Why LRTA is losing too much money

Scandals in government continue even as President Benigno Aquino III has made the fight against corruption the cornerstone of his administration. This one is worth P500 million and concerns the Land Rail Transit Authority’s (LRTA) extension to Cavite.

Recently, the government wanted to increase the fares in the elevated rails lines, including those of the LRTA’s. The reason is that the national government no longer wants to subsidize the operations of the elevated rails because they are losing too much money. Here is one reason for the losses.

Ten years ago, the LRTA planned an extension of its LRT 1 line to Cavite. As the Cavite governor then, Erineo “Ayong” Maliksi, now the Liberal Party congressman of Cavite’s third district, signed a memorandum of agreement with the LRTA in 2008 to relocate 2,000 squatter families living on the road right-of-way of the proposed LRT line. The agreement, which cost the LRTA P500 million was patently illegal because, under Republic Act 8974 and its implementing rules, only the National Housing Authority is empowered to establish and develop squatter relocation sites.

With the money, the Cavite provincial government bought seven parcels of unconverted agricultural land totaling 20 hectares. Only one of the seven parcels has a Transfer Certificate of Title. The rest were covered by agrarian reform Emancipation Patents and a 10-year transfer ban. Less than 10 percent of the uprooted families have benefited from the relocation project.

This was too much for the Commission on Audit (COA), which saw through the bloated costs of acquired lands. It disallowed P26.5 million of the provincial government’s spending on tenants’ disturbance compensation (even though tenancy arrangements are prohibited for Emancipation Patent-covered lands), real estate broker’s fee, capital gains tax, and documentary stamps.

And what did the President’s Liberal partymate do after the COA disallowance? In 2011, Maliksi successfully lobbied for the appointment of another partymate, Rafael Rodriguez, as LRTA administrator. Rodriguez served as board member in Maliksi’s provincial government and acted as legal counsel in the LRTA contract for the Line 1 South’s informal dwellers relocation project.

Maliksi is now reportedly lobbying Transportation Secretary Mar Roxas to appoint Joseph Alan Dilay as the new LRTA administrator.

Don’t let Dilay’s credentials as an experienced railway engineer fool anyone. Of course he’s better qualified than the musicians and lawyers who administered the LRTA in the past. But that’s because Dilay is allegedly being cast to preside over the crown jewel of the Aquino administration’s much-touted public-private partnership project, the LRT Line 1 extension, the biggest contract in the Department of Transportation and Communications’ portfolio of infrastructure projects. Major conglomerates such as Ayala Corp., San Miguel, and Metro Pacific Investments have expressed interest in the project.

The original proponent of the project was SNC-Lavalin, a Canadian company that entered into a joint venture with the LRTA to implement the project without any public bidding. When the Department of Justice objected in 2005, the LRTA paid SNC-Lavalin an incredible $10 million to buy the project study and rights to the project—even though the proposals were unsolicited.

What not too many know is that Gina Dilay, the spouse of Joseph, is alleged to be the broker for the unsolicited no-bid proposal. Between them is the family-owned JAD Group of companies, which includes Genials Trading and Contracting Co. Inc., and derives a portion of the family fortune from transactions with the LRTA.

Genials is also the joint venture partner of Meralco Industrial Engineering Service Corp. (Miescor) in MiescorRail, a subsidiary of Meralco. There is every indication that MiescorRail and Sumitomo Corp. will align with Metro Pacific Investments to corner the LRTA Line 1 Cavite Extension project.

In anticipation of his appointment as LRTA chief, Joseph Alan Dilay is said to be divesting his shares in Genials and other related family-controlled companies to avoid conflict-of-interest issues.

It took 10 years for the LRTA’s train of impunity to finally run toward Cavite. Surely, international players in the urban rail industry, including investors who sit on trillions of dollars, are waiting to see whether or not the DOTC will implement the project using a truly competitive and transparent model.

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KAPIHAN NOTES: Vice President Jejomar Binay will be the lone guest at the Kapihan sa Manila at the Diamond Hotel this morning.