IT took for me time to understand the media reports that the World Bank barred seven construction firms (three of them Filipino) and one individual (also a Filipino) “from bidding on future World Bank-financed contracts,” due to “collusion.” I had to pore over several articles, watch live TV coverage of congressional inquiries and talk with several WB officials to make sense of what was going on.
Four different reports. Actually, three different WB reports have surfaced: “Referral Report,” “Notice of Sanctions Proceedings,” and “Decision of the Sanctions Board.” The first two were prepared by the WB Department of Institutional Integrity (INT) and sent directly and only (not via the local WB office) to the parties concerned. The WB indicated that a fourth document titled “Redacted Report” would be issued later via its website.
The Referral Report contained a summary showing the evidence of collusion and the reasons why WB rules were violated in the bidding of WB-funded roads. On Nov. 16, 2007, the WB head office in Washington, D.C. forwarded the 9-page Referral Report to Finance Secretary Margarito Teves and, on Nov. 19, to Ombudsman Merceditas Gutierrez. While it detailed sensitive information that formed its basis in banning the contractors, the WB “made no judgment as to whether the laws of the Philippines had been violated.”
On the other hand, the voluminous Notice of Sanctions Proceedings was issued on May 8, 2008 by the suspension officer in the WB head office directly and only to the contractors concerned. The notice informed them of the evidence gathered by the INT as well as the recommended sanctions, and advised them to answer—if they so want—the evidence. It is the equivalent of a “show cause” order.
Since the Filipino respondents contested the allegations, the case went to the WB Sanctions Board. After the proceedings were terminated and due process observed, the Decision of the Sanctions Board was issued on Jan. 12, 2009 directly and only to the respondents.
Composed of “senior Bank officials and external legal experts,” the Sanctions Board “decided that the entities had participated in a collusive scheme designed to establish bid prices at artificial, non-competitive levels and to deprive the (Philippines) of the benefits of free and open competition.”
According to a press release (dated Jan. 14, 2009) of the World Bank head office, “E.C. de Luna Construction Corp. and Eduardo C. de Luna, owner and sole proprietor of the firm, were both debarred indefinitely—the first permanent debarments since 2004.” On the other hand, “Cavite Ideal International Construction and Development Corp. and CM Pancho Construction, Inc. were each debarred for four years.” This could be reduced to two years if either firm “puts in place a compliance program satisfactory to the World Bank.”
Immunity from testifying. Apparently, the media as well as many senators and congressmen got only parts and pieces of the first three documents resulting in confusion and frayed nerves during the nationally televised hearings.
The refusal of the WB to attend the Senate investigation irked the senators who threatened to issue a subpoena to force WB Country Director Bert Hofman to testify during the hearings on pain of possible contempt. However, Commonwealth Act 699 granted “full force and effect” in the Philippines to the “Articles of Agreement of the Bank” including those giving immunity to WB “governors, executive directors, alternates, officers and employees — from legal process with respect to acts performed by them in their official capacity”
The above-quoted legality simply means that Hofman could not be compelled to appear or to testify during congressional hearings. Fortunately, before the Senate could issue its subpoena, the Dutch-born WB country director wrote the Senate offering to conduct an “informal technical briefing,” which was actually held last Tuesday, thereby avoiding a possible nasty showdown.
Action by Philippine authorities. From the foregoing, it is clear that taken together, the WB documents merely narrated the process and the sanctions imposed on the contractors. Since 1999, the WB has debarred about 350 firms from more than 24 countries, including the United States, Sweden, the Netherlands and United Kingdom. To preserve the integrity of their work, the INT acts as an autonomous ombudsman and the Sanctions Board, as an independent judge, in the internal operations of the WB.
The “strictly confidential” label on the WB documents means that they can be used only for the purposes intended by the WB, not for any other purpose however noble. It is up to the relevant Philippine agencies, like the Office of the Ombudsman, to conduct their own investigations, gather their own evidence and reach their own conclusions as to whether Philippine laws had been violated and whether the proper charges should be filed.
In a press release dated Feb. 12, 2009, the WB Philippine Office said that “both the Referral Report and the documentary evidence are now in the hands of the Office of the Ombudsman.” This should prod that office to perform its constitutional duty to ferret out corruption. After all, unlike the WB, the ombudsman has coercive powers of summons and subpoena to compel the attendance and testimony of witnesses.
Likewise, Congress may approve remedial legislation, at its sole discretion, to prevent collusion in the bidding of public works contracts and to take other actions to protect the people’s paramount interests.
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The Personal Website of Retired Chief Justice Panganiban 