By Roderick T. dela Cruz

THE World Bank wants a ?substantive reorganization? of the Department of Public Works and Highways as a pre-condition for its continued lending for the last stage of the controversial National Roads Improvement and Management Program.

The reorganization is one of the criteria to be applied in the second stage of the road-building program to trigger fund releases for the third stage, according to a 150-page project appraisal report that the Bank posted on its Web site.

Budget Secretary Rolando Andaya confirmed the government and the Bank had agreed that ?improvements have to be made in the system,? including the deployment of more internal auditors, procurement advisers and private sector representatives in future biddings.

He said the government was eyeing one of its staunchest critics, the Transparency and Accountability Network, as a possible private sector observer.

Transparency and Accountability Network is a federation of organizations from the private sector and the academe, including the Caucus of Development-NGO Networks, Kilosbayan-Bantay Katarungan, and the Makati Business Club.

But the first ?trigger criteria? for the third stage is a ?substantive reorganization of the [Public Works Department] based on a corporate audit and corporate plan consistent with the program goals that has been authorized and implemented.?

That criterion became necessary because investigators found that ?bidders are manipulated by an ?arranger? under the direction of a patron, who for large national or international competitive bidding bids is typically a senior politician or elite, and who for regional or district level bids is typically a local politician,? the appraisal report said.

?The patron often requires payment at the time of award recommendation; other payments are usually made from the advance payment,? it said.

?Bid prices are established by the arranger, with a sufficient margin above the cost estimate to pay kickbacks to the patrons, cartel participants and some officials. The margin is often high [15 to 36 percent], but appears subject to controls,? the report added.

But Andaya said World Bank representative Bert Hoffman had assured the government of the agency?s continued support of the National Roads Improvement and Management Program, although funding for the first stage had been suspended.

?I just want to clarify that it is only Phase 1, which is worth around $33 million, that was put on hold. Phase 2, which costs more, will push through. Hoffman told us the World Bank remains confident of the system of the Philippine government,? Andaya said.

?He said ?we?ll not push through with Phase 2 if we don?t trust you,? Andaya quoted the Bank official as saying in a meeting with Finance Secretary Margarito Teves and Public Works Undersecretaries Ramon Aquino and Manuel Bonoan.

The reorganization was one of the reforms recommended after the World Bank identified irregularities in the first stage of the road program and then rejected financing for two other road contracts worth $33 million.

The appraisal report for the second stage complained of weak support and control systems, the lack of attention to procurement milestones and the procurement plan, a multi-layered approval process, a weak general procurement environment, political interference in the procurement process, and corruption allegations.

But despite claims of collusion in the first stage, the Bank recommended that the second stage be continued but demanded more pragmatic triggers for stage 3, including the reorganization of the Public Works Department.

In the Senate?s investigation of the alleged collusion in the first stage, Senator Miriam Santiago said her committee might just ask First Gentleman Jose Miguel Arroyo to execute a deposition instead of testifying in the committee hearing.

?Instead of forcing him to go to the Senate, we ourselves will go to him,? Santiago said as she prepared for the resumption of the hearings today.

?The questions that the senators wish to ask will be presented to him. Then he will answer them. That is like being present at a Senate hearing,?

Mr. Arroyo had an open-heart bypass operation in 2007 but has since recovered. A few months ago, he complained of acute abdominal pain while accompanying President Arroyo on a foreign trip.

Santiago said there was no offer of deposition from the side of the First Gentleman. She said it was her idea to get his deposition in case her committee received a medical certificate saying he was not physically fit to testify.

Asked if it might be necessary to subpoena the First Gentleman, Santiago said that would also be decided by Senator Ramon Revilla Jr, chairman of the committee on public works and highways, and Senator Edgardo Angara, chairman of the committee on finance, who are also involved in the investigation.

She said Senate President Juan Ponce Enrile would also have a say on the matter.

Santiago confirmed she filed an indefinite leave of absence Wednesday because she was suffering from fatigue, but she canceled her leave after deciding to resume the inquiry on the alleged rigging of the bidding for WB-funded projects.

She said her committee would try to verify Senator Panfilo Lacson?s claim that the First Gentleman?s name was mentioned in the World Bank report. She said Mr. Arroyo?s name was nowhere to be found in her copy of the report.

?Apparently, what I have is a copy of the decision,? she said.

?And the decision is different from what is called in the [World Bank] as referral report. In chronological order there is a notice, then a referral report, and lastly the decision. And what I have with me is only the decision,? she said. Joyce Pa?ares, Fel V. Maragay