Press Release
January 18, 2011

Technology supplier has 'bad record' including bribery

Senate President Pro Tempore Jinggoy Ejercito Estrada yesterday questioned the P4 billion contract awarded by the Department of Transportation and Communications (DOTC) to a foreign consortium for the modernization of the country's air traffic control system.

"There is more to this deal than meets the eye and for the sake of Pres. Noynoy Aquino's call for transparency and the elimination of graft and corruption in government transactions, the people has the right to know if indeed, due diligence was conducted by the DOTC prior to the project's awarding to Sumitomo of Japan and the Thales Group of France," Sen. Estrada said.

"There is a need to remove all doubts and clear the air of suspicion about this deal because not only billions in taxpayers' money are involved here but also innocent lives," Sen. Estrada stressed.

Specifically, Sen. Estrada noted that Thales, a global electronics company mainly catering to the aerospace, defense and security markets has a "trail of bad records" over the years including failed products that cost lives and allegation of bribery to foreign clients in order to corner a business contract.

Thales would be the technology partner of Sumitomo for the installation of a modern communication, navigation surveillance and air traffic management (CNS/ATM) system at the country's international airport.

As with the scandal-marred national broadband network (NBN) project in 2007 which was to be financed by a loan from China, the CNS/ATM project would be financed thru a Yen 9 billion loan package (roughly P4 billion) from the Japan International Cooperation Agency (JICA).

"I wonder if indeed, as Sec. Ping de Jesus claimed, he has thoroughly investigated the record of Thales or if he has taken into consideration the lessons learned from the NBN scandal before agreeing to award the contract to this company," Jinggoy said, referring to DOTC Sec. Jose de Jesus. "This may be another 'NBN scandal' in the making at the DOTC," he warned.

Among other issues against Thales, Jinggoy noted that the European Aviation Safety Agency in 2009 decided to ban the use of the company's speed censors for the Airbus commercial jets after air crash investigators concluded it was the fatal reason for the crash of an Air France Airbus A330 in the Atlantic on June 1, 2009, where all 288 passengers on board were killed.

"Then there is an article from the AFX news wire service in 2005 stating that the French police raided Thales' headquarters that December after one of its own officials accused the company of 'organising a centralised slush fund to bribe and corrupt officials to win contracts,'" Sen. Jinggoy Estrada disclosed further.

In the Philippines, Sen. Estrada noted that Thales had reneged on its obligation to deliver P1 billion worth of 19 'global marine distress safety system' (GMDSS) to improve the safety of sea travel in the country. This reportedly forced the Commission on Audit (COA) to subsequently recommend that the firm be banned from further doing business with the government.

"Against such known facts, why did the DOTC, even under the new administration, seen it fit to turn a blind eye on this company's performance and continue awarding it with fat contracts," Sen. Estrada asked.

"Is this latest deal with Thales-Sumitomo the kind of example of the 'tuwid na landas' that Pres. Noynoy Aquino said he would pursue since he was campaigning for the presidency?" the senator asked further, adding: "We will soon get to the bottom of this mess."

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