EXCLUSIVE: Ex-DFA chief Yasay knew but 'didn't want to cancel' illegal contract with passport maker

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Former Foreign Affairs Secretary Perfecto Yasay Jr.

Metro Manila (CNN Philippines, January 13) — Former Department of Foreign Affairs (DFA) Secretary Perfecto Yasay Jr. on Sunday admitted to knowing the alleged irregularities in the contract for the printing of passports but did not stop it immediately because it would worsen the passport application backlog.

In a Facebook post, Yasay said the DFA in October 2015 entered into a deal with APO Production Unit Incorporated (APUI), a company under the Presidential Communications Office, to produce a new e-passport system, provided that it would not subcontract to any company. This is despite the agency's existing contract with French firm Francois-Charles Oberthur Fiduciare, which was producing passports in line with the standards set by the International Civil Aviation Organization.

In an exclusive interview with CNN Philippines, Yasay, who led the DFA from June 2016 to March 2017, said APUI violated its agreement with the DFA when it tapped United Graphic Expression Corporation (UGEC) for the production of the new e-passports.

Yasay said he found the contract between DFA and APUI “grossly disadvantageous” when he reviewed it before assuming office. However, he did not cancel it immediately because it would worsen the delays in the issuance of passports.

He said ending the contract with APUI would have a dire impact on passport processing since the DFA would need at least six months to find a new passport printer.

According to him, even the passport appointment system would’ve been affected by the cancellation because it was controlled by UGEC.

"Because the contract was between the DFA and APO, I could not even hold UGEC— which was the actual printer and producer of passports and had control over the facility in Lima, Batangas and controlled the appointment and the data and personalized information," he said.

Instead of agreeing to the full implementation of the deal with APUI and UGEC, Yasay said he signed a six-month contract with the two entities.

As part of the conditions under the deal, UGEC would sign a new contract where it will be held accountable for any problem that would arise related to producing passports. But at the end of the temporary contract in December 2016, Yasay said UGEC refused to enter into a new deal with the DFA.

"At the end of the six-month period, they refused to sign, knowing that at that point in time it will be more difficult for me to cancel the contract," he explained. "They refused to sign it, so I sent them a notice to cancel and I immediately forwarded the notice and the draft of the contract to the President and we discussed this at the Cabinet meeting."

Duterte, then, directed him and Finance Secretary Carlos Dominguez to discuss with the BSP to return to the Central Bank the printing of the passports. But the BSP refused to accept the proposal.

Yasay said it's not easy for the government to demand the passport data from UGEC because the contract for printing passports was signed by the DFA in 2015 with APUI.

"Because the contract was between the DFA and APO, I could not even hold UGEC— which was the actual printer and producer of passports and had control over the facility in Lima, Batangas and controlled the appointment and the data and personalized information," he said.

"I could not for the life of me understand why our DFA officials at that time in 2014, 2015, awarded the contract to APO knowing fully well that the facility, the equipment, the technological capability to undertake the contract that’s why they were forced to subcontract it in violation of the law," he added.

By the time Yasay bowed out of the DFA, UGEC was still printing passports.

He made the remarks after DFA Secretary Teodoro "Teddy Boy" Locsin Jr. disclosed that an outsourced passport maker took passport applicants' data after its contract was terminated.

READ: 'I will autopsy the yellows': Locsin vows to identify people behind passport mess