Political Tidbits is the prestigious column of Belinda Olivares-Cunanan that ran for 25 continuous years in the op-ed page of the Philippine Daily Inquirer, the newspaper that she helped put up with its multi-awarded founder, the legendary Eugenia Duran-Apostol, in December 1985, just two months before the EDSA Revolution.

Sunday, April 6, 2014

What’s the truth about alleged attempted extortion on Czech company Inekon, said to have involved DOTC officials and influential private individuals? What about accusations Czech Ambassador Rychtar has leveled vs. DOTC, specifically vs. MRT Gen-Mgr Al Vitangcol? Was he truly involved in alleged extortion or is he just the fall guy for highly-placed relatives? House investigation should summon him to clear air once and for all.

Al Vitangcol
MRT-3 General-Manager

Last Oct. 23, 2013, this blog tried to dissect the truth about the long-playing issue of an alleged $30 million extortion attempt on Czech company Inekon, which was involved in bidding for additional MRT trains in 2012.  Almost two years later, this issue seems to get murkier and Czech Ambassador Josef Rychtar is making accusations that now directly implicate MRT Gen-Mgr. Al Vitangcol---contrary to what the Inekon chair was quoted as saying two years ago.

In that Oct. 23, 2013 blog I traced the sequence of events and came to the conclusion that if any big-time extortion is going to be done, it couldn't be at the level of Vitangcol as there were several layers of officials above him; in other words, for such a huge extortion sum, he’s too low in the totem pole. Vitangcol's role in the bidding process was just to recommend the best deal for government, and in fact he recommended the Chinese rival corporation. 

In addition, at the time this extortion controversy raged in mid-2012, Vitangcol was just a neophyte in government, coming from the IT sector where he enjoys a solid reputation with his peers. Would a neophyte really have the guts to extort $30 million? 

Today I decided to reprint that Oct. 23, 2013 blog, so you readers can decide on the facts yourselves. To prevent this issue from getting murkier and for the sake of our country’s and people’s reputation, the House of Representatives should bring the MRT investigation to a credible end. 

Summon Vitangcol himself.

My blog of Oct. 23, 2013:

Two weeks ago the Daily Tribune bannered the headline, “Bid to use MRT exec as fall guy bared,” and this caught the nation’s attention. The Tribune story written by Charlie V. Manalo alleged that MRT-3 General-Manager Al Vitangcol is “likely to  to take the fall in the alleged $30 million extortion attempt against the MRT coach supplier, the Czechoslovakian firm Inekon, to cover up for the alleged participation of presidential relatives, a source privy to the botched deal told the Tribune.”

Writer Manalo cited a letter sent by Inekon Board Chair and Director-General Josef Husek to Atty. Vitangcol, belying Husek’s earlier statement made to the NBI that it was Vitangcol who dictated the terms for Inekon to qualify for the bidding of additional MRT train coaches. 

The Tribune quoted Husek as telling the NBI earlier that Vitangcol had proposed the creation of a joint-venture company as a “precondition” for Inekon, the successor of the original MRT train supplier CKD-Tatra,  to get the multi-billion dollar MRT-3 expansion contract, and that it was also Vitangcol, through businessman Wilson de Vera,  who “fixed  the price of the tram coaches that Inekon would supply at $3 million per coach.”


But, said Manalo in his Tribune story, subsequently the Inekon Czech executive changed his story and said that in a meeting on July 9, 2012 at the residence of Czech Ambassador Josef Rychtar, wherein De Vera and a businessman named Manolo Maralit, said to be a consultant of the Czech Embassy, were also present, it was De Vera who proposed that Inekon pay $30 million to an “unknown entity.”

De Vera and Maralit are said to be close to some relatives of the President, principally his first cousin Jorge Aquino-Lichauco (son of Ninoy Aquino’s sister Maur), who is said to have drafted the “sample terms” for the Light Rail Vehicles (LRV) negotiation’s terms of reference (TOR). There’s opinion that Lichauco, who’s suspected to have been the “unknown entity” that De Vera and Maralit were allegedly reporting to that night at the ambassador’s residence, had submitted a sample TOR so stringent that it would have excluded all other bidders.

Inekon Chief Husek claimed that he protested this demand for a $30 million cough-up.


The conclusion Manalo arrived at in his Tribune article was that Al Vitangcol, who is a novato in government circles, having been recruited by former DOTC Secretary Mar Roxas on  January 2, 2012 from the ranks of IT practitioners, is being made the fall guy by a circle close to the President.  The implication in Manalo’s piece is that it’s a sort of a second-generation Kamag-anak, Inc. attempting to corner the LRV enchancement program of the DOTC.

When this Inekon issue first broke out in media, the names of presidential sister Ballsy Aquino-Cruz and husband Eldon Cruz came out as allegedly brokering for the Inekon Group, which is represented here by Yorgos Psinakis (nephew of the late Steve Psinakis, a close friend of the Aquino family from way back, whose wife, Precy, is connected with the family that owns ABS-CBN).

This suspicion was fueled by the fact that the Cruzes had travelled to Prague, capital of the Czech Republic, in 2011, with some businessmen about the time that the Czech company began making overtures to supply the Philippines with more MRT trains.  But the Cruzes explained that like many other Filipinos they were just there to make a pilgrimage to the Sto. Nino de Praga.


The MRT controversy died down after a while, but it resurrected after its GM, the benign-looking soft-spoken lawyer and  former IT practitioner Al Vitangcol, 50, appeared to media to be groomed as the “fall guy” for the hot story on the Inekon extortion issue. When that story first broke out about Vitangcol leading the pack of extortionists vs. Inekon, I was immediately skeptical about it. I hardly knew the guy personally, but during the month-long hearings conducted by the House committee on electoral reforms on the 2010 elections and the PCOS fiasco, chaired by former Rep. TeddyBoy Locsin, I found IT resource person Vitangcol to be quite credible and straightforward---apart from his looking like a seminarian.

Reading the front-page story of Charlie Manalo and subsequent Tribune columns on the MRT-3 issue by Herman Tiu Laurel,  I became quite interested  and began checking out the DOTC websites as well as sources in the know.  I tend to agree now with the conclusion of Manalo that Vitangcol was being set up to be the object of blame for the MRT-3 fiasco, for a number of reason.


For one thing, as GM of the MRT-3, Vitangcol only ranks at third level in the hierarchy of DOTC officials, so that he does not carry the power to decide on procurements of big-ticket items, such as the MRT-3 expansion project that’s said to have been costed by Inekon Group at US$174.460 million for 52 trams. I find it incredulous that this third-level DOTC official could possibly guarantee award of such a huge project on his own for a fee.  At worst Vitangcol could have been acting on behalf of his superiors, but there's no evidence of this from documents checked out.

In fact, the proposal submitted by Inekon on July 12, 2012 was way above the bid of other manufacturers, including the China North Dalian Locomotive which eventually became a complying bidder. Inekon’s proposal was forwarded by Vitangcol under a First Indorsement dated July 23, 2012 to Jose Perpetuo M. Lotilla, chair of DOTC’s Bids and Awards Committee (BAC) and Undersecretary Rene K. Limcaoco (brother of President Cory’s media bureau chief Dodie Limcaoco) who handles the “Rail Sector”of DOTC, for “their appropriate actions.”

In that same indorsement, however, Vitangcol pointed to the huge discrepancy in Inekon’s offer vis-à-vis other offers. He wrote: “Cursory perusal of the (Inekon) proposal shows that the unit cost of each LRV is USD 3,355,000.00, which is way above the ABC (Neda-approved price) of USD 3,000,000.00 per LRV.” Vitangcol also stressed that “The average cost of an LRV from other train manufacturers is about USD 1,500,000.00.”  

Those statements hardly qualify someone as itching to make money from Inekon; in fact Vitangcol was actually shooting down Inekon's proposal and making his superiors realize there were other CHEAPER bids.


On Nov. 7, 2012 Vitangcol sent to new DOTC Chief Joseph Abaya, through  BAC Chair Lotilla a memo stressing that the approved general appropriations budget for 2010 recommended only USD 108.590 million for the MRT-3’s expansion project (far lower than the Inekon offer of USD 174.460 million for 52 trams). Vitangcol also invoked “open competitive public bidding procedures as found in RA 9184, the ‘Government Procurement Reform Act.’ ”

Again, these were hardly conditions set by one out to mulct the highest bidder.  
For his determination to make DOTC consider lower bids, Vitangcol was given a rough time. On Nov. 28, 2012, Asst. Secretary Jaime Raphael Feliciano ordered him to submit documents to JUSTIFY his assertion that lower bids for the LRVs ought to be considered (shouldn’t it be the other way around?).

Vitangcol argued that the NEDA-approved budget contract of USD1.895M per LRV---which would bring in 48 additional LRVs instead of only 26 units---would save the government the amount of USD 41.69M or roughly P1.79B.  With the full backing of the MRT-3 engineers this estimate was endorsed to DOTC’s bids and awards committee on Dec. 21, 2012.  

On February 2, 2013, the DOTC came out with a published invitation to bid and the Terms of Reference. Bidding took place on June 13, 2013 with China North Dalian as complying bidder. Nawala ang Inekon.


But the woes of Vitangcol, who hasn’t even been to Prague, didn’t end there.

The conscript media began its demolition job on him, making him appear as the villain in an alleged extortion case vs. Inekon, instead of the victim.

On July 22, 2013 in a meeting with Secretary Abaya, Vitangcol offered to take a 30-calendar days leave which Abaya  announced. On August 27 he returned to work but the day after, Mark Abaya, son of the Secretary and his chief of staff, asked Vitangcol again to take another 15 days leave; on Sept.10 he returned to work, but next day young Abaya again asked Vitangcol to take a leave, this time of indefinite duration.  

This time, however, the MRT-3 GM refused to do so and asked management instead, through his lawyer Pablo Sanidad, to file charges against him. Until now, however, there are none.

It’s a sad plight for a new and idealistic guy recruited into government service. I checked out Al Vitangcol’s record at MRT-3, and it seems that he did save taxpayers' money a lot.

Consider this:  Before he came in as MRT-3 GM on Jan. 2, 2012, recruited by Secretary Mar Roxas, MRT-3 was paying P14Billion/year for maintenance fees; after he came in he was able to reduce it  to P700M/year. Insurance coverage before 2012 was P200M/a year; now it’s P96M/year. The fare-box collection at MRT used to be only P3-4M daily before 2012; today it’s P6-7M a day; in projects, it used to be P196M for security; now it is P30M.

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