by MALOU C. MANGAHAS

IN INVESTIGATING the alleged collusion and overpricing of World Bank-funded road projects in the Philippines, the international financial institution’s powerful and dreaded anti-corruption unit, the Department of Institutional Integrity (INT), conducted interviews for almost three years in at least three countries. By the time it wound up its work, it had interviewed some 60 people.

The 230-page Part II of the Notice of Sanctions Proceedings is perhaps the first solid and extensive documentation of the myriad, if also conflicting, cases of collusion and corruption in the public works sector, according to industry players themselves.

While many interviewees offered second- or third-hand stories, many others also offered first-hand revelations that altogether paint a big, nasty picture of widespread corruption in the Philippines.

	EXCLUSIVE VIEW list of persons interviewed by the World Bank’s Department of Institutional Integrity.

Local investigators should now access the documents to sift through the layers of rumors, innuendos, and facts — and distill the good from the bad raw information. The storyline repeats in most of the accounts: contractors, bureaucrats and politicians conspire to rig bids to draw fat commissions from contracts.

Yet by all indications, the Bank’s massive, expensive, and multi-country effort to investigate corruption in Philippine road projects may stand a lot of improvement. In fact, the way the INT conducted its investigation does not seem to measure up to the image it commands within the international political circle.

For one, most of the interviewees were contractors with rival vested interests. For another, the interviewees also offered a wild mix of information they claimed to know directly, a lot of impressions and opinions they hold, and mere rumors they said they heard regarding how public works contracts in the Philippines are supposedly riddled with corruption.

And yet the INT personnel and consultants apparently accepted all these accounts uncritically, and exerted minimal effort to corroborate the stories told by the interviewees. In part, that may be explained by the very nature of INT investigations that are mere “administrative” and not criminal nor judicial proceedings.

The “record of interviews” conducted by the INT takes up 231 pages in the World Bank’s voluminous report on the NRIMP-1 investigation.

Curiously, the “record of interview” memoranda carried a standard caveat: “this memorandum is not intended to be a verbatim transcript of the interview…rather, the interview is related in sum and substance only.”

A fortnight ago, the World Bank’s sanctions board barred four Chinese firms and three Filipino companies from participating in any Bank-funded project for at least four years for their alleged role in the collusive scheme to artificially inflate bid prices.

One Philippine company and its owner were de-listed permanently, and two other local firms, suspended for four years. A Korean firm, which did not contest the allegations, was debarred for four years in August last year.

In stark contrast, at least two investigations conducted by the Department of Public Works and Highways (DPWH) found no evidence of collusion and overpricing, respectively, in the 2002 and 2004 rounds of civil works tenders for two road projects being funded by a $150-million loan from the World Bank.

Under ordinary circumstances, that would just be taken as a difference of opinions between two groups of experts. But in the Philippines, where public distrust of the DPWH is very high, the sharply opposing conclusions are fueling public perception that department officials are in league with road-building contractors.

Already, a senator is making the allegation that one of the debarred contractors is a close friend of Jose Miguel Arroyo, the president’s husband.

To be sure, the difference in conclusions could be partly because some of the evidence, particularly testimonies of people who told the World Bank investigators about the collusive scheme, were not made available to the DPWH.

But the Bank investigators also relied on other data available as well to DPWH officials.

EMAIL TRIGGER
The investigation into the Philippine road contracts funded by the World Bank also had an unusual trigger — a series of email from a source/s known only by a series of pseudonyms — “Kim Lhi Ko,” “jimmy,” and “jerrypanch.”

The first email from “Kim Lhi Ko” (kimlikho@yahoo.com) was received on May 5, 2004, addressed to William D.O. Paterson, lead highway engineer of the East Asia Pacific Regional Office of the World Bank.

This set off an email chain between the anonymous email senders, and Paterson and Terry Matthews of the World Bank INT.

To be sure, the anonymous email were a critical and useful twist in the INT’s investigation. In one email, the sender actually predicted the outcome of the bidding, a solid proof of actual collusion.

29 SESSIONS, 43 MONTHS
Apart from the email exchanges, the INT conducted 29 scheduled interview sessions, starting with Paterson and EAP Regional Procurement Advisor Denis Robitaille on April 28, 2003.

The interviews brought the INT team to Manila, Japan, and South Korea, and ran through a 43-month period ending on Nov. 28, 2006.

By May 2008, the World Bank’s Evaluation and Suspension Officer, who evaluates the evidence gathered by the INT, issued the notice of sanctions to bidders suspected of collusion. That led to a process for the bidders to refute the allegations within 90 days, but not to confront the INT’s anonymous and named witnesses.

(Only 54 out of the 60 the INT said it interviewed are named in the report. According to the INT, the others had reportedly requested anonymity.)

Initially, the INT recommended sanctions against 17 companies. The evaluation and suspension officer recommended sanctions only against seven companies, four of them Chinese and the rest Filipino. These seven were barred from participating in any World Bank-funded project for at least four years for their alleged role in the collusive scheme to artificially inflate bid prices.

The Bank’s sanctions board also upheld the INT’s findings of collusion, but it also concluded that the evidence “did not establish that it was more likely than not that the Respondents had engaged in fraudulent practices separate from the collusion.”

The sanctions board concluded as well that the INT “had not presented evidence sufficient to establish that it was more likely than not that these Respondents had engaged in corrupt practices.”