CLARK FREEPORT – Top officials of the state-owned Clark Development Corp. (CDC) have been charged with graft and corruption over the alleged “coddling” of a Korean investor infusing at least $400 million for its projects in this freeport.
In a 12-page complaint filed with the Office of the Ombudsman, the Paranaque City-based First Worldwide Marketing Corp. (FWMC), a former partner of Donggwang, accused the CDC officials of “entering into a joint venture and/or partnership agreement with Donggwang Clark Corp. (Donggwang) in violation of its charter.”
The complaint also said the agreement was “patently disadvantageous to the government” as the CDC had agreed that arbitration of possible conflict be done by a Singapore-based third party reportedly requiring arbitration fee of as much as $280 million, despite the mere $150,000 annual lease the CDC could collect from Donggwang.
It also noted that the CDC, which manages this freeport, allowed “the operation and sale of the condominium units in the Donggwang Clark Ode Country in the absence of the necessary permits and licenses.”
The CDC public affairs office, which is in charge of issuing official statements for the state firm running this freeport, could not immediately issue any reaction to the case.
The CDC officials, the complaint said, were an accomplice in “assisting Donggwang Clark Corp. in defrauding the public by allowing it to misrepresent that some of its stockholders are residents of the Philippines.”
The complainant also cited environmental issues, claiming that the CDC had known that the Environmental Clearance Certificate (ECC) issued to Donggwang referred to a previous plan, not the current projects being developed by the Korean firm.
This, even as Pampanga’s 1st District Rep. Carmelo Lazatin said he is set to file a resolution seeking to investigate the $400 million Donggwang golf course project in a 304-hectare area inside Clark “to determine whether it violates environmental laws.” (See separate story).
The Ombudsman complaint accused the CDC of “bending the law to accommodate” Donggwang.
It noted that the lease agreement between CDC and Donggwang was initially dated July 20, 2008 and mandated Donggwang to submit within 90 days certain requirements such as true copy of its business registration and resumes of its stockholders, and the Korean firm’s “payment of the initial financial obligation upon signing of the agreement.”
The complainant said that Donggwang failed to comply with these first two provisions and that this, as stipulated in the contract, should have led to the “automatic cancellation or termination” of the agreement which the CDC did not do.
The complaint noted that “in fact, the local company of Donggwang Construction Co. Ltd. was registered with the Securities and Exchange Commission only on Dec. 3, 2008 or 164 days after the execution of the lease agreement.”
The FWMC also said that the agreement between the CDC and Donggwang was amended at least five times, including the change of the Korean firm’s name from Donggwang Construction Ltd. to Donggwang Clark Corp.
Donggwang’s project included the golf course covered by another amendment to its contract with CDC providing that in cases of conflict unresolved within 30 days, the conflict “shall be finally and exclusively” settled by a third-party arbitration in Singapore pursuant to the Rules of Arbitration of the International Chamber of Commerce.
“This is very disadvantageous to the government and is contrary to public policy,” the complaint said. The FWMC admitted it had resorted to such arbitration before in its former partnership with Donggwang, only to find out that the arbitration fee cost some $280 million.
“The CDC entered into a lease contract with a lease payment of $150,000 per year for 50 years. The arbitration fee would have been exorbitant,” the complaint noted.
The complaint said this violated the law against graft and corruption or Republic Act 3019, as well as Republic Act 319 “which penalizes the act of entering, on behalf of the government, into any contract or transaction manifestly and grossly disadvantageous to the same.”
FWMC also accused the CDC officials of turning a blind eye to Donggwang’s selling condominium units in three 10-story buildings it constructed here, despite alleged lack of authority to do so and having only ECC for only one of the buildings.
Respondents in the Ombudsman cases included CDC acting president Eduardo Oban, although the contract with Donggwang was done before he assumed post, CDC executive vice president Philip Panlilio, vice presidents Ernesto Gorospe, Noel Manankil, Franco Madlangbayan, Joanne Evangelista and Mariza Mandocdoc. Six Korean respondents were also cited.
