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Fund-raising? Intel report claims P15-M demanded from DND contractors

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As the 2016 elections draw closer, defense contractors are reportedly being asked to pay P15 million in “administrative fees” to take part in biddings for contracts in the Armed Forces of the Philippines’ modernization program.

The Standard newspaper editor-in-chief Jojo Robles cited an intelligence report on the incident, adding a person with knowledge of this likened it to a country club’s operations.

Robles said this is allegedly part of the fundraising efforts for the ruling Liberal Party.

“They operate like a country club. You pay a fixed amount to get a chance at cornering juicy defense contracts,” Robles quoted one of his sources, who he said had worked in several capacities in the government since the Ramos administration.

He said the details in the intelligence report were among the findings of an internal investigation.

“Under legal cover of consultancy agreement, the group will charge an administrative fee of P15 million without guarantee of success. The usual arrangement is an advance payment of P3 million and a monthly payment of P1 million for 12 months,” he added, citing the document.

Robles said the defense intelligence report cited interviews with bidders and suppliers, and intercepted mobile phone messages regarding the fee demanded from the contractors.

It indicated local agents and foreign suppliers were “cajoled to sit down with them.”

Robles, citing his information, said former Defense undersecretary for civil, veterans and retirees affairs Eduardo Batac was present during meetings with contractors.

He said the intelligence document claimed the usual representation of the group is that they were authorized by the Defense Department and Secretary Voltaire Gazmin.

“(A)nd most recently because it is a fundraising effort by the government for the Liberal Party,” he quoted the document as saying.

But Robles said the intelligence report indicated there is “no evidence to establish a clear link” between Defense Secretary Voltaire Gazmin and Undersecretary Honorio Azcueta to the racketeers.

Robles said Batac, who resigned last month due to personal and health reasons, could not immediately be reached for comment.

* names

Robles said the document claimed Batac would attend the first meeting, usually in a hotel.

Usually, lawyer Jesse Matibag will just show him as proof of assistance, he added. The supposed document described Matibag as one of the brokers of the group who set up meetings with contractors.

Another broker was identified as Rhea Maddatu, who would join the meeting.

The document indicated the group used consultancy names such as Elementum Inc. and SPAM.

Robles said a check with the Securities and Exchange Commission showed Elementum Inc. as a corporation “has not yet been registered but its name has already been reserved.”

SPAM was said to be a shell corporation without many assets, he added.

The document also claimed an unidentified engineer “connected to SPAM” had asked an administrative fee of P40 million from the local representative of a foreign supplier involved in a radar project with Israel.

But the radar project is a negotiated government-to-government deal awaiting the issuance of a notice of award and contract and approval of President Benigno Aquino III.

* victims

The racket has supposedly cost two high-level Defense officials their jobs, Robles quoted the intelligence report as saying.

Batac was supposedly the first casualty. Robles said his source claimed Batac was told “to shut up and leave,” in exchange for being spared from legal cases.

Another “victim” named by the intelligence report was former Office of Civil Defense and National Disaster Risk Reduction and Management Council head Benito Ramos.

Ramos had resigned from his post, supposedly to care for his wife. But Robles said Ramos had told The Standard that a certain group “has been operating against” him.

Ramos said the group even sent text messages to his wife claiming he was having an affair with his secretary. He said he quit his job “to stop the lies.”

Meanwhile, Robles said it is not known if the report has been submitted to higher authorities or if it has reached Malacanang.