This is a shame

    • nod if you agree on

      I agree. And to think thousands of commuters use the “TRAGEDY WAITING TO HAPPEN” MRT daily.

  23. hindi nakalusot si abaya sa mga pambobola nya. buking ang mga palusot nya. pero ang tanong, may mangyayari bang pag ‘censure’ at pag rekomenda na kasuhan ng graft and corruption kay abaya at dotc officers ng senado katulad ng ginawa ng yellow ribbon committee sa 3 senador???? siguro pag puti ng uwak at pag itim ng tagak or as in never in this aquino’s term.
    ang end result nito ay bahala na si batman sa mga riders. magdasal sila habang lulan ng mrt.

  24. Its good that you point all this out to everyone but to most flips they wont give a monkeys. & because of that nothing will change. This government & all other governments before it were all the same. They know the masses wont take any notice & so they know they can get away with anything. You all need to know & i say this quite often, flips go into politics to get rich not to do good for the country. They will help their family’s as they know it will help them, to them cronyisum is a good thing. I think they should all be held accountable & a spell in jail & i mean in a normal jail cell would wake them up. Take the 3 senators in detention, put them in normal jails suffering every single day like every other prisoner & things will slowly start to change. The more they see punished this way the more chance of them changing for the better.

  25. If your facts and sources are legitimate and true, these documents can be conveyed to the office of Ombudsman so they will help them sort out the truths about the allegation of graft and corruption charges filed against the top DOTC men.

    • you are assuming that the ombudsman will do her job. that is presuming too much. hindi nga nya inaaksyunan yung mga kasong isinampa laban kay abad regarding dap.