Chinese operators
Nearly 20 years ago, the long and sordid saga of the Bataan Nuclear Power Plant came to a close with the acceptance by the government under President Corazon Aquino of a $100-million out-of-court settlement from the American firm Westinghouse. Malacañang had accused Westinghouse, along with the engineering firm Burns & Roe, of having funneled some $18 million in bribes to President Ferdinand Marcos in the 1970s, through his intermediary and crony Herminio Disini, to bag the contract to build the nuclear power plant.
Completed in 1984, the plant never generated a spark of electricity. Word of the anomalous transaction, along with public anger at the danger of a nuclear power plant having been erected on an earthquake-prone zone, only added fire to the national conflagration that, in less than two years, would sweep the Marcoses out of power.
Westinghouse was a private firm, but because the United States had stringent laws against American companies engaging in unethical business practices abroad, the Aquino administration felt it had a strong case to have the Westinghouse contract invalidated on such grounds. In 1988, it sued the company and Burns & Roe before a New Jersey court. A Geneva-based arbitration tribunal subsequently ruled that there was no sufficient proof of bribery, but Westinghouse nevertheless decided to settle out of court to the tune of $100 million.
This piece of history might no longer be familiar to today’s generation, but it’s a tale that deserves to be kept in mind in light of the country’s recent experience with foreign companies that, like Westinghouse, appear to operate on a kind of business ethics malleable enough to enable them to corner local contracts and concessions with undue ease and advantage. The costly, non-performing monstrosity in Bataan, all but forgotten through the years, should resume its place in the public consciousness as a reminder and a cautionary tale, now that President Aquino has declared the Philippines “open for business” before China and a contingent of its newfangled investors and tycoons.
Mr. Aquino’s speech before the Philippines-China Economic and Trade Forum in Beijing is notable for its call for fairness and transparency in business transactions. “We know that transparent and fair processes build investor confidence,” he said. “More businesses mean more jobs, giving our people more chances to rise in society. Most important among our efforts is instilling a culture of transparency and integrity in government: weeding out corruption, and ensuring that businessmen —whether from within our shores or from foreign enterprises such as yours—are met with a level playing field.”
It is notable because the Philippines’ recent brush with the two biggest, most high-profile Chinese business contracts to come its way happens to have both floundered on charges of deceit, corruption and skullduggery. The proposed $503-million NorthRail transit system, a project between the North Luzon Railway Corp. and China National Machinery and Equipment Corp., has been derailed by allegations of padded costs and contract anomalies. An even more radioactive project was the bid by ZTE International Investment Ltd. to build a broadband infrastructure across the country. The administration of President Gloria Macapagal-Arroyo had inked the deal with ZTE, only to scuttle it in a rearguard attempt to stanch the ensuing revelations of monumental bribery and chicanery, reaching all the way to her innermost circle, that would taint the contract irredeemably.
There is a difference, however, between Westinghouse then and China National and ZTE now. The latter firms are state-owned. The Chinese government itself backed their contract bids, lent them the extraordinary prestige and power inherent in government-to-government transactions—a clout and heft otherwise lacking in private initiatives—to buttress these companies’ positions. That they would end up mired in questionable straits, charged with abetting official bribery and crookedness in a foreign country, does their host government, at the very least, a grave disservice.
Mr. Aquino’s promise of greater transparency and honesty in his new administration has not, so far, resulted in clarity, let alone accountability, in the fraudulent business practices that reportedly characterized the Arroyo administration’s dealings with state-owned China National and ZTE. Are those companies not likewise liable for their actions? Now that he’s in Beijing, perhaps Mr. Aquino can find a way to bring the matter up with his Chinese hosts.
