By Raïssa Robles
While monitoring the Supreme Court hearing on the cybercrime law yesterday, I was drawn to this tiny business story that broke, which would have a strong impact on our tourism, millions of Filipinos flying in and out of the country and on the economy.
Transport Secretary Joseph Abaya announced he will soon sign a US$45 million civil works contract with giant Japanese construction company Takenaka to finish NAIA 3 – you know, the white elephant of a terminal at the Ninoy Aquino International Airport complex that was intended to be THE terminal for all international flights. Instead, the multibillion peso German-designed structure ended up servicing only local and budget flights.
Construction cost ballooned from US$350 million to over US$650 million and the project was marred by charges of payoffs and corruption. Ten years after it could have been fully operational, the terminal is only partly functioning.
The key was always Takenaka.
To understand what happened, I am providing a timeline below this article.
A tainted project
Briefly, the project was marred with changes in the contract that grossly benefited the project proponents to the detriment of the public; as well as allegations of payoffs to certain government officials.
When Joseph Estrada became president in 1998, the consortium Piatco secretly renegotiated the contract it had signed with the previous government of Fidel Ramos. But the late Josefina Lichauco, Estrada’s acting Transport and Communications secretary then, blocked the changes. “I froze the amendments because they are onerous and illegal,” Lichauco told me in 2001.
However, her successor Vicente Rivera approved them. I used to interview Rivera before that, he declined to be interviewed about Piatco. Among the changes Piatco obtained through Rivera were:
- A monopoly on cargo, handling, catering, aircraft repair and maintenance services which were then all handled by the companies of rival businessman Lucio Tan.
- The government not only agreed to shoulder Piatco’s debt in case of default.
- It also gave creditors “step-in rights” or the right to award the concession to another operator in case of default. The BOT allowed this provided the original contract stipulated it. In Piatco’s case, its 1997 contract did not.
Nothing came out of these revelations, however. Estrada was deposed from the presidency and Gloria Macapagal-Arroyo took over. A year later, another money scandal concerning Piatco and Naia 3 broke out when Norbert Loesch, a former consultant of Fraport – which was part of the Piatco consortium – told Philippine lawmakers that some government officials had been paid off in exchange for further concessions.
Arroyo had the Piatco contract reviewed and then junked it. Fraport had a falling out with its Filipino partners.
NAIA 3 was due to open over 10 years ago. Every few years after it was supposed to open, the government would keep announcing it would soon commence operations. It never did. Instead, it has only been used partially and most of the hi-tech equipment has deteriorated – maybe beyond repair – due to non-use and tropical heat. My sources in the airline industry told me this includes a luggage handling system with an ion scanner that will automatically match a departing passenger with his check-in baggage. If a piece of luggage is stowed aboard a departing plane but the passenger is a no-show, the system will flag the luggage. In addition, the system includes hi-tech anti-terrorist equipment with a computerized tomography x-ray machine able to detect minute particles of explosives and gunpowder in the luggage.
NAIA 3 was designed with the Filipino in mind. It has a large area where departing Filipinos can stay with their families before the flight.
I recall that the Arroyo government was confident it could get NAIA 3 fully operational once the Philippine Supreme Court ruled on whether or not Arroyo was right in voiding the NAIA 3 build-operate-transfer (BOT) contract awarded in 1997 to a consortium which later formed Piatco.
On February 26, 2004, the court voided the BOT contract with finality and the government thought it could take over the facilities and operate it without paying the Japanese contractor, Takenaka, which insisted that Piatco still owed it a tidy sum of money.
I remember asking Makati lawyer Eduardo de los Angeles in one news forum how the government could run NAIA 3 without Takenaka. I told him that I had attended a media tour of NAIA 3 terminal, sponsored by Piatco – which had spent US$55,000 just to turn on the lights and equipment to show foreign correspondents what a sleeping beauty NAIA 3 was.
Piatco officials then told me that Takenaka was key to operating the terminal because it held all the codes to the computer systems that operated the luggage handling, ion scanner and x-ray equipment. Without Takenaka, no one could run those facilities inside the terminal unless someone broke the computer codes.
Atty De los Angeles assured me that the government didn’t need Takenaka to run NAIA 3.
It turned out he was wrong and Piatco was right after all.
It’s interesting to note that Takenaka has come around shortly after the Japanese and Philippine governments signaled better relations in the light of China’s rising military aggressiveness in Asia. I don’t know if these two events are related, though.
Takenaka has a 400-year old history as a contractor, so presumably it is used to long term and delayed projects. It helped build Singapore’s Changi airport and to this day continues to do upgrades for it. It was also the contractor of Thailand’s US$3.7 billion Suvarnabhumi airport which is still unfinished after more than 40 years. Like NAIA 3, Bangkok’s new second airport was also plagued by allegations of corruption and cost overruns.
The Thai airport today can handle 45 million passengers yearly. In comparison, Naia 3 was built to handle only 13 million passengers yearly, according to PIATCO in 2004. In fact, NAIA 3 reminds me of the medium sized airport in Hamburg back in the first half of the last decade. Still, though, 13 million passengers is a big jump from the five million passengers that the dilapidated NAIA Terminal 1 can handle yearly.
I will hold Secretary Abaya to his announcement and hopefully the next time I travel I will be passing through NAIA 3 and not NAIA terminal 1 which sucks big time.
NAIA 3 TIMELINE
September 15, 1993 – Six taipans – Lucio Tan, Henry Sy, John Gokongwei, Andrew Gotianun, Sr., George Ty and Alfonso Yuchengco – form Asia’s Emerging Dragon Corporation (AEDC) after President Fidel Ramos urges them to build a new airport terminal.
September 20, 1996 – A consortium that later formed Piatco submits a competitive bid. The consortium consists of People’s Air Cargo and Warehousing Co., Inc. (Paircargo), Phil. Air and Grounds Services, Inc. (PAGS) and Security Bank Corp. (Security Bank) – collectively called Paircargo Consortium. Paircargo and PAGS are owned by the Cheng family.
The consortium offers to build and operate NAIA 3 for 27 years, and guaranteed to pay government at least P17.75 billion, compared to the Lucio Tan group’s grudging offer of P135 million during the entire period.
July 9, 1997 – Piatco wins despite an AEDC suit questioning its financial capacity.
November 26, 1998 – Piatco gets the newly-elected President Joseph Estrada to amend the original contract and insert a government guarantee in case of loan default.
July 8, 1999 – Frankfurt Airport Services Worldwide buys out the 30% stake of German airline owner Lufthansa in Piatco for US$90 million. To kick start the project, Fraport agrees to provide bridge financing, with the understanding this would be repaid once the anticipated bank loan came through. Fraport’s advances would later balloon to US$409 million.
The project is Fraport’s biggest investment outside Germany.
The Cheng family and their business associates hold 50% of the company and call the shots even if they collectively put in only US$16.5 million of the consortium’s US$150 million paid equity. Nissho Iwai of Japan and Philippine firm SB Airport hold 10% each.
Later, Fraport is forced to write off US$60 million of the bridge financing amount and its relations with the Cheng family sour.
August 27, 1999 to September 4, 2000 – President Estrada agrees to “supplements” amending the contract in Piatco’s favor.
January 18, 2000 – Estrada presides over groundbreaking of NAIA 3.
June 5, 2000 – Takenaka Corporation starts construction.
August 2, 2001 – Piatco gets a $440-million syndicated loan from an Asian Development Bank-led consortium. The loan wins four awards.
June 22, 2001 – The newly-installed government of President Gloria Macapagal-Arroyo signs a third “supplement” amending the contract.
September to December 2002 – Workers of international airline service providers, concessionaires of the present airport terminal and lawmakers file suits before the Supreme Court protesting the amendments.
January 2002 – Mrs Arroyo’s presidential adviser on strategic project, Gloria Tan-Climaco, reviews the Piatco contract and asks for a breakdown of costs.
Climaco estimates that given Fraport’s sizable advances, its stake in the project has in reality reached 61.4%, as against 18.6% of the Chengs and other shareholders. She warns this might be in breach of the 40% constitutional restriction on foreign equity in strategic industries.
March, 2002 – Fraport admits in a media release it had to write down about US$60-million “on loans and shareholder advances” to Piatco. Some of Fraport’s creditors stop releasing money until contract terms are clarified and scandals are settled. Fraport comes under fire for this investment, partly because it is 31% owned by the German state of Hesse. The Piatco-Fraport case also sours relations between Germany and the Philippines and scares European firms from investing in Manila.
June 4, 2002 – Norbert Loesch, a former consultant of Fraport, claims in Congress that Arroyo’s acting Transport and Communications Secretary Pantaleon Alvarez received a bribe in connection with Piatco.
Loesch also claims in a separate congressional probe that a consultant hired by PIATCO for US$2.1 million to do “crisis pr” was part of a ploy to pay off some government officials.” Loesch explains he was required to disclose this by German law “lest I be accused of conspiring in the commission of a crime.”
November 29, 2002 – President Arroyo declares she will not “honor” the Piatco contracts.
February 26, 2003 – Piatco files arbitration request before the International Chamber of Commerce, International Court of Arbitration (ICC).
September 17, 2003 – Fraport files arbitration request before the World Bank’s International Center for Settlement of Investment Disputes.
February 26, 2004 – Supreme Court voids “with finality” Piatco’s BOT contract. It concludes that compared to Piatco’s 1996 bid offer – which helped it land the project – the contract it finally signed in 1997 bore “substantial amendments…that directly translates concrete advantages to Piatco that were previously not available during the bidding process.” – raissarobles.com
Thank you, Boo, for airing my concern about our air traffic safety. Now I want to talk about NAIA’s toilets & bad food
NAIA’s air traffic congestion worsening
Why does world billionaire Lucio Tan have such a troubled airline?
$45M lang? ;-)
Having said that, it’s about time. Note how the flight screens there are still the CRT tube types, not the LED/LCD types you see in newer airports.
And don’t get started on the toilets, very inadequate. Two urinals per toilet?!? Not enough even for a single flight disgorging cranky passengers from Tagbilaran.
Thanks Raissa, for another insightful, thoroughly researched piece.
Mariano Renato Pacifico says
In my 1stworld of Information Technology and Business Information we can do away with Takenaka. We can have somebody to write another program to handle the network. Baden-Baden/Karlsruhe did not depend on Takenaka so did London INternational and Kingsford Smith International over at Sydney including the rest.
Could this be another Na-Iya ?
C’mon, people, you know better than that. If you guys can disintangle cyberadultery it would be easy to disenfranchise Takenaka.
Filipinos are wired for two things: POLITICS and SEX.
maybe we could retrofit a new feature in the airport — wheelchair express lanes for fleeing corrupt ex-presidents, ex-chief justices, ex-comelec chairmen, ex-pcso chiefs, etc
@Mariano Renato Pacifico
Politics and sex – sex and politics, that includes you if you still consider yourself Filipino. Cheers!!!!!
politics and sex they’re not just pinoys’ sole domain. Italy under berlosconi he with the dyed hair and penchant for nubile women, some are pinoy looking, dominated politics and sex issues in europe. USA has its own sex and politics issue with senator weiner posting raunchy photos of himself. then we have general petreus who lost his job, his two lovers caught in e-mail war. china as well. lately I’ve read that a big bikie there was sacked after his mistress talked about how terribly exciting life with him was. MRP, you’re so blinkered. ethnocentric. pinoys are not the only ones wired for politics and sex. biblical king david stole bethsheba and killed his opposition by sending her husband to the frontline and so ensure the husband’s death.
I have hard time accessing this site. being denied’ many times the past two days. I was fobbed off,’read more’ refused to let me in no matter how many times I click in, then I went to raisa’s home page and finally – here I am. I supposed my fellow commentors have the same problem as me.
Joe America says
I’ve had trouble accessing Rappler and also my own Blog has access problems. Either Google Chrome is acting up or there is a bug in the woodwork.
“Database error” also been acting up lately…
Mariano Renato Pacifico says
Where are the people here in this thread?
BUSY ABOVE disintagling and autopsying cyberadultery !!!
NAIA is pronounced NA-IYA in Ilong-go vernacular it means roughly “it became his”. “Na-Iya” is only used in corruption.
So, therefore, NAIA 3 is corruption redux 3.
the corruption behind NAIA 3 was traced to Erap’s administration. Erap was convicted. GMA pardoned Erap. Any questions?
no questions from me, only hope. I hope NAIA 3 can rise from the ashes and be reborn like the bird phoenix. under new management. willing and raring to go. up, up and away . . .
Mariano Renato Pacifico says
I thought it started with Filipinos electing philandering bed-jumping Erap. Then traced to his administration. Erap convicted … noh! noh! noh! … abdicated.
Fortunately, this time @Alan, crying unknown benign0 Aquino stole the heart of the voters, got elected, dumped by his girlfriend (cingular not plural), by a fluke of Filipino nature, turned out to be a goot president by taking his ire of being dumped against the corrupts.
Ain’t that cute?
You left out the part where Gloria tried to flee the country in a wheelchair. That was pretty hilarious. Especially when the Supreme Court chief justice also wound up in a wheelchair
Kailangan Na Talagang Magkaroon ng Panibagong International Airport!
Yung NAIA, na dating MIA, talagang hindi na akma sa dami ng mga pasahero. Mahina pa ang pagmantena ng kanilang CR.
Di ko makalimutan ang aking karanasan, at sana maintindihan ng karamihan kung bakit ako pabor na unahin na magkaron panibagong airport.
Yung huling paalis ako papuntang abroad, bale nagkainuman muna ang mga barkada, dami rin naming nakain, tapos hinatid nila ako sa NAIA. Mahaba ang pila, dami ko pang binayaran, talagang rambol sa loob. Halo halo, marami pang magugulang na sumingit sa pila. Asar talaga, pero sabi hayaan na tutal baka first time din makalabas, mukha syang DH at mukhang takot, first timer ata, so pinabayaan ko na.
Hanga lang ako sa security at mga immigration at customs officers sa NAIA, hindi ka talaga basta basta makakalusot. Sila kasi trained ng kanilang mga superiors, alam nila kung saan lulusot, saan itatago ang illegal na droga, idadaan yung mga tao sa espesyal na daanan papuntang tarmac at hiwalay sa ordinaryong pasahero. May advantage din pala pag yung mismong mga nagbabantay ay marunong sumalakay, sabi nga noong mga opisyales, hwag na tayong maglokohan, parepareho lang tayong manloloko.
Nong dumaan sa inspection, hinubad ko ang sapatos ko, yong mama sa unahan ko ganon din, minalas naman at ang tindi ng amoy nong kanyang mga paa, masangsang, pero ganon talaga, kailangan safe. Wala namang aberya, nagtanong lang naman sa akin yung isang nakauniporme kung may tira pa akong peso, palitan daw nya. Yun binigay ko naman yung apat na libo ko, pinalitan nya, pero sampung riyal lang, yung kulang daw pagbalik ko na, lagi naman daw syang nandon sa pwestong yon. Syet, naalala ko pagbalik ko sa arrival ako pano ko sya mahahanap? Sabi ko ilang oras na lang, safe na ako sa mga holdaper.
Nong nakapasok na ako sa makalumang hintayan sa loob ng departure area, parang nalanghap ko ang lumang amoy ng dekada setenta, nilabas ko yung earphones ko at ikinabit (siempre sa tainga, pag sa iba kasi baka ako magmukhang tanga). Pinatugtug ko yung kay Mike Hanopol, pero pinalitan ko agad noong TVJ(Tito, Vic and Joey), pamilyar sa akin ang boses, boses mangongopya. Biglang sumama ang pakiramdam ng sikmura ko, nautot ako at narinig nong katabi kung Japayuki ata yun, nakatingin sa akin, ginawa ko inginuso ko yung isang Arabo na katabi ko sa kaliwa. Sama pa ng amoy ng utot ko, ramdam ko may konting liquid na kasama at namantsahan ang brief ko. Syet! kailangan kong magsyet!
Dali akong tumungo papuntang CR, yung lakad ko ay ingat, inipit ko ang aking pwet, nagbabanggaan ang mga tuhod ko sa pilit na ipitin ang aking pwet. Pinagpapawisan ako ng malagkit, impit lang ang paghinga ko para ipit ang tyan at pagnasobrahan ng paghinga ay baka matuloy at ako ay magkalat. Nuutot ako ng mahina bawat hakbang ko. F**k!
Naabot ko rin ang CR, putang ina yung isang cubicle may gumagamit at ang lakas pa ng utot, yung isa sira, yung isa may umiihi, tagal pa parang ulan ng mayaman sa tagal matapos. Natapos din sya. F**k, dali akong pumasok, umupo sa trono, Pero yun na nga, hinubad ko na para akong si Superman dahil sabay kong naibaba ang aking pantalon at brief at umupo sa trono. Syeeeeeeeeet! Tama lang yung timing. Lakas ng pressure at may kasama pang sound effects na maluluma ang torotot pangbagong taon. Anak ng titing, may backfire pa, dahil tumilamsik yung tubig sa aking pwet. Bastos din yung mamang umihi dahil naramdaman ko basa pa yung toilet seat, ni hindi lang naman pinunasan. Puta talaga. Pero sige na lang dahil what a relief.Natapos din at bumalik na ang kulay ng aking mukha, at lumuwag ang aking pakiramdam.
Subalit panandalian lang ang aking kasiyahan ng makita ko na wala palang rolyo ng toilet paper sa cubicle na yun. Double F**k talaga, syet! Pini-page pa yung pangalan ko dahil ako na lang daw ang hinihintay at paalis na ang flight ko at five minutes na lang at palipad na. Kung hindi ako makarating sa eroplano, iiwan ako. Tripleng F**K
Sye!.Syet…Syet…Syet…kailangan mabilis mag-isip. Ginawa ko dahan dahan akong umalis sa trono para walang pumatak dahil ramdam ko may naiwan pang nakadikit, binaba ko ulo ko para masilip ko yung sa kabilang cubicle kung may tao para makapag hingi ng toilet paper. Namputsa sa malas, bakante! Walang kaluluwa kahit na pang Paranormal. Desperado ako, kahit pa tunay na kaluluwa papakiusapn ko mabigyan lang ako ng toilet paper.
Apat na minuto ang natitira, Syet ano ang gagawin ko?
Dali kung hinubad ang pantalon at brief ko na nakalaylay hanggang sapatos ko. Einstein! Ginawa kong pampunas yung brief ko! Daling isinuot ang pantalon, kinuha ang aking backpack, at dagling lumabas ng cubicle. Talo ko pa si Hussein Bolt sa bilis tumakbo. Stop sa pinto ng tarmac, inilabas at ipinakita ang boarding pass ko na parang nag-relay, Ala Bolt uli na parang hagibis tumakbo. Nakarating sa dulo ng tarmac at pasara na ang pinto ng eroplano. Nakita ako nong stewardess at dali-daling pinapasok at check ang seat number ko.
Hinahabol ko pa ang hininga ko pero masaya na ako. Hinay hinay na dumaan patungo sa economy class, habng binabaybay ko ang First Class nakita ko ang pamilyar na mukha, maitim sya at hindi masyadong kataasan, mga limang piye lang. Nakangiti at bigla inabot ang nakabukang kamay para makipagkamay. Syet, si Binay, nakangiti at sabing mabuhay daw kaming mga OFW! F**k what a coincidence, kasabay namin ang Bise PreSyetdente and feel ko, importante ako at biglang naglaho ang aking pagkakilala sa kanya na Trapo. Ngumit rin ako at sinabing salamat po.
Nong bitawan ko ang aking kamay, parang may malagkit na kulay dilaw na naiwan. Yung parang peanut butter. F**K, !F**K!, Syeeet.., Syet, Syet.
Binilisan ko ang aking paglalakad patungo sa economy class, at habang palayo napasulyap ako at nakita ko si Binay na tinitingnan at kamay at mukhang nandidiri, binilisan ko ang aking lakad.
Narinig ko pa si Binay na mahinay na nagsabi, “Ano to, Syet…?”
True story ba ito? Kailang nangyari itong nakakaaliw na miting mo kay Binay?
Pag may nagtanong ng email ko, hwag mong ibigay. Kung galing sa opisina nya ang nagtatanong, pls lang insist with your right not to divulge your source. Thank you in advance :-)
I only give out e-mails with the commenter’s consent.
Ha ha ha ha “bee-neigh” must be fuming mad. Literally shouting “syet” ang baho!!!!!!!!
@parekoy, paghiningi ni binay ang email mo dahil magpapasalamat sa iyo. suerte yung ibinigay mo sa kamay nya. ay naku baka manalo yun sa election dahil may dalang suerte!!!! huwag sana.
In connection with this, could you please inform us of the outcome of a Writ of Kalikasan
suit filed by residents of residential areas where the electrical supply was passing through. Thanks
Mariano Renato Pacifico says
It took 7 years to finish kaitak airport in hongkong incluidng the longest suspension bridge, udnerwater tunnel freeways and blastinig that lantau island.
In the philippines, it can never be finished.
@MPR be optimistic naman, I know that for you pinoy are not that goot. But sometimes nakaka tsamba rin who knows, by year end tapos na din ang NAIA. Cross your fingers and have hope and dont be pessimistic. eh
(1) Bangkok’s airport took more than 40 years. It’s still not complete
(2) Berlin’s Brandenburg Airport was supposed to open last year, the opening has since been reset four times now because of chronic defects in construction and repeated failure to meet fire safety requirements.
(3) Anything else you want to talk about?
hongkong is fortunate not to have a gma and a joseph estrada. it was part of british commonwealth then. under british management.
sana nga matuloy yan kasi pag bumabalik ako ng u.s.a nag sosolo lang ako dahil maaga akong dumating ng airport tambay muna ako ng lobby kasi walang budget ang mahal ng bilihin sa loob iniwan ko ng lahat ng pera sa pamilya pambayad lang terminal fee ang natira kaso naka upo ako paaalisin ng mga guardiya don daw sa parking area dapat tumambay naku napaka delikado naman po hinde naman lahat pero 90% ng sg sa airport napaka barumbado may pakikita naman deparute ticket at passport pero magagalit pa..sana po hag naman ganon madami pong umaalis ng pinas solo lang po dahil wala ng pangastos iniwan na sa pamilya yun lang po at salamay rizza kahit dito ako sa seattle lagi kong binabasa ang blog mo take care ang god bless
vander anievas says
sa naia 3 ngayon, kahit magdamag at maghapon ka pang tumambay at magtulog. walang mambubugaw sa iyo. maluwag ang lobby, maraming gang-chairs. at konti rin ang tao. at mura rin ang foods. may 7/11 na rin kaya pababaan ng presyo hindi katulad sa terminal 2. pero magtataka ka dahil umaapaw sa cars ang mga parking areas na puno na ng alikabok. mayroon pang sapot na yata ng gagambang pari…
Masalimuot ang kasaysayan ng gobiyerno, Piatco at mga dayuhang Hapon.
Pati nga ang kasunduan sa Takenake na nasabi na noon ni Roxas, sinasabi ulit ni Abaya ngayon.
May kulang pa sa timeline kasi ang Korte Suprema sa Piatco’y meron pang desisyon.
Wala na ko masabi…sana na lang matapos na nang tuluyan ang NAIA 3 construction.
Johnny Lin says
Several months In a previous Raissa blog, I commented and detailed deficiencies we have to improve with our airport, not only the appearance but also everything from aerial view by tourists upon landing to easy entry/ exit by tourists, clean facilities, and provisions for safe accessible transport and free if crimes, hustles and extortion by govt employees.
Understandably, opening NAIA 3 is forward step in the right direction although long overdue. Problem is the serious defects especially safety and transportation accessibility were not being prioritized and corrected while waiting for the opening of the corrupted structure.
Without fixing defective ancillary services, transportation, peace and order situation and eliminate corruption of airport employees tourists will not come in droves.
Without addressing those significant concerns a pretty sparkling airport is like dressing up Brenda to look like Miss Universe but without polishing her freaking mouth she is still the same terrible Brenda.
Reality and facts do not lie and this is not negativity, it is what it is. Nothing will change as long as the people keep electing the same corrupt politicians.
We must realize that it is not enough that Aquino government is on the right track, we the people must help by cleaning up the mess of corrupt politicians, police, soldiers and govt employees.
Let us start by getting rid of undesirable elective politicians and voice out our dissatisfaction.
exactly, get rid of undesirable politicians. one in cebu is refusing to go and is holed up in the kapitolyo. who knows for how long.
If I were the that politician in cebu, I’ll dance the dance of the seven veils by salome done when she asked for the head of john the baptist. that should liven-up the sinulug festival. yay!