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Subic Bay Metropolitan Authority (MPD-SBMA)

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04 February 2009

SBMA seeks to unlock Hanjin Subic’s corporate layers

The Subic Bay Metropolitan Authority (SBMA) is now seeking to untangle the interlocking layers of subsidiaries and subcontractors operating at the shipyard of Hanjin Heavy Industries Co.-Philippines (HHIC-Phil) in Subic as part of a plan to address occupational health and safety concerns.

A total of 19 fatal accidents have been recorded at the Hanjin shipyard since February 2007, leading the SBMA to issue several cease and desist orders (CDOs) and notices of violations (NOVs) against HHIC-Phil and some subcontractors.

However, Hanjin’s multi-layered corporate setup had so far frustrated Subic authorities in pinning down parties liable for injuries and deaths arising from the accidents, said SBMA Administrator Armand Arreza.

“In most cases, investigations have pinned the blame on subcontractors who have committed safety lapses. But although we revoked the permits of those who were found liable for violations, safety lapses have become a recurring problem,” he lamented.

“We’re now trying to unlock this tangle of corporations within corporations at the Hanjin shipyard so we’d know exactly who to go after,” Arreza said.

Aside from this, he said the SBMA will implement a stricter registration process for new subsidiaries or subcontractors of HHIC, and follow on previous recommendations and requirements for compliance by HHIC, as well as its subsidiaries and subcontractors.

The SBMA also intends to file legal action against HHIC-Phil and its subsidiaries or subcontractors whose health and safety deficiencies had resulted in the injury or death of workers, Arreza said.

As of now, the SBMA is preparing a database showing an interlocking web of directors and shareholders of several HHIC subsidiaries and subcontractors, said lawyer Ramon Agregado, who is SBMA senior deputy administrator for support services.

According to Agregado, HHIC’s business model is premised on the division of its construction and manufacturing processes into distinct businesses, with the operations of each division undertaken by an HHIC subsidiary. Each HHIC subsidiary, in turn, engages several subcontractors and sub-subcontractors to perform the work.

Agregado said the layering of corporations results “in the insulation of the mother company, HHIC-Phil Inc., from liability arising from employee injury or death, or from collection cases by unpaid suppliers.”

“This structure also circumvents the security of tenure of employees, as employees could be transferred from one subcontractor to another before reaching regular status,” he added.

Agregado also said they have evidence suggesting that these subcontractors and sub-subcontractors, most of whom provide services solely to HHIC-Phil, “are also owned indirectly by either HHIC or by HHIC officials.”

“This type of business model has proven to be disadvantageous to workers and makes it more expedient for HHIC to evade regulatory controls,” he concluded.

Last week, SBMA officials vowed to pursue the prosecution of all parties found liable in the death of another worker Filipino worker on January 23, two days before a Korean foreman became the latest — and the 19th — fatality at the Hanjin facility.

Arreza said he has ordered the suspension of the Korean subcontractor whose operations led to the January 23 accident, but added that the SBMA is also looking into the contingent liability of Hanjin, because it is the general contractor of the shipyard.

SBMA records indicated that aside from the CDOs and NOVs issued to at least 14 erring subcontractors since February 2007, it has issued a seven-day cease and desist order on all Hanjin construction activities in June 2008, after a 52-year old worker was pinned to death by a wall kicker formwork.

The following month, the SBMA formed an 11-man monitoring team that included a safety officer accredited by the Department of Labor and Employment (DOLE). The team conducted weekly monitoring activities at both the Hanjin shipyard and construction site.

In August last year, the SBMA also set up a satellite office at the Hanjin shipyard gate. This is staffed with personnel from the SBMA law enforcement department, labor center, and pass and ID department, who provided on-site labor assistance to workers, received worker complaints, and also prevented unauthorized access by employees of non-accredited subcontractors.

On December 16 last year, the SBMA also required Hanjin to establish an on-site Trauma Clinic to be staffed by medical and nursing personnel, and other technicians trained in emergency medicine, pre-hospital care, and basic and advanced cardiac life support. (SBMA Corporate Communications)

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