For the past 20 years, across four presidential terms, the same contractors have been awarded the largest public works contracts. Whether the president is a Marcos, a Duterte, an Aquino or an Arroyo, many politically well-connected firms have outbidded all others, cornering a disproportionate chunk of the lucrative public works projects funded from the people’s taxes.
Through those years, the PCIJ has tracked the anomalous practices in public works contracting. Congress members appear shocked at the excesses of the Discayas, the Cos, and their like. But they have long known about—and are often complicit with—these anomalies
We found that despite changes in presidential administrations, the same issues persist:
- widespread corruption and irregularities
- problematic contractors with questionable qualifications and performance records continue to bag large contracts
- significant political influence in contract awards, and
- challenges in regulatory oversight and enforcement
PCIJ found that these companies were consistently at the top regardless of who was president:
- Equi-Parco Construction Company (founded by former Butuan Mayor Vicente Lagnada)
- Arroyo – Top 2
- Aquino – Top 1
- Duterte – Top 3
- Marcos – Top 13
- Sunwest, Inc. (founded by Ako Bicol Party-list Rep. Elizaldy Co and former Ako Bicol Party-list Rep. Christopher Co)
- Arroyo – Top 8
- Marcos – Top 1
- Hi-Tone Construction & Development Corp. (founded by former Ako Bicol Party-list Rep. Christopher Co)
- Arroyo – Top 7
- Marcos – Top 13
- Legacy Construction Corporation (founded and owned by Alex Abelido)
- Duterte – Top 10
- Marcos – Top 2
- L.R. Tiqui Builders, Inc. (owned by Luisito R. Tiqui)
- Arroyo – Top 6
- Marcos – Top 12
- St. Gerrard Construction Gen. Contractor & Development Corp. (founded by Cezarah Rowena Discaya and Pacifico Disacaya II)
- Aquino – Top 7
- Duterte – Top 1
- Marcos – not in the top 15 but among 9 Discaya-owned companies that got P31 billion in flood-control projects
(Note: The data we have for the Marcos presidency includes only flood-control projects, not all DPWH-funded projects, in just the first three years. The data we have for the Duterte presidency covers only one year.)
PCIJ’s reporting on past administrations showed that presidents unable or unwilling to rein in the anomalies:
- President Arroyo’s “obsession with road projects” meant she “wanted networks of roads and bridges rolled out across the nation” so she could preside over inaugurals, effectively turning public infrastructure into “political shrines”. Her first budget secretary noted that Arroyo “did not give as much thought to cost and quality”. The ease with which obscure contractors secured deals suggested they had “very, very powerful connections.”
- In the Aquino administration, local politicians, including mayors and congressmen, routinely demanded “cuts” from winning contractors, threatening to make it difficult for them to secure permits if demands were not met. This practice was described as “ingrained in our political system,” driven by demands from political supporters.
- Under Duterte, of the top 10 contractors, three had been suspended or blacklisted, including one for submitting fake tax clearance certificates. One had its corporate registration revoked. The officers of four others are facing trial for alleged graft. Two have direct connections to politicians, some others had sealed deals via financial favors exchanged with certain politicians. All share a record of incomplete or bad projects, and unsatisfactory ratings in some project performance evaluations.
In 2007, the World Bank conducted a three-month investigation on road projects that it had funded and found systemic corruption and collusion in the awarding of those contracts. It found evidence of a well-organized cartel of contractors actively supported by government officials improperly influenced contract awards and set inflated bid prices of road projects. Witnesses interviewed by the Bank consistently referred to this collusive activity as the “SOP,” or Standard Operating Procedure, and an “open secret.”
Here’s an excerpt from the report (INT here refers to the Integrity Vice President unit of the World Bank, which investigates fraud and corruption in Bank-funded projects):
“[O]ver 15 witnesses independently complained of systemic corruption undermining competition in Philippines road projects. Witnesses told INT investigators that politicians, local businessmen, and DPWH officials usually were involved in the cartel’s operations. Some witnesses told INT investigators that a politician representing the area in which the project is to be carried out normally selected the winning contractor. Witnesses said that then, usually the day before the bid submission deadline, the cartel members met at a local hotel and the designated losing bid-ders were told the pre-arranged prices that they were to bid. Witnesses explained that these prices were significantly inflated to exceed the already-inflated price of the designated winner. Witnesses added that, prior to their submission, the losers’ bids would be checked by the government officials who acted as the cartel’s “mediators”, to ensure that the bids adhered to the cartel-ordered pricing scheme.” Read the World Bank investigation and the summary here.
Will Congressional investigations finally break the cycle and usher lasting change? Could a new DPWH secretary make a difference? And will President Marcos, who pointed out the scandalous anomalies in flood control projects, be able to rein in deeply ingrained corrupt practices?