COA: 2004 water deal a ‘mockery’

STATE auditors who had recommended charges against former members of the Cagayan de Oro Water District board and general manager in 2013 because of the utility’s contracts with bulk water supplier Rio Verde Water Constortium Inc. and a company called Geo-Transport Corp. called the deals a “mockery of the bidding process.”

Last week, the Office of the Ombudsman announced its decision to indict the former COWD officials, including Rio Verde owner and Palawan Gov. Jose Alvarez and Geo-Transport president  Edward Chona for violation of the Anti-Graft and Corrupt Practices Act in connection with the controversial 2004 deals.

It was the Commission on Audit (COA) that brought the matter to the attention of the ombudsman, leading to an official investigation and subsequently, a decision to formally charge former COWD chairman

Raymundo Java and directors Sandy Bass Sr., Sarah Borja, Francisco  Mendez, Bibiana Sarmiento, Joel Baldelovar, former COWD general manager Gaspar Gonzales Jr., Alvarez and Chona.

Excluded from the case was another former COWD director, Frederico Gapuz who passed away.

The ombudsman also indicted former Local Water Utilities administrator Lorenzo Jamora.

The 2004 contract had given Rio Verde 25 years to supply an average of 40,000 cubic meters of treated water to the COWD everyday at a price of some P12 million a month. The project was implemented in 2007 or three years later.

In a 50-page report on June 15, 2013, COA had recommended the nullification of COWD’s contract with Rio Verde. That resulted in a court battle between COWD and Rio Verde until the two firms reached a settlement resulting in the contract’s termination on Dec. 31, 2017.

By Jan. 1, a new company called Cagayan de Oro Bulwater Inc. (Cobi) became COWD’s supplier of treated water. Rio Verde however continued to operate its plant in Bukidnon, selling treated water to Cobi, a company that has yet to decide on whether to set up its own facilities, buy Rio Verde or just continue buying treated water from Rio Verde.

Cobi is owned and controlled by Manny V. Pangilinan’s Metro Pacific Water Investments Corp. but with COWD having a five-percent share plus two seats in the board.

Geo-Transport’s involvement was on the transfer of the original COWD takeoff point to the Carmen reservoir and Canitoan area in connection with the Rio Verde bulk water supply project. COWD spent some P47.96 million for this against the opinion of its own engineering department that saw the undertaking as  “unnecessary and irregular expenditures.”

COWD had contracted Geo-Transport to set in place the utility’s main line from a tip-off point in Lumbia to its Carmen reservoir. The interconnection project was carried out from 2003 to 2007 allegedly bloated from P5 million to P21 million.

It was a violation of RA 3019 and RA 9148, the Government Procurement Reform Act, according to COA.

Other findings:

• excess amount of P14.72 million representing the difference/variance between the contract cost and the COA evaluated cost;
• excess amount of P14.48 million for Phase 3 Improvement/Expansion Project-Lateral Improvement Project (P3IEP-LIP) Supplemental Agreement No. 2 representing overpayment to the contractor; and
• the amount of P16.32 million representing loss suffered by COWD when it agreed to Geo-Transport’s computation on the price escalation which was higher than the COWD’s computation.

The COWD deals with Rio Verde and Geo-Transport were a “mockery of the bidding process through violation of the law and public policy,” according to state auditors.