Home News Top Stories Probe of ‘collusion’ between big steel firms, DTI-BoC sought

Probe of ‘collusion’ between big steel firms, DTI-BoC sought

A bill was filed on Thursday directing the House Committee on Trade and Industry to investigate the alleged smuggling and proliferation of substandard steel products in the Philippines resulting from a “collusion between large steelmakers and officials of the Department of Trade and Industry (DTI) and the Bureau of Customs (BoC).”

House Bill (HB) 379, filed by Agusan del Norte First District Rep. Lemuel Fortun, urged the committee to look into the alleged connivance between the government and the biggest big steel manufacturer in the country, which is headed by a former undersecretary of the DTI.

Fortun’s bill is anchored on fears expressed over the past two years by consumer groups, specifically buyers of high-rise condominiums all over the country, over reports of continued selling of sub-standard steel rebars by the big steel firms that may ren der thousands of high-rise structures unsafe during a high-intensity earthquakes.

Chuzon tragedy

In drafting the bill, Fortun expressed suspicion that the collapse of the four-story supermarket in Porac, Pampanga during the 6.1 magnitude earthquake last April that killed five people and injured nine, “was due to the use of
Quenched Steel (QT) bars used in constructing the building.”

Investigators who combed the Chuzon wreckage immediately after the quake found twisted remnants of QT rebars at the site with telltale markings of Steel Asia, reportedly the biggest steel maker in the country.

Noting that the bill seeks to “protect consumers from trade malpractices and from substandard or hazardous products,” Fortun said the committee needs “to determine the veracity of various reports to protect the welfare of the Filipino consumers, plug holes in the government revenue streams, clamp down on corruption and, if warranted, exact accountability on public officials involved in the aforesaid unscrupulous acts.”

He particularly singled out the collusion of local steel manufacturers with “avaricious and unconscientious officials of the DTI and the BoC to cover up the rampant deceitful replacement of Micro Alloy (MA) steel bars with QT steel bars, and the large-scale smuggling of steel bars.”

Technical smuggling

Last week, the Customs bureau announced that it was cracking down on undervalued steel importations — amid reports that sub-standard steel products that put at risk the structural soundness of infrastructure amid an ongoing construction boom in the country — continue to flood the local market.

Assistant Customs Commissioner Philip Vincent Maronilla disclosed that four to five big steel companies were being audited by the bureau.

The BoC’s investigation followed an announcement by the Presidential Anti-Corruption Commission (PACC) of its parallel probe of alleged corruption between several big steel manufacturers and officials of the BoC, who may have deprived the government of billions of pesos in tax revenues, including penalties for improper import declarations.

PACC Chairman Dante Jimenez revealed that documents obtained by the PACC show that the total steel imports by the industry reached 9.1 million tons last year, with over P2.3 trillion imports brought into the country over the last decade

Jimenez said his office suspects large scale “technical smuggling” happening over the past ten years because of alleged collusion between Customs officials and large steelmakers, who have the products of the latter ‘cleared’ at the BoC point of entry, even though there were discrepancies in documents submitted for these items.

The PACC said Steel Asia alone imported two million tons of steel billets last year, and may be responsible for over half a trillion pesos worth of lost revenues for the government because of systematic misdeclaration of its importation figures.

DTI looking the other way

The PACC suspects the big steel importers, in collusion with BoC officials, had been manipulating the HS codes (the universal code for export and import goods).

Specifically, the steelmakers have been describing the imports of cast and prime steel billets used for steel manufacturing as Grade 60 when in fact, the orders under the same code are a mix of Grade 40 (5sp) and Grade 33 (3sp).

They are then allegedly able to misdeclare the imported billets at a lower value.

The PACC is also looking into allegations that the DTI has been looking the other way when these big steelmakers misdeclare the true grades, sizes, lengths, weights and pieces of steel billets, and have been pronouncing the steel rebars made from these billets as Grade 60 (standard steel grade used for high rise constructions and major infrastructure).

‘Steel that kills’

Fortun based HB 379 on findings presented in a study, “A Clear and Present Danger,” authored by Emilio Morales, former chairman of Association of Structural Engineers of the Philippines, which questioned the structural stability of locally made QT steel bars for high-rise buildings

Morales said substandard construction materials, particularly reinforced QT steel bars or “rebars,” are still being used in high-rise commercial buildings and residential condominiums in key business districts.

“Being near the Pacific Ring is the main reason why certain types of steel materials are not recommended for use in high-rise buildings in the country,” he noted.

“Substandard construction materials, particularly QT rebars, would not withstand a magnitude 7.2 earthquake,” Morales said.

QT steel is made by spraying cold water on a red-hot steel bar.

Morales said this process alters the steel’s metallurgy: the outer core becomes very strong and brittle, but it is relatively very thin — about 1 or 2 millimeters in thickness.

“This kind of multilayered steel can kill, as the thin outer layer, which is brittle, can be easily damaged during an earthquake,” he pointed out.

In HB 379, Fortun claimed that QT rebars can still be found in construction sites nationwide because of the inaccuracy in testing steel products in the country.

The bill mentioned that China and Taiwan, both countries also within the Pacific Ring, have already banned the use of QT bars in constructing high rises.

“We are alarmed by Engineer Morales’s study, and its findings. We should protect lives and property at all costs since the Philippines is a seismic belt country. Lives are more important than profit by big businesses. If there is corruption in the dealings between business and government, the committee will investigate this,” Fortun said.

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