(Fourth of a series)
ONE of the clearest indications that the P38-billion scheme for the production of the new machine-readable passports that former President Aquino 3rd and his officials engineered was rotten is the following.
They strenuously concealed that it was a private firm United Graphic Expressions Corp. (UGEC), and not the government corporation APO Production Unit (APU), that would print the 45 million passports at a cost of P38 billion from mid-2016 to 2026. Such monopoly operations would generate for UGEC a staggering P11 billion in profits.
The scheme represents one of the biggest deceptions ever to conceal corruption of the highest order. Aquino and his officials — mainly Presidential Communications Operations Office head Herminio Coloma Jr. and APU Chairman Milagros Alora — set up in November 2014 a dubious “joint venture,” without any bidding, with the formerly Malabon-based printing outfit UGEC.
Billionaire Iñigo Zobel, the country’s 11th richest man, according to Forbes magazine, has been reported to have become only in 2014 its biggest stockholder through his family’s E. Zobel Inc. Zobel has not responded to these reports.
APU is one of only three state entities — the other two being the National Printing Office and the Bangko Sentral ng Pilipinas — that the government has authorized to print “high-security” materials, such as excise-tax stamps and passports. APU, however, turned over its printing contracts, first, with the Bureau of Internal Revenue and trade and industry department, and later the gargantuan 10-year P38 billion job for the printing of the e-passports to the JV.
The JV is a farce. APU is a token partner with just 10 percent of its ownership, with 90 percent held by UGEC. Ninety percent and then 70 percent of its profits, under the terms of its agreement with APU, would go to UGEC. Even as UGEC charges the JV for the use of its machines, for P700 million annually.
As a result, this shadowy private firm generated P3 billion in income from 2015 to 2106, and if it continues this scheme, will get another P8 billion.
In effect, Aquino and his officials — mainly Coloma and Alora, both high officials in Cory Aquino’s government — had transformed a government firm into a façade of a private firm that has and will generate billions of pesos on the back of profit margins on the printing of 45 million Philippine passports.
This colossal case of corruption has been successfully concealed, with mainstream media apparently looking the other way when these were first exposed in a congressional hearing in 2018. It is so strange — or maybe not — that party-list representatives, Akbayan’s Ibarra Gutierrez in 2016 and Bayan Muna’s Carlos Zarate in 2017 had vociferously condemned early last year the passport scam, the latter even filing a resolution asking Congress to investigate. Quite suddenly though, the two became totally silent on the controversy.
A prime example of how Aquino went to great lengths to conceal the scheme was when he inaugurated on June 20, 2015 what he and his officials called the “APU High Security Printing Plant” at the Lima Technology Park in Batangas, which started producing en masse the e-passports in July 2016. Aquino was issued the first such e-passport on the day of his visit to the plant.
In his speech, Aquino boasted that under his watch the APU had been turned around to generate income and that it had set up a high-security printing plant that could print the DFA’s new e-passports.
Aquino didn’t mention at all though that the plant was almost entirely owned through the JV by UGEC and would get 70 percent of its net income for 10 years. APU’s equity in the JV was in the form of the one-tenth of the valuation of the land it had leased from the export-processing zone. Ninety percent of the JV’s managers and workers were employees of UGEC, with the APUs employees being there merely as fixtures to portray it as a joint venture.
He could have boasted that the plant was a good example of a partnership between a government agency and an efficient hi-tech private firm. That he didn’t can only be explained by the fact that he deliberately wanted to keep from the public the fact that a crony firm really owned the plant and would get the P38-billion printing contract from the DFA.
PCOO’s head Coloma — under whose supervision and authority APU was — in several media interviews claimed the “APU’s High Security Printing Plant” as a stellar achievement, but never disclosed that it was run and was 90 percent owned by a private firm.
In the APU’s 2015 annual report — the last under the Yellow regime and by its chairman Alora — no report at all was made of that P38-billion e-passport contract from the DFA, its biggest print job ever, and its de facto sub-contracting to UGEC. Its only mention of the firm was that APU “received an unsolicited proposal from UGEC for a joint venture for the purpose of upgrading APO Lima’s plant into a high-security printing facility.”
I asked Coloma, just before and after I wrote these articles on this fraudulent case, to give his side, with my messages relayed to his colleague at the Manila Bulletin where he is executive vice president. There has been no reply.
I also asked Alora, an old acquaintance of mine as she has been a PR practitioner since the 1980s, to similarly respond through Facebook’s Messenger platform.
Alora answered four questions, the most important of which was on her justification for the subcontracting of the passport-printing to UGEC: “What APU and UGEC have is a joint venture and not subcontracting and approved by NEDA, Govt procurement board, DBM and DOST and other pertinent agencies.”
The Commission on Audit though claimed that one of the major “misrepresentations” — that is, lies — that APU told government regulators was even contained in its JV agreement, that the UGEC offer for a JV was “superior and more advantageous to APU“ than other offers.
The CoA said that there was no other offer made to APU. It was in fact secretly negotiated, agreed to, and implemented.
After those four questions, Alora blocked me from sending her messages in Messenger.
I have investigated and written columns on several other scams and instances of corruption during the Aquino government, among them the grant of a P5-billion MRT-3 maintenance contract shepherded by a Liberal Party finance officer, the P4-billion purchase of the defective Dengvaxia vaccine, and the Disbursement Acceleration Progra that was really the hijacking of government funds to projects that Aquino chose at his whim.
This e-passport printing case is the most abominable. This is not only because of the magnitude of profits — P11 billion — it would generate to enrich the already rich, at the expense of 45 million Filipinos needing that main document signifying one’s membership in the Republic.
It is most damnable in that the scheme was designed to be implemented whether or not the Yellow candidate won in the 2016 elections, since it practically hostages the government.
In fact, former Foreign Affairs secretary Alan Cayetano declined to end the corrupt scheme even after he knew about it. He feared the fate of his predecessor Pefecto Yasay Jr. whom the Yellows successfully took out of his post because he wanted it ended. The ambitious Cayetano also didn’t want to risk his career being damaged if there was a disruption in the passport issuances.
Will the present foreign secretary who has built an image that he’s got huge balls end this colossal case of corruption?
The Duterte presidency would be blamed if it doesn’t stop the scam. The Yellow forces would even throw Coloma and Alora under the bus, and spread the lie that it was under Duterte’s watch that the scheme was implemented, and he and other officials profited from it.
Facebook: Rigoberto Tiglao
(The original column was printed with The Manila Times)