Insider Drags DND Chief Into ‘Anomalous’ Chopper Deal

Insider Drags DND Chief Into ‘Anomalous’ Chopper Deal

June 13, 2015

A whistleblower tells senators that Defense Secretary Voltaire Gazmin was promised P84M in commission to give the chopper deal to Rice Aircraft Services

MANILA, Philippines – Corruption in the defense department goes all the way to the top, according to a former agent of a United States-Canadian joint venture that won the allegedly anomalous P1.2-billion deal to supply the Philippine Air Force with 21 refurbished combat choppers.

Secretary of National Defense (SND) Voltaire Gazmin was allegedly promised a 7% kickback – about P84 million – while Defense Undersecretry for Finance Fernando Manalo got another 5% of the total project cost to cover his and his men’s commissions, according to agent-turned-whistleblower Rhodora Alvarez in an affidavit submitted to the Senate blue ribbon committee last week.

On Tuesday, June 9, Gazmin did not attend the continuation of the Senate committee hearing, but sent a letter denying the allegations.

Both Gazmin and Manalo  have denied before the investigating Senate body. Alvarez admitted she had not dealt with Gazmin himself but said she’s confident that Manalo couldn’t make those commitments without his knowledge.

Alvarez said she was also supposed to get 3% or about P36 million. This means a total of P180 million or 15% of the total project cost was meant to pay grease money to ensure that the joint venture of US-based Rice Aircraft Services Incorporated (RASI) and Canada-based Eagle Copters Ltd won the contract.

Gazmin’s denial

In response, Gazmin submitted to the Senate committee a letter to deny the claims of Alvarez.

“I categorically state that I have given strict instructions to all Department of National Defense (DND) officials to avoid acts of impropriety in all their dealings. I have never issued any instructions to seek favors from any entity or manipulate transactions that would violate the public trust and result in a disadvantage to the government,” said Gazmin, who did not attend the continuation of the Senate hearing on Tuesday, June 9.

Gazmin is a father figure to President Benigno Aquino III. Ascommander of the Presidential Security Group (PSG) of his mother, the late President Corazon Aquino, he protected her administration from several coup attempts, including the bloodiest in December 1989 that wounded now President Aquino.

In the Senate hearing, Alvarez provided detailed narration of her supposed meetings with Manalo and Alvarez to make sure the only RASI could win the project.

Senators have raised red flags on the chopper deal – delayed delivery of choppers and engine defects in 4 of the only 7 choppers it was able to deliver.

Senator Francis Escudero also questioned why RASI, which failed the 3 public biddings for the project, still won the contract during the negotiated bid.

“To my mind, after two failed biddings, you should have learned your lesson already,” Escudero said.

Defense Undersecretary Pio Lorenzo Batino said the defense department is now investigating the contract.
“We regret that we have not yet formed conclusions to the facts we received. We are collating everything to make a definitive conclusion on all of these matters,” he said.

Air Force chief’s concerns

Alvarez said RASI’s choppers were only good as search and rescue choppers, not for combat mission. She said this is why the choppers were not used by the Philippine Air Force during the “all-out war” against the Bangsamoro Islamic Freedom Fighters earlier this year.

Senator Joseph Victor Estrada said that Air Force pilots he talked to admitted to him that they are afraid to fly those choppers.

It turned out Air Force chief Lieutenant General Jeffrey Delgado had refused to accept the choppers last year because RASI wanted to deliver them without the necessary gun mounts. But the DND supposedly amended the terms of the contract to allow separate delivery of the choppers and the gun mounts.

“I have a memorandum signed by commanding general Lieutenant General Jeffrey Delgado to Secretary of National Defense, saying that the request of Rice Aircraft is not acceptable,” Alvarez told the Senate hearing.

Alvarez said the defense department repeatedly amended the contract to allow RASI’s request.

Alvarez said the Air Force eventually received 21 gun mounts and most of them may be useless because the defense department has terminated the rest of the contract with RICE. The US firm is appealing the ruling, however.

The defense officials, military officers, and representatives of the winning bidders were encouraged to respond to allegations made by Alvarez in her affidavit.

Manalo earlier confirmed that Alvarez used to be an agent of the US firm RASI. He said she’s only making up the allegations to extort money from the supplier.

The allegations of Alvarez, however, have mostly targetted at Gazmin, Manalo, and Assistant Secretary Patrick Velez and particular Air Force officers who were supposed to scrutinize the qualifications of the bidder and the inspected the choppers upon delivery.

She also accused Manalo, a former Air Force general, of being an former agent of RASI. She said this explains why he would supposedly favor the company. – Rappler.com