THE LARGEST amphitheater in Asia, with a seating capacity of 35,000, stands virtually unused in the middle of what used to be barren, lahar-filled land inside the Clark Special Economic Zone.

This gargantuan structure, which cost P1.2 billion to build, is called the Freedom Ring and was intended as the centerpiece of the 60-hectare Philippine Centennial Exposition.

How it got built is a story of grand plans gone wrong, made worse by poor government planning, unbridled ambition and the symbiotic relationship between contractors and public officials.

Today, one year after the centennial celebrations, the Freedom Ring is a white elephant whose long-term benefits to the local economy are as hazy as the procedures that were followed to build it.

Envisioned to symbolize “freedom and the Philippine spirit,” it is instead a monument to the power of a president to mobilize massive government resources for a project with little tangible returns.

Our investigation shows that the Freedom Ring was built by systematically shortcutting government procedures and with high officials led by former president Fidel V. Ramos and National Centennial Commission (NCC) chief Salvador Laurel irrationally insisting on the grand project even if it could not be fully funded. Although we did not uncover hard evidence of commissions or bribes being paid to these officials, the project is nonetheless reminiscent of the extravagance of the Marcos era.

That it was considered at all, particularly at a time when the currency crisis was beginning to wreak havoc on Asian economies, shows how much more monitoring and checking there needs to be done on the use of public resources. The Freedom Ring had grown well beyond the initial projected cost of P260 million. From the initial design of two hectares, the project ballooned to nine hectares.

Today the folly of a 35,000-seat amphitheater is evident in the cracks on the floors of the bleacher section as well as dust and cobwebs on the imported blue seats – sure signs that the place has been used only rarely.

Besides small conventions, the amphitheater has so far drawn one international show and a beauty contest that filled only half the performance area. Little wonder: The sellout Michael Jackson concert in Pasay some years ago drew a crowd of only 19,000, says former Bases Conversion Development Authority (BCDA) chairman Victorino Basco.

Other officials interviewed for this report, however, are hopeful the government will recoup its expenses from the conversion of the Expo site into a recreational theme park and the envisioned development of Central Luzon. But this, they conceded, will take some time.

GRAND VISION
Former President Fidel V. Ramos wanted the Expo to be a catalyst for development in Central Luzon, which has borne the brunt of Mt. Pinatubo’s wrath since 1991. The region’s economy has remained almost stagnant and the Expo was expected to spur economic activity by building roads and bridges and attracting tourists and businesses.

P1.9 billion was initially thought sufficient for the project, but documents obtained from the Senate blue ribbon committee and BCDA officials showed that this budget increased to over P3 billion for structures on the Expo site alone, representing about a third of the amount spent for the centennial preparations.

When Ramos created the NCC in October 1993, he had already asked Laurel to be chairman. Laurel said he was chosen because of his “stature” and “sense of history” and that he accepted the post on two conditions: that he not be paid and the project be kept above politics.

Laurel said he contacted Douglas/Gallagher, a Houston and Washington-based development planning firm to do a master plan and feasibility study. The firm presented two options for the Freedom Ring in its Nov. 15, 1995 report: scheme A, costing P1.92 billion, involved a covered space; and scheme B, estimated at P1.53 billion, was for an open space.

The economy was then doing well. Still, the study advised a combination of public, private (through a “strategic partner”), domestic and international resources since the Philippine government could not afford the entire cost of the exposition. Officials did not expect to make money from the Expo since previous expos –save for the one in Taejon in South Korea – were financial failures.

Since a joint venture had better chances of making some profit after the lifetime of the Expo and the private sector could help shoulder the costs, the government looked for a business partner. But little did officials expect that projections would go awry and that relations with the partner would turn sour.

EXTRAORDINARY ARRANGEMENTS
To implement Ramos’s vision, a Philippine Centennial Expo ‘98 Corporation (Expocorp) was created as a government-owned joint venture that would later invite a private sector partner to assume majority ownership of the company.

The feasibility study rationalized this majority ownership as a way of allowing the new corporation to function as a private entity and not make it “responsible for following government contracting procedures. Such procedures would present a difficult burden on the development of the Exposition in the time available,” the study said.

A Memorandum of Understanding was signed by BCDA and NCC on Mar. 18, 1996 –four months after the completion of the master plan – to pave the way for Expocorp. The agreement provided for an extraordinary arrangement when it required a government-controlled board for a private corporation.

Eleven days before the agreement was signed, NCC executive director Luis Morales had already written to Jaime Koa, president of Lilly Hill Corporation, asking him to confirm his interest in Expocorp.

A public relations man who helped in the 1992 Ramos campaign, Morales was appointed by the former president to run the day-to-day operations of the NCC. He spelled out in his letter to Koa the “Terms of Reference” of the negotiations – among them, a critical 55-45 percent ratio in the joint venture.

The private-sector partner was supposed to pour in P550 million in capital, while government was committed to put in its P450-million share for a total of P1 billion. In exchange, the partner would be extended a maximum 75-year lease of the 60-hectare Expo site and be allowed to operate whatever useful structure is left on the site.

The Terms of Reference also indicated a 14-18 month life for the Expo (from December 1997 till June 1999) and set land rentals at a rate of five percent on the gross revenue. It set Nov. 14, 1997 as the completion date for the construction of the Freedom Ring.

Within five days of the Morales letter, Koa confirmed his acceptance and named as his partner, Nora A. Bitong, with whom he was putting up a consortium, Global Clark Assets Corporation (Global). Described as a “shrewd, sometimes abrasive” businesswoman, Bitong, according to several officials involved in the centennial project, saw the opportunity to make money by leasing Expo land.

By June 1996, Expocorp, BCDA, Clark Development Corporation and Global signed an agreement that pegged the total cost of the Expo project at P1.9 billion. The agreement affirmed the constitution of the Expocorp board, granting government nine of the 11 seats. It also required Global to pour in P123 million, with the balance of P427 million funded by way of loans, a departure from the paid up capital that the Terms of Reference had specified.

On July 15, 1996, Douglas/Gallagher submitted its final report which clearly indicated that the centerpiece of the Expo would be temporary and have a covered roof structure that would stretch about 2.7 hectares.

Using adjusted estimates by ICF/Kaiser which it hired to do costings, Douglas/Gallagher gave an estimated design budget of $9.5 million for the Freedom Ring structure and roof packages, roughly equivalent to P248.6 million at the time. While Kaiser estimates placed the total Expo project cost at P3.035 billion, design estimates were pegged at P2.25 billion.

In its final report, however, Douglas/Gallagher said, “While the Kaiser estimates are higher than the P1.9 billion budget adopted, we feel they do not adequately reflect the temporary nature of the celebratory architecture and exposition construction and, therefore, tend to maximize the general construction over the development of show and entertainment.”

Laurel said the final report was disapproved and the original Freedom Ring cost estimate was “grossly inaccurate.” He insisted on a permanent structure that, he stressed, had the approval of Ramos and the Cabinet. This, however, would heap disaster on a grand project already pressed for time.

PERMANENT OR TEMPORARY
Veldon Corporation, tapped by the Bitong group to manage the Expo project, listed two options: a temporary structure for the duration of the Expo and a permanent structure with a design life of over 20 years.

Following the Douglas/Gallagher proposal, Veldon’s design brief gave an “indicative budget” of P260 million maximum for a temporary structure and asked contractors to submit a price estimate for a permanent structure as an alternative offer.

On Nov. 27, 1996, Maj. Gen. Cesar Tapia, then Expocorp vice president for operations, wrote a memorandum addressed to Tony Gulliver, Veldon Corporation vice president for operations, telling him that Laurel wanted a permanent Freedom Ring structure.

“This is the understanding from the very start which I understand the chairman reiterated and stressed during the briefing at Manila Hotel last 21 August 1996. As the chairman said then, ‘this is not negotiable.’ The roof, when viewed from the air, should look like a giant Pampanga lantern,” Tapia wrote.

Apparently wanting to make sure that Laurel’s instructions were clear, Tapia wrote another letter on the same day and said, “The fact that a permanent Freedom Ring structure will cost more is beside the point.”

The day before, Tapia scribbled a note to then Expocorp president Teodoro Peña. Quoting Morales of NCC, Tapia said Laurel wanted the Freedom Ring contract awarded before the end of November and that “Birdair of USA be the supplier/fabricator of the roof cover.”

On the evening of Nov. 28, Gulliver wrote Laurel to point out that covering the amphitheater only instead of the whole Freedom Ring would achieve a “substantial cost reduction in budget” without “any great loss of amenity to the remaining uncovered area which comprises already enclosed pavilions.”

He also estimated that covering the entire Ring, all of nine hectares, would mean an additional P260 million for the roof material, excluding additional expenses for the structure. This meant spending beyond what was budgeted for the project.

But Laurel would not budge. On Nov. 29, 1996, Tapia again wrote Gulliver, telling him that the structure “will be completely roofed.” Laurel’s decision, he stressed, is “final.”

Laurel’s specifications were distributed to four pre-qualified contractors: Asian Construction & Development Corporation (Asiakonstrukt), Kajima Construction, EEI Inc., and H.R. Lopez Construction.

Furthermore, the bid papers specified, “A quotation from Bird Air for the supplier of the roof fabric is to be included in your offer as a minimum requirement.” To avoid a highly questionable closed bid, the brief said that alternate prices may be included “from other suppliers.” Contractors were expected to present their design proposals by Dec. 18, 1996.

In its design proposal, EEI Inc., one of the largest and oldest construction companies in the country, said that after extensive investigation and discussion with fabric contractors, manufacturers and structural engineers, it found the 300-meter roof of about 60,000 to 80,000 square meters of fabric area “impossible for anybody to guarantee to complete” by Nov. 14, 1997 using the preferred fabric cover.

Even assuming that sufficient Teflon material is available, “the cost to cover the whole Freedom Ring is staggering and seems unnecessary,” the EEI proposal pointed out. EEI eventually lost its bid.

WINNING BID
On Dec. 11, 1996, Veldon said the budget needed to be reviewed and made a preliminary estimate of P1 billion. Then, on Dec. 19, 1996, Laurel –vested with authority by the Expocorp Board – declared Asiakonstrukt the winning bidder after presentations were made on the same day.

Asiakonstrukt put in a bid of P1.165 billion for its proposed design and construct package that included Birdair as a manufacturer and supplier. Birdair Inc., a wholly-owned subsidiary of the Japan-based Taiyo Kogyo Corporation, is known as a world-class builder of “tensioned membrane structures.”

Bondad said it was Louis Berger, a service engineering and construction management firm that Asiakonstrukt teamed up with, which dealt directly with Birdair. It was Louis Berger too, he added, that got retired Lt. Gen. Bennett Lewis, an army engineer and former classmate of Ramos at West Point, to become the project director of the Freedom Ring project.

The choice of Asiakonstrukt, however, only exacerbated the already uneasy relationship between Laurel and Veldon Corporation. The brewing tensions came to a head on Christmas eve of 1996 when Gulliver raised concerns about the conduct of the bid and exclusion of Veldon from the assessment of the bid proposals.

“We have also been aware of instances where Expocorp staff have had direct unreported communication with suppliers and contractors involved in the preparation of costed proposals. We find this unusual, disorganized and unnecessary. The instruction to evaluate and negotiate award of a P1.2 billion peso contract in one day we cannot accept as reasonable and can in no way feel confident that our Client is not exposed to contractual chaos in the future,” Gulliver said.

At around this time, Bitong was beginning to worry about the budget. She held on to her money and asked for control of the Expocorp board, while Laurel insisted that Global fully pay P550 million in equity to maintain its 55 percent share in the firm.

During the Dec. 19 Expocorp board meeting, Laurel said that if the 55-45 percent ratio were not maintained, Expocorp as a government-controlled corporation would be “subject to inspection and audit by the Commission on Audit” and be required to follow rules and regulations on government disbursement and purchases. “This would also mean that all officials and employees of the corporation would have to reckon with provisions of existing anti-graft and corrupt practices laws,” the minutes of the meeting said.

Laurel said he eventually terminated the services of Veldon because of “loss of confidence.” He accused Veldon officials of arrogance and of being “anti-Filipino.”

A former BCDA official however said there was talk about commissions given out but that no proof exists. Willy Castor, national president of the National Constructors Association of the Philippines, said it is common practice for contractors to get the commission they pay out to government officials from the advance payment given after the bid has been approved and a notice to proceed is issued.

By Jan. 10, 1997, according to a confidential memorandum prepared by Basco for Ramos, BCDA had put in P200 million of its required P300-million share. The Bitong group by this time had poured in P216 million, putting Expocorp’s capitalization at P416 million. But with barely 10 months to go before the targeted completion date of the Freedom Ring and a P1.2-billion contract to fund, Expocorp resources were clearly insufficient.

Basco warned Ramos that Expocorp will likely “depend on the President’s assistance to raise additional government contribution” to cover the estimated balance not covered by the initial budget. He anticipated funding problems given the emerging differences between Laurel and Bitong. Ramos, the following day, scribbled on the memo, “Let’s stick to original plan. We need BCDA money for other projects.”

But efforts to downsize the project did not work as Asiakonstrukt had already ordered the materials and advanced over P400 million. Laurel, meanwhile, was annoyed that a presidential team tasked to solve the Laurel-Bitong impasse recommended downsizing the project, and offered to resign in May 1997.

“Nakataya na ang mukha ng bayan. I had invited 14 heads of state and government. It would have been a national embarrassment. Kahiyaan na,” Laurel said.

For reasons mysterious even to officials close to Ramos, the former president went along with Laurel’s decision and did not accept his resignation. He instead mustered all the powers of his office to finance the Freedom Ring.