The Office of the Ombudsman has ordered the dismissal of National Director Demosthenes R. Escoto of the Bureau of Fisheries and Aquatic Resources (BFAR) for grave misconduct over the purchases of transmitters and transceivers in 2018.
The penalty of dismissal also carries with it the cancellation of eligibility, forfeiture of retirement benefits, and perpetual disqualification to hold public office.
The administrative charge against former Department of Agriculture (DA) assistant secretary Hansel O. Didulo has been dismissed for insufficiency of evidence. BFAR is under the DA.
The purchases of transmitters and transceivers, which were subject of Escoto's administrative charges, were intended for the BFAR's Integrated Marine Environment Monitoring System Project Phase II (PHILO Project), which was supposed to enhance the government's capability to safeguard and monitor the country's marine resources and to combat illegal, unreported, and unregulated fishing activities.
The French government granted a loan to the Philippine government amounting to €28,520,000 on Dec. 18, 2015 payable in 30 years with an interest rate of 0.115 percent per annum in order to finance the PHILO Project. The condition of the loan was that the source of the products to be purchased for the PHILO Project must originate from French suppliers.
Two companies participated in the bidding for the transmitters and transceivers: CLS Collecte Localisation Satellites (CLS) and SRT-France, a subsidiary company of SRT-United Kingdom (SRT-UK) incorporated in France. After checking the bids, the former was disqualified and the latter was declared the winner of the contract.
However, when the French Embassy in the Philippines checked, it declared that SRT-France was unqualified under the terms of its loan since SRT-France has no manufacturing or engineering facilities in France. It also has no record of activities in France, and its parent company is incorporated and domiciled in the UK.
The BFAR then sought to increase the project cost from P1.675 billion to P2,097 billion and to close the French loan. It also sought to change the funding source from foreign assistance to local funding, which was later approved by the National Economic Development Authority (NEDA) - Investment Coordination Committee (ICC).
The Department of Budget and Management (DBM) then alloted P2,097,819,000 for the PHILO project as requested, and the final procurement for the transceivers took place on Oct. 30, 2018. Around 5,000 transceivers were purchased for commercial catcher vessels above 30 gross tons and Satellite Services subscription during the entire duration of the project.
Since the contract was no longer limited to French suppliers, the participants to the bidding were Fleet Automation Services Pte. Ltd. JV Comfac Corporation and SRT-UK. Since Fleet Automation was found "wanting" in qualification, SRT-UK was awarded the contract.
However, the Commission on Audit (COA) issued a Notice of Suspension on Jan. 24, 2020 claiming that a portion of the money paid to SRT-UK worth P722.639 million was not supported with complete documents, and that there was failure to pay the appropriate withholding tax.
Escoto and Didulo were then slapped with administrative charges for accepting the bid of SRT-UK and causing the loss of the French loan. They were also accused of failing to account for the P722.639 million and for adopting a project that is not "sustainable."
For the Ombudsman, SRT-France was indeed not qualified to participate in the bidding. It added that an "anomalous scheme" was adopted by the respondent (Escoto) to cause the award of the contract to SRT-UK, even though it was disadvantageous to the government.
The Ombudsman said that their suspicions were raised at the outset that SRT-UK was really the bidder for the transceivers, and SRT-France was only used to satisfy the French-related conditions of the loan.
"Despite knowledge of the French-related conditions, the newly created French company, and with no proof of activities in France, [SRT-France] made use of the documents pertaining to its parent company (SRT-UK) to justify its eligibility to bid. These documents were found to be acceptable by Escoto," the Ombudsman said.
It found that SRT-France was created just a month before the bidding. With the sudden termination of the award to SRT-France for some "baseless reason," as well as the immediate cancellation of the French loan, the Ombudsman said that Escoto paved the way for SRT-UK to participate in the new bidding with expanded scope and increased coverage.
The Ombudsman added that Escoto gave unwarranted benefit to SRT-France by allowing the company to participate in the bid despite its ineligibility, and his actions constitutes a "willful violation of the law and established rule."
"His actions as Chairman of the bids and awards committee culminated in the award of a very favorable contract to SRT-UK. In this contract, the government was made to assume a contractual obligation way beyond what was asked for. As mentioned, instead of purchasing merely 3,736 units of VMS Transceivers, he agreed to compel the government to procure 5,000 units of these items. This is a contractual obligation that is grossly disadvantageous to the government and unreasonably beneficial to SRT-UK," it ruled.