Palace to let law run course in water fraud

January 09, 2020

MANILA — Malacañang on Thursday said it will let legal process run its course following allegations that state regulator Metropolitan Waterworks and Sewerage System (MWSS) allegedly colluded with Maynilad and Manila Water by relieving them from paying corporate income taxes, allowing them to rake in more profits.

Presidential Spokesperson Salvador Panelo acknowledged that there was indeed a “conspiracy between certain parties to commit this colossal fraud and rip-off.”

However, he said the people involved in the alleged onerous provisions in the water contracts have yet to be found out.

“Who are involved in the conspiracy is another matter. And if we find out who they are then the law has to take its course regardless of who are involved,” Panelo said in a Palace briefing.

Panelo, meanwhile, belittled reports that uncertainties over the concession contracts have prevented the water firms from commencing new projects to improve the system as banks have suspended lending money to them.

“My reaction is ‘Excuse me, you have raked billions of profits during the years from 1997 up to the present, what do you need loans for? You have the money in your pocket,” Panelo said.

Citing Justice Secretary Menardo Guevarra, Panelo said the Department of Justice is eyeing the completion of the renegotiated contracts in three to six months and will focus on onerous provisions in the rate rebasing mechanisms of the previous agreements.

DOJ earlier claimed that these onerous provisions allowed the firm to pass on to consumers such costs as income taxes, commission fees, service payments, and arbitration fees.

Manila Water is a subsidiary of the Ayala Corp., while businessman Manuel V. Pangilinan’s Metro Pacific Investments Corp. owns a controlling stake in Maynilad.

The two private companies distribute water in Metro Manila and other parts of the country under agreements signed with state regulator Metropolitan Waterworks and Sewerage System (MWSS) in 1997.

President Rodrigo Duterte lashed out at the water concessionaires after a review by the DOJ showed the water contracts were “onerous and disadvantageous to the people, relative to the terms or periods, government non-interference, as well as concessionaire indemnification for losses.” PNA