Police search Fraport offices

9 December 2003

FRANKFURT – Police have searched the offices of the Frankfurt International Airport company, four years after a contract to build a new terminal in Manila turned sour amid allegations of overcharging and other anomalies.

Monday’s search was led by the Frankfurt prosecutions department who have not yet stated what kind of offence they are investigating.

Fraport, as it is known for short, said Tuesday it had cooperated with the visitors, who were seeking evidence in connection with the Manila project. Fraport spokesman Klaus Busch said employees of the company were not the target of the inquiry.

The company has regularly denied allegations that any corruption occurred in connection with the deal.

Construction of the terminal, which is currently not in use because of a continuing dispute with the Philippine government, proved a financial disaster for Fraport, which has already written off EUR350 million as lost.

Last week, a shareholder sought to blame the company board, but a judge said he was inclined to dismiss the case. That Frankfurt civil case is due to come to a verdict 17 December.

Fraport has asked the World Bank’s International Centre for Settlement of Investment Disputes to mediate in its claim for EUR364 million in compensation from the Philippine government.

Manila insists Fraport brought the disaster upon itself and has refused compensation.

Last year the Philippine government cancelled its 1997 contact with Piatco, the local consortium that built the terminal, arguing that the contract contained anomalies. Fraport has held a 30 percent share in Piatco since 1999.

In May the Supreme Court in Manila upheld the government’s decision to declare the contract null and void.

The Philippine government said certain clauses in the contract as agreed with previous presidential administrations in Manila were either illegal or against the country’s broader economic interests.

Fraport, which has sought to expand worldwide as an airport operator, has been the target of past corruption allegations, with prosecutors reviewing claims of supposed kickbacks in a deal to modernize the airport in Tashkent, Uzbekistan.