THE GOVERNMENT has annulled a contract with a Japanese consortium for the development of a property in Tokyo after discovering fraud.

Nagayama Taisei Corp., the Justice department yesterday announced, had falsified bid documents when it applied, and subsequently won, the right to develop a 2,489-square meter property in Tokyo’s Nampeidai district.

Acting Justice Secretary Agnes Devanadera presented findings by the Office of the Solicitor General, which she concurrently heads, that Nagayama Taisei was a "non-existing consortium".

Subsequently, Finance Secretary Margarito B. Teves earlier this month informed consortium lead partner and manager Masahiro Nagayama, and attorney-in-fact Masaichi Tsuchiya that the contract had been rescinded. Company officials were not immediately available for comment.

In a letter to Mr. Teves, Mr. Devanadera said "what was established is that there is sufficient evidence to prove that the eligibility documents submitted to the BAC (Bids and Awards Committee) Japan by the purported winning bidder are falsified."

The bid documents were "not properly notarized," with Hector B. Centeno, who supposedly notarized the document, denying doing so in a May 22 affidavit.

Ms. Devanadera added: "The signatures of the alleged representatives of [consortium member] Taisei Corp. are all forged." She said Taisei legal chief Shigeru Ikemoto had informed BAC Japan last June 2 that Taisei did not participate in the bidding.

"In the absence of properly notarized documents proving the existence of the consortium between Nagayama Architects Co., Ltd. and Taisei Corp., there is no legal basis to award the project to the consortium. Therefore, the award of the project to NTC, a non-existing consortium, is null and void," she said.

The awarding of the contract has been questioned before local courts. One case was filed by the original winner, Urban Corp., which claimed the deal "suffered from transparency issues." Urban was edged out after Nagayama Taisei amended its financial bid.

Finance Undersecretary Estela V. Sales, who took over BAC Japan from former Finance Undersecretary Gaudencio A. Mendoza, Jr. in June 2008, said the project would be auctioned off anew.

"We had changes in the membership of the BAC... In one or two weeks, we hope to have a quorum and talk about how we can pursue the program... Will we go for the same value, this is a question we need to answer," Ms. Sales said.

Ms. Sales said BAC Japan should not be blamed for the oversight. Ms. Devanadera agreed, replying "None at all" when asked if committee members faced any liability.

Ms. Devanadera said the government was prepared to face possible lawsuits from Nagayama Taisei.

The Nampeidai asset was acquired as part of World War II reparations. Nagayama Taisei, based on a notice of award dated Oct. 13, 2005, was to construct a ¥1.7-billion (P830 million) four-storey building, part of which would be occupied by the Philippine consulate and the rest to be leased.

Voided was a service development agreement (SDA) signed in August 14, 2006 and a supplementary agreement signed March 13, 2008 that required Nagayama Taisei to pay a ¥480-million (P194 million) fee.

Mr. Teves has authorized the return of the service development fee and has told Foreign Affairs Secretary Alberto G. Romulo of discussions with Ambassador to Japan Domingo L. Siazon, Jr. about the decision.

"For this purpose, kindly issue the necessary written instructions to Ambassador Siazon regarding the full implementation in Japan of the termination of the SDA and the supplementary agreement," Mr. Teves asked Mr. Romulo.