Vibal Publishing House: What cartel?
By Michael Lim Ubac
Inquirer
Last updated 01:55am (Mla time) 06/09/2007
MANILA, Philippines—Amid a controversy over the Department of Education’s recent textbook projects, the country’s biggest publishing house yesterday admitted having links with another printing company but denied it was the leader of a so-called cartel.
In an interview, lawyer Rufino “Penny” Policarpio said his client, Vibal Publishing House Inc., had “interlocking ownership” with an “affiliate,” the LG and M Corp.
But Policarpio rejected reports that Vibal was the leader of a cartel which had cornered the lion’s share of textbook contracts since the Estrada administration.
Policarpio stressed bidders in a consortium cannot bid against each other for a similar lot. “So what cartel?” he said.
According to him, Vibal specializes in publishing and printing, while LG and M is only a printer.
Nothing wrong with consortium
“Vibal and LG and M formed a consortium among themselves. That’s not wrong. Everything has been declared to the (bids and awards) committee,” Policarpio said, admitting that the two jointly bidded for Lots 1 and 2 for the publication and delivery of elementary textbooks.
He was referring to the 17.5 million textbooks and teaching manuals for public elementary and high schools that were intended to be used last school year and were funded from an P800-million loan from the World Bank.
Losing bidders charged the bidding process was rigged and plagued with conflict of interests among the major bidders and several of their supposed “dummy” companies.
Petition pending at SC
Contracts were eventually awarded in September 2006 to Vibal, Watana Phanit, among others, despite a pending petition before the Supreme Court lodged by two bidders that felt they had been cheated.
The new textbooks and manuals were crucial to addressing the worsening textbooks’ backlog in primary and secondary schools, and central to efforts in arresting the rapidly declining quality of education.
One of the lowest complying bidders, Kolonwel, originally won Lot 3 (Hekasi for Grades 4-6) worth P386 million but was booted out of the bidding in the end. Kolonwel had passed the content evaluation conducted by the Instructional Materials Committee Secretariat of DepEd.
The bidding was divided into three lots, Sibika for Grades 1-3, Hekasi for Grades 4-6 and Araling Panlipunan for Years 1-4. But Kolonwel mysteriously failed in a post-test conducted on sample cover and body stocks of the textbooks by Instructional Development Institute of the Department of Science and Technology.
Kolonwel declined to be interviewed pending resolution of a petition with the high court.
Copyright provider
Policarpio stressed that Vibal was being unfairly lumped with Watana Phanit.
“But legally and factually speaking, there is no relationship between Vibal and Watana,” he said, pointing out that Vibal was “only copyright provider” of Watana.
“Watana bought the copyright of one book. Aside from that, we’re not related. Watana is based in Thailand, so therefore it’s incorrect to say that we have interlocking directors or stockholders,” Policarpio said.
Interestingly, Watana got the biggest bulk of the project worth P277.9 million, while the Vibal consortium only bagged P208.8 million, followed by Daewoo International Corp. with P55.6 million.
All three bidded for Lots 1 and 2 covering textbooks for Grades 1-6. The rest of the P800 million has yet to be awarded but was already bidded out, said the lawyer.
The DepEd obtained the loan from the World Bank to finance the procurement of elementary and high school textbooks and teachers manuals in Sibika Grades 1-3, Heograpiya, Kasaysayan at Sibika Grades 4-6 and Araling Panlipunan High School Years 1-4.
Joint ventures
Upon DepEd’s request, the Inter-Agency Bids and Awards Committee (IABAC) of the Department of Budget and Management called for an international competitive bidding on Oct. 27, 2005.
The 11 of the 18 bidders who submitted financial bids were Vibal Publishing, Lex Media Digital Corp., Ibon Foundation, Grand C. Graphics Inc., Kolonwel Trading, Ningbo Binbin, Rex Bookstore, Anvil Publishing, Alkem Co., Watana Phanit and Daewoo International Corp.
PDI disclosures
Documents submitted to IABAC showed joint venture agreements and common shareholders between several bidders, to wit: Vibal, LG & M Corp., JTW and Lamco; Watana and Advance Agro (and also with Alkem); Ibon, Bookman and Tri-Media; and Lex Media, SD Publications and FEP Printing.
(DISCLOSURE: LEX MEDIA AND FEP PRINTING ARE SISTER COMPANIES OF THE INQUIRER.)
The four suppliers, Vibal, Watana, LG & M and SD Publication, have interlocking and common controlling shareholders based on their general information sheets.
The common shareholders of Vibal, SD and LG & M are Jean Fernandez, Aida Gutierrez, Stella Lawson, Nila Mampa and Gaspar Vibal. Fernandez is corporate secretary while Mapa is vice president for all three bidders. Lawson is treasurer of both SD and Vibal.
Except for Fernandez, all four have 24.9 percent of subscribed shares in all three companies.
A technical working group formed by the DBM said in a report to the IABAC that it was clear the controlling shareholders of Vibal, SD and LG & M “are common and the same.”
It said that LG & M, a joint venture partner of Vibal, was the copyright-owner of the book submitted by Watana Phanit, a competitor.
In Lots 1 & 3, LG & M submitted two different bids, first, by itself in partnership with Vibal, JTW and Lamco, and second, through its agent Watana, which also offered books published by LG & M.
For Lot 3, SD, in partnership with Lex Media and FEP, submitted a bid against Watana which is basically an agent of LG & M. Thus, bidders SD and Watana were bidders that have the same officers, directors and controlling shareholders, according to the report to IABAC.
Interlocking interests
As an agent of LG & M, Watana offered books published by the former while SD offered books published by Vibal, said the TWG memo dated Feb. 20, 2006.
“These interlocking interests put the four firms in a position to have access to information about the bids, or influence each other’s bids,” said the memo. “Their acts created the appearance of a competition to establish bid prices that were artificial and noncompetitive.”
Thus, this “deprived the government of the Republic of the Philippines of the benefit of free and open competition.”
Policarpio told the Inquirer that SD had formed a consortium with another printer.
He admitted that SD and Vibal also had “common directors and stockholders, but it formed a consortium with Lex Media and bidded for high school textbooks … which eventually failed in the content evaluation. Vibal and Watana submitted only one bid.”
World Bank guidelines
The World Bank Procurement Guidelines define collusive practice as “a scheme or arrangement between two or more bidders, with or without the knowledge of the borrower, designed to establish bid prices at artificial and noncompetitive level.”
The government Procurement Reform Act, Republic Act No. 9184, says collusion exists “when a bidder maliciously submits different bids through two or more persons, corporations, partnerships or any other business entity in which he has interest to create the appearance of a competition.”
The TWG then strongly recommended the disqualification of the Vibal group, prompting the IABAC to concur.
It then wrote a letter to the World Bank which, however, intervened and upheld Vibal and Watana’s right to join the bidding.