Palace on alleged water deal collusion: Let law take its course

Presidential Spokesperson Salvador Panelo acknowledged that there was indeed a “conspiracy between certain parties to commit this colossal fraud and rip-off.” (File Photo: Office of the Presidential Spokesperson/Facebook)

MANILA — Malacañang on Thursday said it will let legal process run its course following allegations that state regulator Metropolitan Waterworks and Sewerage System (MWSS) allegedly colluded with Maynilad and Manila Water by relieving them from paying corporate income taxes, allowing them to rake in more profits.

Presidential Spokesperson Salvador Panelo acknowledged that there was indeed a “conspiracy between certain parties to commit this colossal fraud and rip-off.”

However, he said the people involved in the alleged onerous provisions in the water contracts have yet to be found out.

“Who are involved in the conspiracy is another matter. And if we find out who they are then the law has to take its course regardless of who are involved,” Panelo said in a Palace briefing.

Panelo, meanwhile, belittled reports that uncertainties over the concession contracts have prevented the water firms from commencing new projects to improve the system as banks have suspended lending money to them.

“My reaction is ‘Excuse me, you have raked billions of profits during the years from 1997 up to the present, what do you need loans for? You have the money in your pocket,” Panelo said.

Citing Justice Secretary Menardo Guevarra, Panelo said the Department of Justice is eyeing the completion of the renegotiated contracts in three to six months and will focus on onerous provisions in the rate rebasing mechanisms of the previous agreements.

DOJ earlier claimed that these onerous provisions allowed the firm to pass on to consumers such costs as income taxes, commission fees, service payments, and arbitration fees.

Manila Water is a subsidiary of the Ayala Corp., while businessman Manuel V. Pangilinan’s Metro Pacific Investments Corp. owns a controlling stake in Maynilad.

The two private companies distribute water in Metro Manila and other parts of the country under agreements signed with state regulator Metropolitan Waterworks and Sewerage System (MWSS) in 1997.

President Rodrigo Duterte lashed out at the water concessionaires after a review by the DOJ showed the water contracts were “onerous and disadvantageous to the people, relative the terms or periods, government non-interference, as well as concessionaire indemnification for losses.”

Due to the two provisions, the government was ordered by the Singapore arbitration court to pay about PHP3.6 billion to Maynilad and recently, PHP7.4 billion to Manila Water as compensation for losses and damages.

On Tuesday, Duterte gave the water firms the option of either accept the new water contracts favorable to the government and the public or face cancelation of their present deals.

“The Chief Executive is giving the water concessionaires the option of accepting the new contracts without any guarantee of not being criminally prosecuted together with those who conspired to craft the very onerous contracts which are void ab initio for violating the Constitution and the laws of the land,” Panelo said in a Jan. 7 Palace briefing.

“Should Maynilad and Manila Water refuse to accept the new agreements, the Chief Executive will order the cancellation of their present water contracts,” he added.

Panelo also said Duterte will not hesitate to order the nationalization of water services in their respective areas of operation which he later clarified meant a “military.”

In a media interview on Tuesday, the President said he would not rush Maynilad and Manila Water into deciding whether they want to accept the new water concession agreements being prepared by the government which no longer has the alleged “onerous” provisions found in the existing deals.

He noted that as soon as the water firms are given copies of the new water concession agreements, they may take their time in agreeing to them or rejecting them.