ON January 31, 2011, I asked in this column if then-Department of Transportation and Communications (DOTC) Secretary Jose “Ping” de Jesus was blindsided on the P4-billion “Sumitomo-Thales” deal for the setting up of the much anticipated Communications, Navigation and Surveillance/Air Traffic Management Systems Development (CNS/ATM) project. The question was asked after I wrote an earlier article entitled “Thales vs Thales in P4-billion deal?” pointing out that the lead project proponent, the Japanese sogo-shosha Sumitomo Corp., was insisting that its preferred contractor for the questionable transaction, Australian- registered Thales Corp., was different from its mother company, France’s Thales Corp., which was blacklisted for having abandoned earlier a P1-billion project for maritime navigation and safety. Thus the title “Thales vs Thales in P4- billion deal?”

Was it possible, I said, that a paragon of excellence and virtue like Ping was misled on this and in a number of other equally problematic deals reportedly given the “go ahead” by the DOTC over the past six months? I noted then that Ping must really have been blindsided on this project which Senate President Pro-Tempore Jinggoy Estrada said may well turn out to be President Aquino’s “NBN/ZTE” albatross in terms of the expected total cost (P12 billion and counting) and the highly irregular manner by which it was evaluated and awarded. I pointed out that the seemingly undue haste in the award of two contracts worth P4.9 billion under this project (P900 million for consultancy services and P4 billion (phase-one construction works) despite serious objections raised by the Commission on Audit (COA), senior DOTC officials and concerned Caap personnel was already questionable by itself.

I am told Secretary Ping had the project investigated and was about to come out with his report when he resigned. I have not heard from the DOTC again but I am now informed that the agency proceeded with the project despite the adverse findings and continuing objections of the COA and concerned Caap personnel. If that is so, and I have no reason to believe otherwise as I have been given copies of project papers indicating so, then Secretary Mar Roxas and his crew have a lot of explaining to do. Like Secretary Ping, a learned and honest man like Secretary Roxas cannot simply ignore the earlier findings unless he has himself been blindsided by his aides.

Thales vs Thales

We noted then that otherwise responsible the DOTC and Malacañang officials tried to explain away the COA findings raising questions of “overdesign and overpricing” over the project with non-sequitors. They even tried to paper over the participation of Thales SA as the technology partner despite its dismal record in the Philippines and elsewhere. When I pointed that Thales, then known as Thompson CSF, abandoned a P1-billion Coast Guard/DOTC project in 2000, Secretaries de Jesus and Lacierda insisted that the project was going to be implemented by a joint venture of Sumitomo Corp. and Thales (Australia), not Thales SA (France).

So, I referred them to a letter dated August 25, 2010, by a Mr. Mitsuyoshi Oshima, authorized representative of the joint venture, to then-DOTC Undersecretary Aristotle Batuhan who chaired the Bids and Awards Committee, that Thales (Australia) “...is an indirect subsidiary of...Thales SA as its shares...are not held directly by Thales SA....”

Here’s how Oshima explained the Thales (Australia) ownership structure: “Thales Australia Ltd. is ADI Group Pty. Ltd. [an Australian company], which is, in turn, owned by ADI Group Holdings Pty. Ltd. [another Australian company]. The shares in ADI Group Holdings Pty. Ltd. are owned by the Australian holding company, Thales Australia Holdings Pty. Ltd. All shares in Thales Australia Holdings Pty. Ltd. are owned by Thales International SA (France) which is a direct subsidiary of Thales SA [France].” That was straight from the horse’s mouth. I advised that an indirect subsidiary like Thales (Australia) just means that while registered in that country and run mostly by Australians the company ultimately answers to Thales SA (France). No more, no less. It is owned and controlled by the same company that had earlier abandoned a P1-billion project in the Philippines and we are giving them a P12-billion project again? Whew!

Roxas’s questions in 2006

So, if Thales (then Thompson CSF) abandoned its P1-billion Global Marine Distress Safety System (GMDSS) contract with the DOTC in 2000 and was subsequently barred from participating in any project in the country since, why should it be awarded this much bigger one now? Why should we do that? No less than then Senator Roxas asked the same question in 2006. In the course of investigating the MV Princess of the Stars tragedy, Roxas asked the Coast Guard then: “Did the contractor [Thompson CFS now Thales SA] deliver on its obligations, and if so, what happened to the GMDSS? If the winning bidder failed to comply, why didn’t the DOTC run after them? On the finance side, are we still paying off a foreign loan for an invisible GMDSS?” Has Secretary Roxas forgotten his valid objections about Thales’s abject record then and has convinced himself that it can take on this P12-billion project pala?

Unfortunately, for unknown reasons, these questions and other concerns, which ordinarily would have caused the disqualification of Thales SA were apparently swept under in the course of evaluating and eventually awarding the contracts. Did Secretary Roxas ever ask Caap and his staff to answer the questions raised about the project and Thales at all, considering that as early as July 2, 2010, or just two days after P-Noy assumed office (shades of CBK deal?), COA Auditors Teresita Panganiban and Herminio Cueto in Audit Memorandum (AOM) 09-033 pointed to a number of questionable matters in the proposed CNS/ATM project, including the participation of Thales despite its “unsatisfactory record with the DOTC?”

If Secretary Ping was not able to correct things before he left office and the Sumitomo-Thales joint venture was eventually awarded the P4-billion contract for phase one of the CNS/ATM project, why did Secretary Roxas not do anything to prevent this highly problematic deal from continuing? And while he has bandied around that he embarked on a massive review of all DOTC contracts entered into before his term did Secretary Roxas find out that a P900-million consultancy contract embedded in the multibillion-peso CNS/ATM Project that was awarded to a Japanese company, ASCO Consultancy, was actually a superfluity? Did he also find out that as early as June 2009, the DOTC already set up the P500-million New Manila Area Control Center which was supposed to be a transition system to a CNS/ATM but if properly supported with additional equipment and personnel can actually do the work of the overpriced P12-billion-plus CNS/ATM system awarded to the Sumitomo-Thales joint venture? If he has not, then his staff has not done a thorough review of this questionable undertaking. Is it possible that like his predecessor he was also blindsided?

Grabe!