Red tape slows down Smokey Mountains project

On the northern outskirts of Manila's Tondo district, 20 high-rise residential buildings - 10 storey tall - lurk in the shadows of what had been a symbol of poverty for most Filipinos, the Smokey Mountain.

The buildings were among the projects by the administration of former president Fidel Ramos to provide housing for the poor and to turn Smokey Mountain from a dump where Metro Manila throws hundreds of tons of refuse every day, into an industrial showcase.

The Smokey Mountain buildings had been unoccupied during the last five years because the National Housing Authority (NHA) had yet to declare the facilities habitable.

An RII Builders engineer interviewed by Gulf News in 1999 said they were awaiting a decision by the government to allow their request for an expansion of their port facility to finish all the requirements set by the NHA so the buildings could be occupied by tenants.

RII Builders, owned by former Abu Sayyaf hostage Reghis Romero, contracted the Smokey Mountain project in 1996.

"When we started with the project, the original contract only called for the construction of the residential buildings. However, in 1999, with the passage of a law requiring government and private housing facilities to have their own waste disposal treatment plants, we were forced to stop civil works because we would be at a disadvantage," the engineer said.

Aside from building the treatment plants the project also includes turning the 50-foot-high pile of garbage at the Smokey Mountain into a park. Now, two years after that interview, the building remains vacant.

The issue over the Smokey Mountain project is as much a matter of red tape slowing down a project for the poor as that of the government using funds meant for the welfare of millions of Filipino migrant workers.

According to Senator Aquilino Pimentel, some P664 million ($13.2 million) used to finance the multi-billion peso project was taken from the coffers of the Overseas Workers' Welfare Administration (OWWA).

RII Builders had undertaken the Smokey Mountain project under the Build Operate and Transfer (BOT) arrangement with the government.

Under this arrangement, RII would construct the project and operate it for a specified number of years before turning it over to the government.

The scheme aims to put up public infrastructures at no cost to the government. However, to construct the project, RII had to take a loan, and OWWA, at the behest of the then government leadership, provided the loan.

Pimentel cited a 2000 Commission on Audit (COA) report which stated that OWWA purchased P664 million worth of bonds, called the Smokey Mountain Project Participation Certificates, issued by Romero's firm to finance the project.

"Those certificates were supposed to mature on October 12, 1999, and by that time, interest included, the money should have been about P1.1 billion," noted Pimentel quoting the report.

The Senator noted that since the project had lain idle for several years, RII was not able to pay for the loan. Pimentel demanded that RII pay back its debt that was taken basically from a government entity which is the OWWA.

OWWA Administrator, Wilhelm Soriano, in a recent interview with Gulf News, averred that the funds "invested" by the welfare agency on the housing project is already lost.

"That loan, which was taken during the term of my predecessor, OWWA administrator Corpin during the Ramos administration, was considered a 'safe investment'.

"This means that even if RII is not able to meet its debt commitments, payment is assured since the government would be the one to put up the payment," he explained. But Pimentel pointed out that OWWA's money should not be used to finance government projects.

Pimentel also revealed several other failed OWWA transactions, which include providing advances for the repatriation of 80 employees of the local Landoil Resources in the mid 1980s.

"Up to now OWWA has yet to recover anything from Landoil," Pimentel said.

Pimentel's accusations against OWWA's investments were prompted by an investigation conducted by the Department of Labour and Employment (DOLE) Undersecretary Patricia Santo Tomas.

The DOLE secretary said the investments were not cleared by the OWWA board of trustees. Records showed that in 1995, OWWA, through former chief Corpin, invested P300 million ($6 million) in the Smokey Mountain Participation Certificate. When Soriano took over the agency's leadership in November, 1995, OWWA invested the balance of the P664 million in the project.

But Soriano said that the Smokey Mountain Project and other investments made by OWWA, apart from the allowed investment in treasury bonds, were cleared by the agency's previous board of trustees.

Despite hundreds of millions of pesos in apparent failed investments, Santo Tomas said OWWA is far from being in the red. "OWWA is not bankrupt. We can liquidate P800 million ($16 million) on an immediate basis if needed."