Ex-OGCC chief refutes 'go signal' for New Clark sports hub
MANILA, Philippines – Former government corporate counsel Rudolf Jurado on Tuesday, December 3, refuted the claim that his January 2018 contract review gave the "go signal" for the multibillion-peso New Clark sports facilities in Capas, Tarlac.
Rappler sought Jurado's comment after Government Corporate Counsel Elpidio Vega said in a press conference on Monday, December 2, that the joint venture agreement between the Bases Conversion and Development Authority (BCDA) and Malaysian firm MTD Capital Berhad went through the proper procedure.
"I'd like to point out that in the first opinion or contract review by the OGCC (Office of the Government Corporate Counsel), it already gave the go signal for BCDA to enter into such an agreement," Vega had said.
Refuting this claim, Jurado said on Tuesday: "The Contract Review dated 30 January 2018 I issued when I was still the head of the OGCC is very clear. It is subject to a condition that BCDA should revise Section 8 of the draft joint venture agreement to align with the laws on joint venture."
Why is this important? Vega claimed that Jurado's contract review was a "go signal" because according to several government rules, BCDA needed a favorable legal opinion from the OGCC before it can enter into a major agreement.
The contract review was dated January 20, 2018, while the joint venture agreement (JVA) became effective on February 22, 2018.
The favorable legal opinion signed by Vega on October 2, 2018 – or only a day after his appointment – was issued 7 months after entering into the agreement.
According to sources, a contract review is different from a legal opinion.
"[The contract review] did not say that BCDA should not go into this particular JVA," Vega claimed.
Jurado, meanwhile, said his contract review subjected the JVA to a condition.
"[The condition] is for BCDA not to pay MTD Capital Berhad of the cost of the sport facilities since this is the contribution of MTD Berhad in the joint venture," Jurado told Rappler.
What payment? BCDA and MTD Capital Berhad entered into a joint venture agreement on February 22, 2018, to build the sports facilities of New Clark for P8.5 billion. Later, MTD Capital Berhad secured a P9.5 billion loan from state-owned Development Bank of the Philippines (DBP).
In the final JVA, BCDA would contribute the land while MTD Berhad would foot the construction cost. However, BCDA also committed to repay MTD Berhad P2.2 billion a year for 5 years, with the excess counting as return on investment.
In the agreement, BCDA also committed to a 50-50 profit sharing with MTD Berhad for 25 years. After our first story was published, BCDA said it will now pay MTD Berhad the full amount, and will scrap the 50-50 profit sharing.
Jurado's contract review flagged that the contract was not a joint venture but a build-and-transfer scheme.
In layman's term, joint venture means both parties will mutually contribute, while build and transfer entails a private firm to construct the facility first, and the government will repay the cost and own the facility later. A build-and-transfer scheme, Jurado said, needed to undergo public bidding.
The project was borne out of an unsolicited proposal by MTD Berhad and was subjected to a Swiss Challenge which the Malaysian firm also won.
"It's up to Government Corporate Counsel Vega to explain why he issued this legal opinion after almost 8 months when the joint venture agreement was signed," said Jurado.
Why did BCDA push through with joint venture? BCDA chief Vivencio "Vince" Dizon said that upon the advice of the Asian Development Bank (ADB), they pushed through with the joint venture.
"It was agreed, with the advice of the ADB, that the JV was the best, most practical, most transparent mode to do this project. It allows BCDA to simply leverage the land, the asset, and allows the developer to put in the capital for development," said Dizon.
Dizon added: "If we went into build-and-transfer, we felt that, we believed, this project would not be viable. Number one, we would not be able to build it in time. Number 2, that mode would sacrifice the long-term development of Phase 1 of New Clark City."
Dizon justified the repayment scheme of the sports facilities by saying that MTD Berhad is also constructing satellite government offices there, or the National Government Administrative Center (NGAC).
Dizon added that the sports facilities aspect of New Clark was not included in MTD Berhad's unsolicited proposal.
Dizon said the BCDA asked MTD Berhad to also build the sports facilities for the 30th Southeast Asian Games.
"Building a stadium, an aquatic center, is not commercially viable, government has to come in to build it. That's the only way, there's no other way to build them especially in the timeline that was given," said Dizon. – With reports from Ralf Rivas/Rappler.com
Read related stories:
- Part 1: BCDA, Malaysian firm ink questionable P11-billion SEA Games deal
- Part 2: OGCC flagged non-bidding of BCDA's New Clark sports facilities
- Part 3: How BCDA's multi-billion New Clark deal slipped through