MANILA, Philippines – Defense Secretary Delfin Lorenzana said the Philippine government will still pursue its contract with Hyundai Heavy Industries (HHI) to build two warships for the Philippine Navy despite the South Korean firm’s involvement in a bribery case.

Senator Panfilo Lacson asked Lorenzana if the Department of National Defense (DND) checked the status of HHI before he signed the contract in October 2016. HHI was banned in its own country because of a bribery conviction that sent officials to jail. 

After all, the two-year ban against HHI’s participation in Korean government projects was first handed down back in 2013. The company appealed it but it was only in December 2017 when the Supreme Court dismissed the appeal with finality.

The defense chief admitted that they did not conduct “due diligence” because they just presumed regularity with the actions of the former Bids and Awards Committee (BAC). He also denied knowing about the allegations against HHI.

“Sir, we did not know about this blacklisting. We just presumed that the previous BAC did their due diligence. We’re just continuing their jobs,” Lorenzana said.

Lacson then said: “So there was no due diligence. If you had due diligence, may alarm ito (an alarm would have been sounded).”

Lorenzana said the deal would push through, adding that HHI could still deliver the first of the two frigates by 2020.

“I think, sir, we will still implement the project because they are still capable of doing the frigate,” the defense chief said.

“Because it’s a perfected contract. We signed a contract with them, we expect frigates to be delivered on time,” he added.

Lorenzana also said there are already representatives in South Korea to discuss the details with HHI.

HHI became the center of attention in the Philippines because of disagreements over the implementation of the Navy’s frigates project.

Former Philippine Navy Vice Admiral Ronald Mercado was ousted from his post after opposing HHI’s choice, Hanwha Systems, for supplier of the Combat Management System (CMS) of the two warships.

Mercado and the Navy are pushing for Tacticos Thales of the Netherlands, as it has proven technology.

Special Assistant to the President Bong Go is alleged to have intervened in the selection of the supplier of the CMS, likened to the “brain” of a ship. (READ: DOCUMENTS: How Bong Go is linked thrice to frigates deal)

In January 2017, Go allegedly interceded on behalf of HHI by sending a white paper to the DND expressing support for Hanwha. (READ: Bong Go says his office ‘endorsed’ frigate supplier’s complaint to DND)

Lorenzana then gave the white paper to Mercado, who insisted on the Navy’s position. (READ: Ousted PH Navy chief wanted ‘proven technology’ for warships)

Barely a week after the white paper was sent to Mercado, Undersecretary Lloyd Christopher Lao, then with Go’s office, arranged a meeting with the Navy team in charge of the project, headed by then Rear Admiral and now Navy chief Robert Empedrad, to discuss the selection of the CMS supplier. (READ: [EXCLUSIVE] Undersecretary in Bong Go’s office confirms letter on frigate deal)

In the end, the DND ruled that the Navy should get Hanwha. Shortly after, Mercado was relieved from his post in mid-December 2017. But during the hearing, Empedrad said he still prefers Tacticos Thales to Hanwha. The contract, however, binds him to the latter. – Rappler.com