Blacklisted by the WorldBank

Blacklisted by the World Bank

The Philippines faces another global embarrassment with the recent blacklisting by the World Bank of three local and four Chinese construction companies found to have colluded in a road project in the country.

The government could do no more than to offer a weak promise to take action if the charges against the firms were proven.

Such a reaction is almost an insult to the World Bank, which would not have taken the extreme measure of blacklisting companies lightly.

The World Bank barred China Road and Bridge Corp. for eight years, China State Construction Corp. and China Wu Yi Co. Ltd. for six years, and China Geo-Engineering Corp. for five years.

Philippine firm E.C. de Luna Construction Corp. and its sole proprietor, Eduardo de Luna, were both barred indefinitely — the first permanent banning since 2004. The other Philippine firms, Philip-Cavite Ideal International Construction and Development Corp. and CM Pancho Construction, Inc., were each banned for four years.

The local companies did more than shame the Republic of the Philippines. Future loans will be harder to come by because of them. This is no small matter considering that World Bank loans are always under the friendliest of terms, with very low interest rates and spread out over an extended period of time.

Indeed, one of the most open secrets is how “contractors” earn millions through government contracts, where kickbacks are the rule rather than the exception. Because of these kickbacks, the winning bidders come up with substandard projects. And because they are substandard, they will break down sooner rather than later, creating the need for another bidding to repair, renovate or reconstruct.

It is a self-perpetuating cycle involving institutionalized graft.

The sad thing about the World Bank blacklist is that Filipino firms had the gall to believe they could get away with it. Never mind the Chinese companies. In China, executives of companies found to have engaged in corrupt practices face the death penalty. The same is true of corrupt government officials.

The World Bank, for its part, cancelled the tender for contracts worth a total of $33 million, and banned the firms from future tenders. As it is a financial institution, the Bank is in no position to mete out stiffer penalties.

Sad to say, in the Philippines they receive nothing more than slaps on their wrists. Little is done to prevent them from bidding for future projects. In the case of the blacklisted Filipino companies, no concrete action is being taken. China, on the other hand, has acted differently, calling on the World Bank to provide evidence of graft by the Chinese construction firms.

The present administration has received millions of dollars from foreign sources, ostensibly to fight graft and corruption. With this latest blackeye, it is clear that such assistance has generally gone to waste.

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