We’re seeing beautiful photos of the New Clark City sports facilities for #SEAGames2019 and it seems to be ready for the games, but @lianbuan and I found red flags in the contract we simply can’t ignore. A THREAD. @rapplerdotcom
@lianbuan @rapplerdotcom The BCDA entered into a joint venture agreement with Malaysian firm MTD Capital Berhad to build New Clark City. We found that the deal circumvented several rules.
READ full story here:
rappler.com/newsbreak/in-d…
READ full story here:
rappler.com/newsbreak/in-d…
@lianbuan @rapplerdotcom On Jan 30 2018, the Office of the Government Corporate Counsel (OGCC) issued a contract review of the draft JVA and flagged some provisions. Basically, the OGCC said that the project should not have been pursued through a JVA.
@lianbuan @rapplerdotcom Under the JVA, BCDA will contribute the land as equity capital, equivalent to 10%, while MTD Berhad will shoulder construction cost of the sports complex worth P8.5 billion, which represents 90% of ownership. So far, so good.
@lianbuan @rapplerdotcom But the JVA specifies that BCDA will then have to pay for the sports facilities with interest (unspecified, vague in the contract). It had 2 options, pay P2.2 billion for 5 yrs (equivalent to P11 billion) and equally share profits with BCDA, or pay in bulk.
@lianbuan @rapplerdotcom The BCDA says it opted to pay in bulk to reduce interest. The 2019 GAA says it allotted P9.5 billion for the facility. Again, the project cost is P8.5 billion, 11.8% higher. Had the gov't opted the 5-yr scheme, that's 29.4%.
@lianbuan @rapplerdotcom The JVA said that this is for MTD’s ”reasonable costs and returns," or a return on investment. The OGCC argued that this is not a JVA since BCDA will have to pay up for the facility. This is a build-transfer scheme and requires PUBLIC BIDDING.
@lianbuan @rapplerdotcom Background: The deal was a result of MTD Berhad’s unsolicited proposal and they later got it through a competitive Swiss Challenge. BCDA insists the project is a legitimate joint venture.
@lianbuan @rapplerdotcom We based our story mainly on the OGCC contract review issued in January 2018, but BCDA said that it was able to secure a favorable legal opinion in October 2018. Note that the JVA became effective Feb 22 2018.
rappler.com/newsbreak/in-d…
rappler.com/newsbreak/in-d…
@lianbuan @rapplerdotcom In the draft JVA, they SPECIFICALLY stated that: on the signing date, the BCDA shall submit a legal opinion from the OGCC confirming the validity and enforceability of this agreement.
That provision was deleted in the final JVA.
That provision was deleted in the final JVA.
@lianbuan @rapplerdotcom BCDA's own JV Guidelines, approved in September 2017, says that "prior to the execution date of the JV agreement, the OGCC as the statutory counsel of BCDA, shall issue the corresponding Counsel's Opinion."
@lianbuan @rapplerdotcom GCG Memorandum Circular No. 2018-02, signed January 3, 2018, says that when entering into deals involving major development projects, "the required favorable legal opinion and/or contract review by the OGCC shall be secured by the GOCC before entering into said agreements.
@lianbuan @rapplerdotcom I'm trying to get the favorable legal opinion issued by the OGCC from the BCDA, but they have not responded to my texts and emails. I'm waiting 🙃
@lianbuan @rapplerdotcom Additional background on joint ventures. JV is an arrangement in which parties agree to pool resources for a goal. In this case, the sports facilities. BCDA provided land, MTD Berhad for construction cost and works. BUT BCDA will be paying for the facilities. Is this a JV?
@lianbuan @rapplerdotcom Parties in JVs can share profits, but in this case, BCDA will be paying MTD Berhad for the construction plus interest. BCDA even helped Berhad look for money. So, what then is Berhad's contribution to the JV?
Oops sorry guys I think made an error in the threading process. Click on the 3rd tweet (on January 30...) to see the rest of the thread. Or just click here
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