Press Release
May 15, 2017

Transcript of Sen. Grace Poe's Opening Statement
Public Hearing on MRT 3 issues

Good morning. Magandang umaga po sa inyong lahat. Salamat po sa inyong pagdalo. The hearing will now come to order. This public hearing is called with regard to Resolution No. 355, which I filed, seeking an inquiry into two issues regarding the MRT 3 - the dismal maintenance of trains leading to frequent breakdowns and the purchase of unusable trains for the MRT3 capacity expansion project.

This committee has conducted hearings on the MRT 3 maintenance deal before and recommended the filing of appropriate charges by the Office of the Ombudsman, the Department of Justice and Civil Service Commission for violations of RA NO. 3019 or the Anti-Graft and Corrupt Practices Act.

I gather that several charges were eventually filed by the Office of the Ombudsman and by concerned citizen groups against the former officials of the DOTC.

We have also recommended that the government consider the possibility of forging a termination to arbitration and to buy-out the MRT.

But the one thing that ticks me the most, aside from the blatant misuse of funds by entering into disadvantageous contracts, is the insensibility of public officials to the plight of the Filipino riding public. Hindi ba't buwis nila ang pinambabayad sa pagaayos at pagmementena ng mga tren at pagbili sa mga bagong mga bagon? Kung ganun, e di dapat masulit naman ang pinambabayad nila. Napakalaking perwisyo sa mga pasahero kapag nasisira ang MRT lalo na kapag ilang minuto na silang nakapila tapos tsaka sasabihin na magkakaroon pa ng delay. Trapik na nga sa kalsada pero madalas, mas napapabilis pa byahe nila kapag nagbus na lang sila papunta sa kanilang paroroonan.

Hindi lang iyun, kapag sinabing "maintenance" hindi ba dapat kasama rito ang pagayos ng mga escalator at elevator para magamit ito lalo na ng mga nagdadalang tao, PWDs at senior citizens?

Until now, the maintenance and operation of the MRT are beset with so many problems that it appears that the only solution is to overhaul it completely--but is it?

As earlier mentioned, we aim to discuss two issues as regards the MRT: the first concerns the maintenance deal with BURI and the second concerns the MRT capacity expansion project with Dalian. Both deals involve around P3.8 billion.

Before we start pointing fingers allow me to present to you a summary of the maintenance deals our government, through the then-DOTC, entered into with various maintenance providers.

For 10 years, or from 2000 to 2010, Sumitomo was in charge of the upkeep and maintenance of the MRT 3. However, instead of renewing their contract with Sumitomo, the DOTC decided to simply renew their contract for six-month periods until October 2012.

In October 2010, then DOTC Secretary Abaya manifested the government's intention not to renew its contract with Sumitomo and later awarded an interim maintenance contract to PH Trams-CB&T through emergency procurement.

It was during this time, when the DOTC decided to award short-term contracts to dubious maintenance providers did the MRT start to experience frequent breakdowns.

These contracts were awarded by the bids and awards committee (BAC) composed of its chair, Usec. Jose Lotilla, BAC members Rene Limcaoco, DOTC BAC Secretariat Catherine Gonzales and MRT General Manager Roman Buenafe. The contract was later approved by then DOTC secretary Jun Abaya.

Ang nakapagtataka, is that unlike Sumitomo, which had years of experience, PH-Trams was only incorporated 2 months before it was awarded the MRT 3 maintenance contract. The company had only P625,000 in paid-up capital but it was awarded a P54 million per month maintenance contract.

A year after, in September 2013, the MRT maintenance contract was awarded to APT-Global.

Now, what does PH Trams and APT Global have in common? They are both connected to a certain Marlo Dela Cruz (an alleged LP stalwart). Dela Cruz was not just Chairman of PH Trams, but was also the authorized representative of APT Global. Maybe later, Sec. Abaya can enlighten us as to who really is this person.

In 2015, the DOTC failed to bid out the MRT maintenance contract and thus decided to undergo negotiated procurement with the approval of the GPPB. But according to our sources, hindi raw GPPB ang nag-approve kung 'di NEDA.

Maybe the GPPB and NEDA can clarify this later. Sino ba talaga nagbigay ng go signal sa DOTC na mag negotiated or emergency procurement? Ano ba ang tamang proseso para dito?

As a result, the DOTC awarded several maintenance contracts for 6-month periods each to various contractors.

Ito ang tunay na chop-chop--hinati hati ang mga kontrata sa kung kanikanino covering only a period of 6 months. What can you expect these companies to accomplish in 6 months, when that is how long it usually takes to purchase spare parts?

Finally, because of two failed biddings, the DOTr underwent negotiated procurement for the MRT maintenance contract. And on December 2015, the DOTr awarded the contract to the Busan Universal Rail Incorporated or the BURI consortium composed of Busan Transportation Corporation, Edison Development & Construction, Tramat Mercantile, Inc., TMICorp Inc., and Castan Corporation.

As with the previous contract with PH Trams, the BURI-DOTr contract is marred with controversy due to BURI's questionable corporate structure.

According to documents from the SEC, the certificate of incorporation of Edison and TMI Corp were revoked in 2003 due to their failure to file their reports. Have they re-incorporated? If not, then how were they able to participate in the bidding?

Also questionable is the fact that Korea's railway giant, Busan Transport Corp. only owns about 4.6% of BURI shares (Busan owns 200,984 shares out of 4,320,000 total shares), which means they hardly have any say in how BURI conducts its business. Another issue is the fact that the invisible hand of that certain Marlo dela Cruz appears to be at play here. He, together with Eugene Rapanut, allegedly brokered the deal with DOTr.

Parang tuloy may secret mafia na kumokontrol sa pagaward ng mga kontrata.

The BURI consortium's 3.8-billion peso contract includes the following components:

a. P1.96 billion for the maintenance of the train system;

b. P907.37 million for the general overhauling of the 43 light rail vehicle units;

c. P888 million for total replacement of the signaling system; and

d. P51.76 million for "additional maintenance works," according to the copy of the contract dated Jan. 7.

Again, the negotiating team from the government were comprised of the same people who awarded the past maintenance contracts to PH Trams and Global APT.

It was during BURI's time as maintenance provider that the unforgivable happened. After a routine check up during the Holy Week, the MRT experienced two derailments, several train stoppages, and smoke emission. Ibig sabihin ng smoke emission ay umusok ang MRT habang nasa byahe. We have received BURI's report explaining their side, which generally say that the breakdowns are due to the fact that the trains are old.

However, we cannot simply blame train breakdowns on the age of these trains. The trains are only 15 years old, as compared to those of the LRT 1, which are around 30 years old.

In today's hearing, we intend to find out if it was proper, to begin with, to award it to BURI. Did the DOTC go through the proper process? Did they truly qualify, such that were they able to submit all the requirements, like a bill of quantities? What is the scope of work in BURI's contract? Why will there be a change from the fixed-block signaling system to the moving block signaling system?

Next, we will move to the Dalian deal, which was approved by the NEDA Board in September 2012.

If you will recall, allegations of corruption surfaced in 2013, after Inekon Chairman, Josef Husek claimed that MRT General Manager Al Vitangcol was asking for $30 million from Inekon in through a supposed liaison from Czech company Inekon in exchange for being the project's supplier.

In 2014, the Php 3.8 billion contract for the supply of 48 Light Rail Vehicles (LRVs) for the MRT-3 contract was awarded to Dalian.

It was also during this year that Al Vitangcol along with PH Trams-CB&T representatives, were sued criminally and administratively for their alleged involvement in the extortion scandal with Inekon.

Now, come 2017, after Dalian delivers all 48 LRVs, we are told that these trains are unusable--kesyo hindi raw compatible ang power supply at kulang ang power supply, at di raw compatible ang signaling system ng mga bagong tren sa sineset up ngayon. Perhaps people from the current DOTr can explain to us what these problems are, which is why they no longer want to continue paying Dalian for the delivery of these trains.

May nagsabi sa akin, setting up a train system is already a complicated matter, but we Filipinos love to make the matter more complicated than it already is. Siguro kaya natin pinapakomplika pa lalo ay dahil may mga gustong kumita sa mga proyektong ito.

I do hope that despite the short time we have today, we will be able to shed light on the many issues I have raised. I also have some preliminary questions that I will ask later after the DOTr's presentations.

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