Stradcom to PNoy: Protect sanctity of our contract

Posted at 06/23/11 7:06 PM

MANILA, Philippines - Stradcom Corp., the IT service provider of the Land Transportation Office (LTO), urged the Aquino government to protect the sanctity of their contract following statements by the President that the firm's services could be pre-terminated due to alleged irregularities.

Stradcom president Cesar Quiambao also defended the company, saying that its services trimmed down processing time at LTO, generating savings for the government.

"There's nothing wrong with the Stradcom contract... [it was] reviewed by all admins, wala kaming tinatago. We're open to any investigation and negotiation, but we request that the sanctity of the contract be observed and protected," he told ANC "Headstart."

On Wednesday, President Aquino said embattled LTO chief Virginia Torres and Interior and Local Government Secretary Jesse Robredo had discovered several anomalies in Stradcom's processes, including excessive charging of "interconnectivity fees" and registration of fictitious vehicles.

The President slammed the P1.3 billion yearly fee paid to Stradcom. "It's like a tax, [but] what kind of service are we getting?"

Stradcom won the contract to provide IT infrastructure and services to LTO under a build-operate-transfer scheme in 1997, during the time of President Fidel Ramos.

Quiambao said the yearly fees paid to them as of December 2010 were not enough to recover their investments and the expected returns based on their contract.

"From 1998 all the way to the completion of the project, we spent close to $100 million. When this project was bidded out, we expected to have internal rate of return of 29% after the concession period. However, because of some circumstances that happened, the company really suffered a setback... As of December 2010, based on our audited financial statement, which is public document, our internal rate of return was -402%."

If the government decides to pre-terminate their contract, Quiambao said "there should be just compensation."

Services, fees

On the issue of excessive fees and substandard services, Quiambao said: "With due respect to the President, di ba mabilis tayo magpalisensya ngayon? Assuming nakakatipid tayo limang oras, there are 6 million motor vehicles, how will you quantify that? That's P5 billion service per year, P2.3 billion in savings."

Quiambao noted their system is dependent on factors like power and telecommunications. "Lahat 'yan pag wala, offline din kami."

Atty. Eric Pilapil, Stradcom's vice-president for legal and corporate secretary, added that some of LTO's functions such as licensing and emission testing are outside their scope.

Despite criticisms hurled against them, Quiambao said: "We have to continue servicing the public. Magagalit publiko sa amin pag huminto kami."

Quiambao said Stradcom submitted a bid price of P168 per transaction for the LTO contract, way lower than that of its competitor Ampi-Fujitsu, which gave a bid of P317.27 per transaction.

Ownership dispute

Reacting to the ownership dispute with the group of Bonifacio Sumbilla, the Stradcom officials insisted they are the rightful owners of the company.
Quiambao said the Sumbilla group was merely misleading the public when it tried to takeover the company in December last year. He likened the takeover to landgrabbing.

"In this case, there's a criminal intent to takeover Stradcom with some cooperation with government agencies. They will not be able to do that unless they have permission from the LTO."

Atty. Pilapil noted former Transportation and Communications Secretary Jose "Ping" de Jesus managed to straighten out the row and take control of Stradcom's services six hours after the December standoff.
Atty. Pilapil also showed the stock and transfer book of Stradcom duly registered with the Securities and Exchange Commission as proof of ownership.

"In this document, you will not see the name of Mr. Sumbilla, or Mr. Yujuico, or other people whom he says are now the incumbent owners.  They seem to be pointing to a court decision of a different company the Strategic Alliance Development Corporation."
Torres has been accused of having "favored" the Sumbilla  group.  The Justice Department had recommended Torres' dismissal for her alleged complicity in the takeover.  She also had allegedly been withholding six months' worth of payment to Stradcom amounting to P1.3 billion, which Torres said is intact.

Quiambao alleged Torres stopped paying after the failed takeover in order to paralyze Stradcom.
Torres returned to work on Tuesday after a 60-day leave.
An administrative complaint against Torres is currently under review by the Presidential Chief Legal Counsel.