Professional Documents
Culture Documents
NAIA III Fiasco Meet The Cast of Characters2
NAIA III Fiasco Meet The Cast of Characters2
By ROEL LANDINGIN
ALFREDO LIONGSON
The PR consultant
Alfredo Liongson was the highly paid consultant that Piatco and Fraport turned to in the middle of
2001 to help them secure a number of government agreements for the Naia 3 project. The two
companies needed government approvals to satisfy close to 80 conditions set by a group of
international lenders for releasing a $44-million loan.
A former marketing executive of United Laboratories Inc., the Philippines biggest pharmaceutical
company, Liongson received a monthly retainer of $200,000 and close to $2 million in variable fees
for helping secure at least nine approvals or agreements from the DOTC and other government
agencies.
The biggest fee of $600,000 was to be paid after the Department of Transport and Communications
(DOTC) approved Piatcos designation of the PAGS Terminals Inc. (PTI) as operator of the new
passenger terminal. Another $200,000 was to be paid to Liongson after the DOTC and Manila
International Airport Authority (MIAA) executed a third supplement to the concession agreement.
The unusually big paymentsSen. Sergio Osmea quipped Liongson was getting more than the
annual salaries of all top officials of the countrys executive, legislative, and judicial departments
combinedhave given rise to suspicions that the monies actually went to government officials who
helped facilitate the approvals.
For his role in securing government approvals, he was indicted by the Office of Ombudsman along
with former DOTC officials and Piatco and Fraport executives for violation of the anti-graft and corrupt
practices act. The complaint was dismissed by the Sandiganbayan for lack of probable cause but the
case has been appealed to the Supreme Court.
Liongson disappeared from public view when copies of his lucrative consultancy contract with Piatco
became public. The Sandiganbayan issued a warrant for his arrest after he failed to appear before
the court to answer the Ombudsmans charges and post bail.
Cheng Yong, who brought him in, defended Liongson, saying the former Unilab vice president was a
highly effective PR person who was tasked to counter the negative publicity on Piatco and the Naia 3
project. However, Cheng could not come up with a detailed list of news articles, advertisements, and
radio and TV plugs that Liongson may have helped place to boost Piatcos image.
Asked where Liongson possibly was, Cheng said in 2002 he may have been out of the country and
enjoying his retirement. Oddly, the 1978 MBA graduate of the Pamantasan ng Lungsod ng Maynila
who was described as a specialist in counteracting adverse publicity was helpless when it came to
the bad press about him.
PANTALEON ALVAREZ
Conflict of interest
A lawyer from Davao, Pantaleon Alvarez has been a bureaucrat, lawmaker, and Cabinet member. But,
wittingly or not, in one form or another, the Naia 3 project loomed large in whatever work he was
doing.
In 1996, he was assistant general manager at the MIAA. Two years later, he ran and won as a
member of Congress representing Davao under Renato de Villas Reporma Party. He became vice
chairman of the House of Representatives committee on transportation and communication. When
Gloria Arroyo became president in January 2001 following Joseph Estradas ouster, she appointed
Object2
Object 3
Department of Justice (DOJ) was preparing a legal opinion declaring Piatcos contracts null and void ab initio or
from the beginning. Perez had initially denied it but Climaco was proven right when the DOJ indeed issued the
opinion on November 28 that year. A day later, Arroyo announced she was revoking Piatcos concession agreement.
By that time, Perez had gone on leave amid accusations from former Estrada financial adviser Mark Jimenez the
justice secretary was extorting money in exchange for dropping plunder charges against him.
Climaco also resigned as presidential adviser in early 2003 but Fraport AG in September accused her and Avelino
Cruz, then the presidential chief legal counsel, of undermining the project to ease out the Chengs and replace them
with what it called a government-favored interest. The charge was one of complaints cited by Fraport when it filed
an arbitration suit against the Philippine government before the World Banks International Commission for the
Settlement of Investment Disputes (ICSID) in Washington DC.
The German firm also said that the two officials pressured it to hire, as legal counsel, Arthur Villaraza, Cruzs former
law partner and the presidents former private lawyer. Fraport said it did not hire Villaraza after the latter asked to
work anonymously and demanded to be paid tens of millions of US dollars to be deposited in overseas bank
accounts.
Villaraza has denied this. Fraport counsel Dr. Dietrich Stiller belied the extortion attempt in an apology letter to
Villaraza. He stated that, no USD20 mn request or similar request was made by any member of your firm in, or in
the context of, that meeting.
Though no longer with government, Climaco cannot completely leave the Naia 3 cases behind. Last year, she
testified before ICSID and was subjected to intense grilling by Fraport lawyers. ICSID dismissed Fraports suit in
August 2007.
The antigraft court dismissed the charges against him last year for lack of probable cause, but government
prosecutors are appealing the decision with the Supreme Court. His legal woes are not yet over. He has vowed to
continue fighting the legal battles not so much to recover his investments but to clear his familys name.
LUCIO TAN
He wants Naia 3
Conspiracy theorists like to paint Lucio Tan as the hidden power behind the legal and policy reversals that have
befallen Piatco. In fact, the countrys second richest man and the owner of the countrys biggest airline had no need
for secret conspiracies to freeze the Naia 3 project, wrest it from the Chengs, and hound officials and private parties
to the deal. He has done so openly and publicly through complaints and cases filed with the countrys investigative
tribunals and courts.
MacroAsia, his inflight catering company, was one of the petitioners in the September 2002 suit that asked the
Supreme Court to nullify Piatcos contract. And no less than the corporate secretary of his AEDC filed the complaint
that became the basis for the Ombudsman to file a string of criminal cases against DOTC officials, and Piatco and
Fraport executives in January 2005. AEDC has also filed a case asking the Supreme Court to compel the
government to award him the right to operate Naia 3 after Piatcos contract was declared null and void.
Although government lawyers are formally opposing his petition for the high court to award him the right to
operate Naia 3, many officials accept that he plays a crucial role in any legal and commercial settlement that will
pave the way for the operation of the new terminal. He has offered to pay about $350 million to Piatco and Fraport
as compensation for building the facility.
Controversy hardly deters Tan from getting what he wants. It didnt stop him from acquiring control of the troubled
Philippine National Bank even though his Philippine Airlines (PAL) had one of the biggest past due loans with the
bank. Neither did the numerous government suits alleging his companies were part of the late strongman
Ferdinand Marcoss ill-gotten wealth stop him from acquiring majority ownership of PAL in the early 1990s. He lent
money to a group led by Antonio Cojuangco Jr. that won the bid for the airline but exercised his option to convert
the debt into equity when the borrowers failed to pay back the loan.
From his birth on July 17, 1934 in the southern Chinese province of Fujian, Tans meteoric rise during Marcoss
martial law is still the stuff of legend and speculation. Unlike the other wealthy taipans who began to build their
fortunes before or shortly after World War II, Tan put up his flagship company, Fortune Tobacco, only in 1966. It
quickly grew to become the countrys biggest cigarette maker in part because of government incentives and
assistance.
He repeated the same feat in banking. In 1977, he acquired the troubled General Banking and Trust, and renamed it
Allied Banking Corp. With generous support from the Central Bank, which provided a large dose of low-interest
loans and liberally approved its applications for branches, Allied Bank became one of the countrys biggest banks in
the early 1980s.
Tan studied chemical engineering at Far Eastern University, where Piatcos Cheng Yong was a schoolmate. He quit
school before graduating to work in a tobacco factory while Cheng Yong stayed on and got his degree. People who
know both men recall that in school, they went after the same girl. It seems the rivalry has not stopped. Now in their
70s, they are going after the same airport terminal.
THE GERMANS
They signed up Liongson
Bernd Struck was Fraports executive vice president and Piatco chairman while Hans Arthur Vogel was Piatcos
finance director. They represented the German company in the Piatco board of directors and stayed in Manila for
long stretches of time to help oversee the Naia 3 project.
The two German executives share the unusual distinction of perhaps being the only executives of a big European
company to face criminal indictments before the Philippines anti-graft court, the Sandiganbayan. The court also
issued warrants for their arrest after they failed to post bail and answer the charges brought against them.
They were charged with violating the countrys Anti-Graft and Corrupt Practices Act for their role in hammering out
a third supplement to the amended and restated concession agreement between Piatco and the DOTC/MIAA that
the Ombudsman considers disadvantageous to the government.
Struck and Vogel were not signatories to the third supplement but, as members of the so-called Piatco special
team, the pair signed the highly controversial consultancy contract with Liongson, which government investigators
believe was a mechanism for making illicit payments to government officials.
Fraport is the German company that operates the Frankfurt International Airport. Naia 3 was to be Fraports
flagship overseas projectto demonstrate that it could be as good running airport facilities overseas as it does in
Germany. Attracted by the terminal projects supposedly high returns and the Chengs ability to secure concessions
from President Joseph Estradas government, Fraport put in $425 million or over 60 percent of Piatcos capital in
return for less than a third of management control.
Struck played an important role in convincing Fraports supervisory board during a meeting in March 1999 to agree
to invest in Piatco amid warnings from the companys financial adviser, KPMG, about country risks in the
Philippines. He pointed out that Estrada had just issued instructions to all government agencies to proceed with the
construction of Naia 3 as THE international airport of the Philippines. This calmed down worries about
competitive risks from other international airports that the government may build or expand in Luzon.
Vogel was also one of the 16 Piatco and Fraport officers and directors accused last year by the National Bureau of
Investigation Anti-Fraud and Computer Crimes Division of violating the Anti-Dummy Law. The NBI concluded that
Fraports direct and indirect shareholdings in Piatco, which accounted for 61.4 percent of the companys capital,
violated laws that restrict foreign investments in companies that operated public utilities, such as airport terminals,
to no more than 40 percent. The DOJ, after initially dismissing the complaint, recently reversed itself and upheld
the NBI complaint, paving the way for the filing of the case before a trial court.
The complaint is particularly ironic, especially on Vogels part. In a December 1999 meeting, the Fraport executive
was noted to have asked questions of the German companys Philippine lawyers that indicated Fraports awareness
of a concern about violations of the Anti-Dummy Law, according to the ICSID decision on Fraports complaint
against the Philippines. He should have paid more attention to the lawyers answers.
bar the use of documents seized during a raid on its Hong Kong office as evidence in the arbitration cases abroad
and in the criminal cases here. The Philippine governments legal team requested the raid under the mutual legal
assistance agreement between Hong Kong and Philippine governments, as they were tracing bribes paid to public
officials channeled through two British Virgin Island companies. These were being administered by a Hong Kong
company, which was apparently sharing an office with Romulo Mabanta. The firm successfully countered that the
warrant undermined their legal professional privilege vested in their clients.
Nevertheless, on his own, De los Angeles is an expert on contracts, securities regulations, joint ventures and loan
syndications, and alternative dispute resolutions, especially when foreign clients are involved. Tucked under his belt
is extensive experience in the capital market, having been elected the first president of the Philippine Stock
Exchange in 1992. He became chairman of the Philippine Central Depository in 1994.
He continued to hold key positions, mostly as director, in other quasi-government agencies, such as the Philippine
Securities Clearing Corporation in 1995, and the Philippine Dealing and Exchange Corporation and the Philippine
Depository and Trust Corporation, both in 2003.
De los Angeles was also a private prosecutor during the 2001 impeachment trial of then President Joseph Estrada.
With a masters degree from Columbia University in 1970, he lectured at the Ateneo de Manila law school, his alma
mater. He eventually became the law schools dean from 1984 to 1990. In 2004, he was elected president of Manuel
Luis Quezon University. In 1987, while he was president of the Philippine Association of Law Schools, he assisted in
designing the model law curriculum which the majority of law schools in the country are using today.
country.
FRANCISCO CHAVEZ
Counsel for Piatco
The high-profile solicitor general of former President Cory Aquino left government service in 1992, but continues to
hog the limelight to this day. He was a vocal opponent of martial law and founded an association of lawyers called
Bonifacio, which defended poor clients for free. Francisco Chavez graduated summa cum laude from West Negros
College and took his law degree from the University of the Philippines, cum laude.
Chavez defended Piatco during the initial phases of its anti-dummy case. He said he took them on as a client
because this was aligned with his other anti-corruption causes. He banked on this reputationof taking on
controversial cases like the plunder case against President Arroyo on account of the fertilizer fund scamwhen he
ran for a Senate seat in 2004 under the slate of presidential candidate Raul Rocos Aksyon Demokratiko party. But
just like the late senator, he lost for the second time. Chavezs first try was in 1992.
Perhaps he was hoping for better luck in the Naia 3 issue. He filed one of the first casesa plunder charge before
the Ombudsmanagainst then transportation Secretary Pantaleon Alvarez and Piatco officials in September 2001.
JOSE BERNAS
Counsel for Congressman Salacnib Baterina
Jose Bernas may be often associated with his uncle, the constitutionalist Joaquin Bernas, but he has made a name
and a flourishing law career for himself.
He has extensive experience in real estate, construction, information technology, financing and shareholder
agreements, and intra-corporate disputes. Bernas is external corporate counsel, corporate secretary, disclosure and
NESTOR BALLACILLO
Assistant Solicitor General
Nestor Ballacillo and his son were riding a tricycle in Barangay San Antonio on their way to Sucat in December
2006 when they were gunned down by two armed men. They died on their way to the nearest hospital. Ballacillo
was handling several controversial cases, such as the wealth cases against the Marcos family, the ban on
breastfeeding advertising case, and the Naia 3 case. Previously, he represented the government in an excess-charges
case against Meralco that resulted in a customer refund of about P28 billion.
Co-workers, friends, and family members describe him as straight, humble, kind, and a thoughtful and honest
person. He was a conscientious public official who inspired his peers and subordinates with his devotion to duty. He
was honest and frugal and was said to have died poor. He enjoyed simple food and often used public transportation.
At the Office of the Solicitor General, he was referred to as the Obispo (bishop) because of his rectitude and
religious devotion. He was an ex-seminarian. He graduated from the Arellano University School of Law in 1983 as
the class valedictorian.