by MALOU C. MANGAHAS

JUST A month ago, when he was only days into his new post as chief of the Commission on Elections, Benjamin Abalos said he would inhibit himself from deciding on a controversial project in which the winning company was owned by some close friends.

But Abalos seems to have since changed his mind. In a recent interview with the PCIJ, he said that the Comelec is now inclined to implement a modified Voter Registration and Identification System (VRIS), and that “if the solution we’re offering fits the scheme of Photokina, then probably we could renegotiate.”

The VRIS project, which is supposed to be part of the efforts to modernize the country’s elections, had been awarded to the Photokina Marketing Corporation (PMC) during the Estrada administration.

Although the Comelec’s budget for the project had been only about P1.2 billion, Photokina’s bid of P6.58 billion was declared winner because it was the lowest among the bidders and had also gained the highest technical weighted points over those submitted by Ultimate and Strategic Alliance Development Corporation (Stradec). Both Ultimate and Stradec had submitted bids of more than P7 billion each.

But because of opposition from within the Comelec itself, all that Photokina had obtained in October 2000 had been a notice of award, and not a perfected contract with a specific budget and timetable. Former Sandiganbayan justice Harriet Demetriou, who was appointed Comelec chair after the bidding was already over, also later decided to nullify that notice of award. She reasoned that the law states that an appropriation measure must first be obtained before a government agency may enter into a contract with any party. In this case, the P1.2-billion fund allotted for the project is a mere fraction of the Photokina deal.

Now, though, it looks like Photokina may yet get that contract, although the one offering a “solution” may be caught in a situation involving a conflict of interest.

Abalos, after all, admits to being friends with the Chua family, who owns Photokina. This was precisely why he had initially said that, “for delicadeza,” he would inhibit himself if “that issue” were to be brought to his attention.

A few weeks after saying this, Abalos confirmed to the PCIJ that he was the godfather of two of the Chua children and had even acted as lawyer of the family in the early 1980s. Yet he also said that despite a pending case filed by his immediate predecessor in the Supreme Court seeking to block Photokina’s efforts to get the contract, he was now willing to consider a solution that would involve his friends’ company.

Abalos argued, “We do not want to be held hostage by a court case. What if they win in the Supreme Court? If this will be resolved in the earliest possible time, the sooner we can have acceptable, credible elections.”

As late as July 18, however, Assistant Solicitor General Magdangal de Leon, who has been assigned to the Comelec case against Photokina, had yet to receive any advisory from Abalos on what to do next. But he was not discounting a compromise because, de Leon said, “Abalos seems more flexible. If they agree on something, if they ask us as counsel, we’ll see if it’s legally possible.”

But De Leon was apparently unaware that Abalos could have a conflict of interest regarding the project because of his ties with Photokina’s proprietors. “We didn’t know that,” he said. “The OSG (Office of the Solicitor General) can of course always oppose any compromise.”

He also noted, “There is no contract in the first place, and the notice of award is void because the approved budget for the project was only P1.2 billion.” He added that modifications in the VRIS project may prompt a new bidding.

The PCIJ sought but was denied an interview with Photokina senior vice president Renato Chua. But in an interview for a 12-page cover story published in Graphic Magazine last May, Chua said, “the disagreement among the commissioners is really the big problem.”

“We complied with the bidding,” he said. “We gave them a good solution at a good price, and we won the award. We just can’t understand why we, who have done no wrong, are the ones being penalized by this.”

A faction among the commissioners, headed by Luzviminda Tancangco, had pushed hard for giving the contract to Photokina, which actually represented a consortium that includes the U.S. firms Unisys, Digimarc ID Systems (formerly Polaroid ID Systems), IBM, and James Martin + Co. Philippines, and the French company Sagem. Tancangco was then chair of the election modernization committee at the time of the bidding.

But then Demetriou opposed the deal, as did her successor, Alfredo Benipayo. In fact, the VRIS/Photokina project had been one of the major sources of friction between Benipayo and the Estrada appointees, including Tancangco, in the body.

When Benipayo was unceremoniously replaced by Abalos last month, after having been bypassed for the nth time by the Commission on Appointments, the VRIS/Photokina issue was still unresolved.

Yet by then, Photokina had already gained some crucial ground. On February 7, acting on a motion for mandamus filed by Photokina, Quezon City Judge Luisa Quijano Padilla compelled the Comelec to negotiate a contract with the firm. In an eight-page resolution, Padilla directed Comelec officials to “immediately resume negotiations to formalize execution of the contract” with the Photokina group.

Padilla had earlier decided to deny Photokina’s petition for a writ of mandatory injunction against the Comelec. But then the judge reversed herself in her February ruling. She junked the Comelec’s motion to dismiss the case, saying, “a thorough review of the facts and the laws applicable in this issue clearly indicated the matter deserved a second look.”

The Comelec under Benipayo, represented by the OSG, appealed Padilla’s ruling before the Supreme Court. Interestingly enough, within just a few days, the Tancangco group filed a manifestation with the high court stating that they were not opposing what Photokina wanted.

By many accounts, the company owned by the Chua family does not lack for friends in high places. By all indications, the Chuas, who also own the company that makes the “Red Bull” energy drink, the Red Bull Basketball team, and a string of French cuisine restaurants, wield considerable clout.

Indeed, no less than the U.S. embassy had sent Benipayo a letter, urging action on the Photokina deal, which has supposedly cost one U.S. partner of Photokina, Digimarc ID systems, to incur expenses worth $700,000. The owner of a big national daily, which has obtained some equipment from Photokina, has also sent President Gloria Macapagal Arroyo a letter urging approval of the Photokina contract.

To top it all, a number of President Arroyo’s senior political allies in Congress and local government, and now, Abalos himself, are at the very least friends of the Chuas.

Some Comelec insiders say that speculations were also rife that Photokina had nosed its way into the VRIS project through the help of one of then President Joseph Estrada’s mistresses, Guia Gomez, who was also alleged to be among its silent financiers. But Renato Chua denied this in his interview with the Graphic. The magazine stated, “Photokina insists Ms. Gomez is a client, but not its financial backer.”

The 28-year-old imaging company that ranks among the country’s top 1,000 corporations, is the exclusive distributor of Agfa and Minolta cameras and Maxell batteries. The firm, which now counts six affiliated companies in food and drinks, technical imaging services, insurance and IT systems, told Graphic magazine that its annual sales were hitting P700 million.

A check by the PCIJ with the Securities and Exchange Commission, however, showed that this claim is a bit of a stretch. In its latest financial statement, Photokina Marketing Corp. declared net sales of P646.8 million in 1999, and a lower P629.6 million in 2000. But minus cost of goods sold/cost of sales of over P460 million for both years, and administrative, general and other expenses, Photokina declared pithy net income levels.

For 1999, the company said it realized only P6.1 million in net income before tax, and for 2000, a much-reduced P1.5 million.

Although it belongs to the charmed circle of the Philippines’ largest companies, Photokina paid income tax of only P2.02 million in 1999, and an even lower P463,000 in 2000.

Despite the decline in the company’s fortunes, the year 2000 saw Photokina’s paid-up capital of only P128 million grow to P200 million, with a fresh infusion of money from Evangeline G. Chua, possibly also a relative of the original incorporators Jaime, George, Haydee and Rosita, all surnamed Chua. The year 2000 was also when the Comelec gave Photokina its notice of award of the VRIS project.

In the meantime, a draft proposal obtained by the PCIJ shows that for fiscal year 2003, the Comelec wants to secure P6.2 billion in new appropriation for the modernization of the elections. This amount includes provisions of P3.8 billion for VRIS, P2 billion for the automated election system/ACCORS, P200 million for “basic infrastructure equipment and renovation,” and P100 million each for “organizational change and management” and for “advocacy and research.”

In all, the proposal seeks to increase the Comelec’s total budget three-fold — or from P2.87 billion in 2002 to P10.3 billion in 2003, on account largely of the still legally challenged VRIS project.

Budget Secretary Emilia Boncodin, however, told the PCIJ that as of July 17, the Comelec had yet to submit its budget proposal. The Constitution requires the president to submit a General Appropriations Act proposal, within 30 days from the opening of Congress’ regular session. “We cannot allow one agency to delay the budget,” said Boncodin, adding that they may be forced to send the GAA, without the Comelec’s new proposal, to the president, for submission to Congress. Without this, the 2003 GAA proprosal would allot only P500 million for the modernization program, the annual increment due the Comelec for the modernization law.

If the poll body fails to submit its new proposal on time, Boncodin said, the “Comelec would need a supplemental budget.” And as the law requires, a supplemental budget must also include specific proposals on revenue sources to be tapped, something that the deficit-saddled administration might find hard to identify.

The Congress last enacted a supplemental budget in 1991 during an emergency situation. It set aside P10 billion for the Mount Pinatubo Rehabilitation Commission. Back then, the Treasury certified to the existence of the funds.

If the Comelec fails to secure approval for its budget proposal, or even Congressional support for a supplemental budget, modernized elections might face further delays. Under the modernization laws (Republic Act 8189 on Continuing Registration, Clean, Computerized Voters’ List and RA 8436 on Automated Vote Counting), modernized elections should have been conducted as far back as 2001.

In Abalos’s estimate, the next 18 months prior to the start of the 2004 election period may still be adequate time. That means, he said, that by September, the poll body would have finished all studies on the modified VRIS and automated count, decide in the last quarter of the year whether or not to conduct bidding, and “by January next year, we could start everything.”

But when it comes to Photokina, Abalos’s best option may be to ignore it, because the law practically puts him in a “damned if you, damned if you don’t” position.

Under the Abalos Comelec, the rule that only the chair can call en banc meetings has been restored. If Abalos calls one to deliberate on the Photokina case, he may yet cross over forbidden territory in anti-graft laws for “directly or indirectly having financial or pecuniary interest on any business, contract or transaction in connection with which he intervenes or takes part in his official capacity, or in which he is prohibited by the Constitution or by any law from having any interest.”

Yet Abalos may not be off the hook even if he chooses not to participate in any decision on Photokina. Again, anti-graft laws state that among what may be considered “corrupt practices of public officials” is “directly or indirectly becoming interested, for personal gain, or having a material interest in any transaction or act requiring the approval of a board, panel or group which he is a member, and which exercises discretion in such approval even if he votes against the same or does not participate in the action of the board, committee, panel or group.”