A World Bank (WB) investigation on collusive practices of Filipino and foreign contractors on WB-funded projects has resulted in stricter procurement rules on all WB-assisted projects in the Philippines.

WB Country Director Bert Hofman said Philippine authorities and WB officials have taken several steps to strengthen the country's anticorruption and transparency measures after the bank debarred seven constructions firms in the WB-funded National Roads Improvement and Management Program or NRIMP 1.

He said the government procurement policy board, under the leadership of Budget Secretary Rolando Andaya, is working with the WB and development partners to harmonize procurement rules with foreign development firms.

He said the policy board is also working to revise the implementing rules and regulations of the Philippine procurement law "so as to cover foreign-financed projects as well as domestic-financed projects."

"And related, the Philippines has recently been selected by World Bank and the Asian Development Bank to be a candidate country for piloting of country procurement systems and international competitive bidding, and discussions are ongoing on how such a pilot will take shape," he said Tuesday at an informal technical briefing for senators.

He said other steps being done by the World Bank and the Department of Public Works and Highways include:

1) hiring of an independent procurement evaluator to assist the bids and awards committee for phase 2 of NRIMP;

2) involvement of the nongovernment organization Roads Watch in the Bids and Awards Committee (BAC) and project monitoring;

3) enhance supervision budget of WB to allow for technical assistance to detect bid rigging and collusion.

Hofman said the World Bank board has already approved phase 2 of the NRIMP last May 2008.

The Senate is currently investigating the World Bank's blacklisting of several Filipino and Chinese companies due to alleged corruption and collusion in biddings of WB-funded road projects.

The World Bank said there was collusion in the awarding of contract for Phase 1 of the NRIMP that it had financed with $138 million. It blacklisted three Philippine and four Chinese construction firms that allegedly colluded in the bidding on the NRMIP 1 contract. The three Philippine firms are E.C. Luna Construction Corp., Cavite Ideal International Construction and Development Corp. and CM Pancho Construction Inc.

WB sanctions 'administrative'

Hofman reiterated that the World Bank, under its Articles of Agreement, investigates allegations or suspicions of wrongdoing to ensure "that the funds it provides member countries in support of development are used economically, efficiently and for their intended purposes."

"Through the application of sanctions, we do intend to deter firms and individuals from misusing funds provided by the World Bank...We believe that the bank's investigations and sanctions process ultimately protect the taxpayers' money of our member-countries, including the taxpayer money of the Philippines," he said.

He also pointed out that the WB sanctions process are "administrative in nature" and concerns only the issue of whether firms and individuals should be eligible to be beneficiaries of World Bank funding in the future.

"This administrative process is not intended to be, and, indeed, cannot ever be a substitute for a determination by a member-country such as the Philippines as to whether the actions of such firms and individuals in a World Bank-financed project give rise to breaches of the member- country's law," he said.

In the case of the Philippines, he said a referral report was sent to officials of the Department of Finance and the Office of the Ombudsman to inform authorities of the WB's investigations and sanctions processes as well as a summary of its findings.

"As we have stated previously in our correspondence with the chair of the committee on economic affairs, the referral report that the World Bank provides to the Department of Finance and the Ombudsman pointed out that it was the decision of the Philippine authorities to determine whether the document produced by the bank and shared with the authorities could play a role in determining whether any law of the country has been violated," Hofman said.

"The referral report also points out that the relevant Philippine authorities can determine whether the report can be shared further, provided that the clauses of confidentiality also apply to those that the report is shared with," he added.

Senate economic affairs committee chair Miriam Defensor Santiago earlier appealed to the World Bank to give the Senate a copy of documents on the probe into alleged collusion and bid-rigging in WB-funded road projects. The Senate's probe into the WB road projects controversy has uncovered the alleged links of First Gentleman Mike Arroyo to a barred contractor as well as the supposed inaction of government officials on the matter.