Palace executive introduced Kuwait company, admits Clark official

CLARK FREEPORT, Pampanga , Philippines  – The chairman of the Clark International Airport Corp. (CIAC) yesterday said a Malacañang official “introduced” Al Mal, a subsidiary of Kuwait’s Al Kharafi, as contractor for the $100-million new terminal project at the Diosdado Macapagal International Airport (DMIA) here.
In a telephone interview, Nestor Mangio, however, did not identify the Palace official who endorsed Al Mal but stressed that “nothing has been signed yet precisely because we could not agree on the terms of reference (TOR).”
This, even as the CIAC board of directors met the other day to give Al Mal seven days within which to accept CIAC’s TOR which exempts Terminal 1 from being taken over by the Kuwaiti firm.
The CIAC’s TOR provided space for the signatures of Mangio and Loay Al Kharafi, identified in the document as the chairman of Al Mal Investment Co.

Contract being rushed?

The contract, according to sources, is allegedly being rushed so it would not be caught by the election ban on the signing of government contracts on March 26. 
Under the proposed TOR, Al Mal, identified as a vehicle of the M.A. Kharafi Group based in Kuwait, “shall develop the Clark civil aviation complex and the more or less 1,500 hectares land adjacent at a minimum investment capitol of $1.2 billion through a joint venture company with CIAC.”   When President Arroyo made an official visit to the Middle East last year, Malacañang issued a news bulletin reporting that the President had secured a $1.2-billion investment from Al Kharafi for a joint venture to build a new airport terminal and aviation city here.
The proposed TOR stated that “it has been agreed that for Phase One, the joint venture company shall develop Terminal 2 at a total investment cost of $100 million with a capacity for seven million passengers per year.”

‘Onerous’ proposal

No one else from CIAC could explain why Al Mal is again being considered for the project despite its proposal being junked in December 2008 by the CIAC’s Joint Venture Special Committee (JVSC) as being “onerous.”
Al Mal has been negotiating for its own version of the TOR, which allocates to itself the sole authority to develop all areas within a 50-mile radius of the airport, as well as full control of the existing Terminal 1, which the CIAC is currently upgrading. 
Al Mal reportedly offered only $20 million for its takeover of Terminal 1 for 45 years, renewable for another 25 years, amid projections that the terminal could generate an income of $120 million during the period.
Apart from Terminal 2, Al Mal also intends to build a third terminal for the DMIA.
CIAC employees went out of their offices the other day to hold a noise barrage to protest Al Mal’s almost full takeover of the aviation complex here, as they feared for their jobs. 
Mangio, however, said he later explained to the employees that part of the negotiations with Al Mal included their continuing employment.
“Only employees of the existing Terminal 1 would be affected,” he added.
Mangio recalled that the Palace “introduced” Al Mal to CIAC executives sometime in 2008, adding that CIAC president Victor Jose Luciano was present then.
Luciano could not be contacted yesterday as he was with some guests.
Mangio said he has been reporting to both President Arroyo and former Trade and Industry Secretary Peter Favila on developments on Al Mal’s bid to get the terminal projects here.
Favila, he said, was the Cabinet member in charge of overseeing foreign investments in the country.
“We had been looking for investors since 2008. There were Chinese, American, Filipino contractors but they all failed to comply with the requirements,” Mangio recalled. Al Mal was among those which failed, he admitted.
Last year, the CIAC, however, again received “unsolicited proposals” that included those from Al Mal. “Al Mal was chosen as the best. We were following all government rules and regulations.”

Rejected anew

A CIAC source, however, said the CIAC board again rejected Al Mal’s proposals only two weeks ago.
Al Mal has reportedly linked up with a local firm called PRIME to comply with the law limiting foreign ownership of public facilities in the country, to justify the requirement of a 70-30 percent joint venture. PRIME was reportedly set up by three businessmen, including Batangas Rep. Hermenigildo Mandanas.
Mandanas and Mangio were among those who were with the President in her visit to Davos, Switzerland last year, sources said.
Sometime in April last year, CIAC expressed “high hopes” on the completion of Terminal 2 amid a proposal from the Pacific Avia Group Inc. (PAGI) which was then being considered.
No CIAC official could immediately be contacted to explain what happened to PAGI.  

‘Midnight deal’

Reacting to the Clark airport issue, opposition senatorial candidate Joey de Venecia yesterday advised President Arroyo to “back off” from the “midnight deal” on the new DMIA terminal.
De Venecia, one of the senatorial bets of the Pwersa ng Masang Pilipino, said Mrs. Arroyo should leave the project to the next administration.
“There appears to be something fishy about the proposal to allow a Kuwaiti firm to take over the airport project,” he said.
“Insiders are confirming that as early as 2008, the CIAC’s Joint Venture Special Committee had already rejected Al Mal’s proposal as onerous. The backroom maneuvers to award the deal to the Kuwaiti firm smacks of a midnight contract aimed as lining the greedy pockets of unscrupulous Palace brokers,” De Venecia said.
He said Mrs. Arroyo “will do well to tell her boys to back off from this deal. They should not forget that the Clark International Airport is dedicated to the memory of her father. They cannot sully his memory with a midnight transaction that may end up to be grossly overpriced and absolutely questionable.”