From Malaya:
$4.3M of $25.3M left to answer for poll automation failure
The Commission on Elections has allowed Smartmatic, the holder of the P11.3 billion election automation contract, to reduce its bank credit line from $25.3 million to $21 million, leaving only $4.3 million to answer for any failure of the contractor to successfully carry out the project.
Comelec’s accommodation was among recent developments that have raised fears that automated elections would end up a failure.
First, Smartmatic has lost its original partner, the local company Total Information Management Corp., in the consortium. Second, it has lost the Aboitiz-owned logistics company 2Go as distributor of the precinct count optical scan (PCOS) machines to 70,000 precincts nationwide.
The decision to “remove, cancel or extinguish the credit line” given by the Hong Kong Shanghai Banking Corp. Manila was reached by Comelec in a meeting on January 20.
Armando Yanes, chief financial officer of Smartmatic, told the Comelec on Nov. 19, 2009, that “due to the nature of this important project (poll automation), most of the expenses and equipment needed must be acquired from different providers outside the Philippines.”
“Therefore, it is commercially unreasonable to use the credit line because the HSBC Manila will provide Philippine pesos that would need to be converted into US dollars in order to purchase the inputs required for the project.”
Yanes explained that the consortium – then composed of 2GO, TIM and Smartmatic – had to provide a cash guarantee equivalent to 110 per cent or $25.3 million and “such amount must remain stationary until the credit line is cancelled or fully paid.”
The Comelec approved Smartmatic’s request but only for $21 million.
This means that the $21 million could be withdrawn by the Smartmatic consortium from HSBC Manila.
The Comelec, however, did not specify or order that the amount should be used for the purchases outside the Philippines of the inputs for the project.
Neither did Yanes explain where the consortium will get the money for the purpose.
Salvador P. Arque of TIM, which by that time had been replaced in the consortium by a company called 1920 Business Inc., questioned the grant of Smartmatic’s request, sating its was “haphazardly done.”
Arque, in a letter to Comelec on February 25, said: “We understand that based on the applicable laws, the eligibility requirement, particularly that referring to the financial capacity of the winning bidder for the automated election system contract, is a requirement that ought to be maintained by the winning bidder all through out the procurement period.”
Arque, in effect, said the credit line should have been maintained until Smartmatic is deemed to have fulfilled all its obligations.
TIM withdrew from the consortium in August last year, but Comelec continues to refer to the contractor as Smartmatic-TIM.
Nothing is publicly known about 1920 Business Inc.
The name of the company is not among the hundreds of thousands listed in the website of the Securities and Exchange Commission. The stockholders and original incorporators are also unknown to the public.
To take the place of 2GO, Smartmatic has contracted three local companies which, as shown by records obtained from SEC, do not have the financial muscle or the manpower to perform the task originally assigned to the Aboitiz company.
The distribution of machines and ballots is considered critical in the success of automated polls. So is the presence and use of trained information technology personnel.
Sources in the Comelec told Malaya that it will take 70, 000 people to distribute the machines. Another 50,000 graduates of information technology courses will have to be hired to man the machines.
The source added Comelec has yet to start hiring IT graduates.
The primary purpose of one of the three companies, Germalin Enterprises, is to “engage in the business of air freight forwarding, transporting, delivering and handling of newspapers, magazines, comics, goods, personal effects and such other items.”
According to financial statements it submitted to the SEC, it had a net income of P2.265 million as of the end of 2006.
Another company, Agro International Forwarders Inc., has for its primary purpose engaging “in the business of domestic and international freight and cargo forwarders, hauling, carrying, handling, warehousing, distribution, loading, and unloading of general cargoes and all classes of goods….”
It had retained earnings of P3,683,257.98 as of Dec. 30, 2008, according to financial statements it filed with the SEC.
The third company, ACF Logistics Worldwide, is practically in the same business as Germalin and Agro International. The financial statement it filed with the SEC as of Dec. 31, 2008 showed that it had a “cash balance” of P1,099.932.
Maraming unknown factors sa equation na ito..Let x be…equals y (why) equals z (zero)? ang labo labo…58 na tulog nalang and I am pretty sure there will be a failure…mano mano na gaya ng boxing ka gabi..harang..pero yumaman si Money Pack at ang kalaban…sino naman kaya ang yayaman sa matic matic na ito…smart ano? galing at talino…
We see Commolect’s shallow reasons and half baked actions as basis of our fears for a failed May general elections. That’s true.
And here’s the main culprit of all our failures since 2001:
http://www.malaya.com.ph/03152010/columnbusi2.html
I always maintain that we are not yet ready for a poll automation on a nationwide basis. Since this system was offered by Comelec and Congress deliberated on it, we have been blogging about its pros and cons and we went to the extent of writing to Senate Committee on Poll Automation, Sen. Gordon, to register our opposition.
For start, the automation should have been confined to the urban areas and goes with it is the training of machine operators. If successful, its expansion will be gradually undertaken and perhaps, some flaws corrected. What we are seeing now is, the delivery of the machines are already delayed. The printing of ballots is getting flak with plenty of unanswered questions and teachers who are always in the forefront are not fully trained to the new system. These scenario is giving credence to the apprehension that failure of elections is in the offing … and chaos.
Our fear of failure of elections is almost the same as what Conrado de Quiros’ wrote when he mentioned it as number 3 in his column “5 reasons to worry about the elections”:
Three, two months before the first automated elections in the country, an undertaking of such magnitude it ought to have been prepared for years, many of the tested machines have been malfunctioning; the problem of distributing the right forms to the right precincts remains daunting; there has been little voter education in the use of the machines; the watchers will have nothing to watch as everything will happen inside the machines whose yields will be taken on faith; the automation will coexist with manual counting; and now they have to contend with blackouts too.