Monday, May 12, 2008

Hanjin: Plundering the Environment

PerryScope: by Perry Diaz

Recently, a series of anomalies concerning Hanjin Heavy Industries and Construction, a South Korean company, have dominated the headlines of Manila newspapers. Considering that billions of dollars were involved in these transactions, "transparency" has once again come to the forefront of debate. Like the Chinese contracts -- NBN-ZTE, Cyber Ed, Fuhua, etc. -- which the Arroyo government negotiated secretly, it would seem that the same modus operandi may have been used in negotiating the Hanjin contracts.

The first Hanjin shipyard was built in the Subic Bay Freeport in 2006 at a cost of $1.7 billion. A few weeks ago, it launched the first ship -- a $60 million container ship for a Greek shipping company. With 10,000 Filipinos employed, it's a boon to the sagging Philippine economy.

The second Hanjin shipyard is to be located in the Phividec Industrial Authority in the province of Misamis Oriental in Mindanao. The shipyard -- which is projected to be completed by 2017 -- will cost $2 billion to build and would eventually employ 45,000.

Indeed, everything about the Hanjin shipyards were looking good and there shouldn't be any reason to doubt the economic benefits. But as soon as the ink had dried on the Phividec shipyard contract, things began to go awry. A couple of weeks ago, Mayor Paulino Emano of Tagoloan -- one of two towns straddled by the shipyard -- issued a "stop work" order to the construction project because Hanjin failed to obtain an Environmental Clearance Certificate (ECC). Hanjin officials complained that Emano tried to extort money from them. When confronted with Hanjin's allegation, Emano said that it was Hanjin officials who offered him a bribe in the form of a contract to supply sand and gravel that would amount to P400 million. In my opinion, had Emano tried to extort money, Hanjin would probably have given him what he asked for and get over it. However, had Hanjin offered Emano the P400-million "sweetheart deal," would Emano have refused it? Apparently, either Emano did not accept the bribe offer or Hanjin never made the bribe offer. But one thing is evident, Hanjin did not have an ECC and Emano had the authority to stop the work.

When Arroyo was told of the incident, she was furious and called Emano on the carpet. Emano told Arroyo about the P400-million bribe offer. According to Emano, Arroyo ignored him. Instead she scolded him for issuing a "stop work" order. Emano must have felt like he was being run over by a bulldozer. A few days later, Emano retracted his allegation that Hanjin offered him a bribe.

With the "stop work" order enforced, Hanjin packed up and left. Soon after the incident, environmental and employment issues started to come out in the news. Ma. Cecilia Rodriguez of Philippine Daily Inquirer reported that the new shipyard will wipe out three barangays; dislocate more than 6,000 families; damage the environment; and destroy millions of pesos worth of crops and properties. She also reported that Emano and Mayor Juliette Uy of the neighboring town of Villanueva had an agreement with Hanjin that the residents of their towns will be given priority in hiring; however, Emano said that Hanjin failed to honor their agreement. Was Hanjin thinking of bringing its own work force from South Korea?

The biggest environmental impact would have been the destruction of the Tagoloan river. In a sworn affidavit, Emano said that an Hanjin official discussed with him a proposal to divert the flow of water in the river in order for Hanjin to get the aggregates needed for its buildings. The effect would be the destruction of the river. Without an ECC, the whole environment and eco-system would be vulnerable to unchecked and destructive industrial environmental abuses, an issue that has already been raised in the Subic shipyard.

Recently, it was revealed that Hanjin built two high-rise condominiums -- presumably for South Korean management officials -- worth $20 million inside the rainforest reserve. Senator Miguel Zubiri called the condo project in the lush rainforest "a dastardly act in this time of water crisis." Zubiri said that "Olongapo City's old water source -- the Sta. Rita River -- has been destroyed and contaminated by this same type of activities that started with wanton cutting of trees to make way for various constructions. Later on, untreated sewage flows and leaching from garbage dumps poisoned the river."

Another issue that surfaced is a Hanjin subsidiary's contract to build the P3-billion Panguil Bay Bridge that would connect Lanao del Norte and Misamis Occidental. The project was a Build-Operate-Transfer (BOT) that requires 60% Filipino ownership. The Hanjin subsidiary has zero Filipino ownership. As to why this violation was not known before the contract was awarded is another example of government inefficiency and corrupt practices. A few days ago, after the anomaly was reported in the news, the Misamis Occidental governor announced that the project is going to be rebid.

Hanjin's troublesome record in the Philippines goes back to 1999 when it was awarded to construct the Davao International Airport for P1.7 billion. It subcontracted a part of the work to Dynamic Planners and Construction Corp for P714.87 million. When Dynamic's work was 94% complete, Hanjin forced out Dynamic and took over the unfinished work and claimed that Dynamic abandoned the work. After a prolonged legal battle that reached the Supreme Court, Dynamic finally won in its claim recently with a Supreme Court ruling for Hanjin to pay P352 million plus interest to Dynamic.

With a dismal record of environmental abuse, broken promises to employ Filipinos in the Phividec project, allegation of bribery, labor disputes in the Subic shipyard, and illegal removal of a subcontractor from a construction project, Hanjin's credibility and honesty become the crux of controversy. What would prevent Hanjin from plundering the environment in the future? Are jobs more important than preserving the environment? In a world beset by global warming and the proliferation of hazardous and toxic materials, preservation of the environment is the Filipinos' legacy to their children. Jobs can be created but plundering the environment would be devastating -- permanently and irreversibly.

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