Santiago/ Chile – Big announcements were made that the “Transantiago informs” campaign which would have football star Ivan Zamorano as its official face, would start in October. According to the government 200 buses are equipped per week with the “necessary technology” for Transantiago to start operating in February 2007. This is the deadline Michelle Bachelet’s government has set upon itself. But few believe such announcements. Transantiago has been delayed four times already, and that the former captain of the Chilean football team and of Colo-Colo and presently a Telethon promoter appears linked to this “fatal business” arouses suspicions. It seems more like another media strategy to make the public believe that everything is “fine and dandy”. But the ambitious plan which “would change the face of public transportation in the capital” is still causing doubts and uncertainties, especially after the lawsuit presented by Transporte Inteligente Multimodal (TIMM) against Sonda S.A. and NEC Chile, who is doubting the genesis of the bidding process of the Administrador Financiero de Transantiago (AFT) and Plan Transantiago itself.

BancoEstado, who was adjudicated the AFT bidding –Resolution N° 897 of the Ministerio de Transportes, 8/4/05- acted as head of the consortium integrated by Banco de Chile, Banco de Crédito e Inversiones, Banco Santander Chile, CMR Falabella and Sonda S.A. Initially Sonda was not a part of the consortium, but it joined the banks later “using the confidential information and TIMM technology for its own benefit”, Robert Sone, one of the engineers who owns TIMM declared. On September 20th, 2005, Sonda signed a profusely publicized contract with the AFT. Then it was informed that the contract meant estimated incomes for Sonda of approximately US$ 450 million over a twelve-year period.

The Servicio de Información y Atención al Usuario (Siaut – Customer information service) –renamed as “Transantiago Informa”- was adjudicated to the Indian Consortium Tata Consultancy Services and Consultora Crisis ICC. According to the Ministry of Transportation 700 buses have already been equipped with the “necessary technology” for the collection of the integrated tariff and the administration of the fleets. AFT’s General Manager, Enrique Méndez told the press that “US$ 90 million will be invested in order to increase the present 200 weekly equipped buses to 268 in October. We are going to fulfill our obligations”, he added. But it has been the government who has declared more than once that one of the reasons to delay Transantiago is that “the AFT has not been meeting the deadlines.” Contradictorily, AFT Consortium still blames the delay on the government. Today they say that all the buses will be equipped by December 31st and that the “pilot phase” will start on January 1st 2007. Few operators believe the deadlines will be met.

TIMM’s denounce is not new. On November 25, 2005, Robert Sone presented a lawsuit at the 23rd. Civil Court of Santiago –Lawsuit N° 14844-2005- in order to prove their suspicions concerning the illegal use of his experience and know-how, as well as of their rights protected by Law 17.336 about Intellectual Property and Law 19.039 about Industrial Property. After several unsuccessful tries with NEC, Sonda, BancoEstado and government officials, they asked the Court to request the parties to exhibit the data related to their participation in the Transantiago bidding and the documents they interchanged between them, as well as the final proposition presented by BancoEstado in order to take part in the bidding. “Despite the defendant’s strong denial, and after the incidental issues raised by NEC, Sonda and BancoEstado to prevent the exhibition were overruled, the Court ordered the exhibition of the documentation under legal warning. The suspicions that TIMM had had for months, based upon comments made by technical administration officers from the MOP (Ministry of Public Works in Spanish), assigned to Plan Transantiago, who knowing that TIMM had property over the technologies and procedures presented by Sonda in the bidding, were astonished that in the months after the adjudication of the bidding to the consortium, Sonda ignored any relation with TIMM”, Sergio Lewin and Sergio Oyarce, the attorneys who presented the lawsuit for indemnity for damages presented by TIMM –August 22, 2006- declared

TIMM is asking the defendants to be sentenced to pay US$2,215,946 for “damnus emergens”; US$ 387,806,484 for “lost profit”; and no less than US$ 2,215,946 for “moral damages”. According to the contract signed by Sonda and AFT, Sonda’s total income in the AFT is presently of US$ 2,972,260 a month, which amounts to US$ 428,005,531 over a period of twelve months. But the costs of the project were considerably less. TIMM estimated the total cost in US$ 40,199,046. Sonda would be making a “profit” of US$ 387,806,485 with the AFT. The amazing “difference” gives cause to think of possible payments for lobby or traffic of influences to who know who in order to win the enormous bid.

Persistent doubts

Deputy Patricio Hales (PPD) says that “Transantiago has been treated as a group of buses”. He has been shown –he adds- 4 CDs with different schedules. “I have not seen a human approach and work on the social level, when the success of this system is based on a normal working day between seven and nine AM. It’ll start “the Chilean way”, that is: half the things done half way and badly informed routes”. Hales -who is an architect and town-planner- qualifies Transantiago as a “dying patient”.” If decisions continue to be taken without considering the final users and their needs, beyond the operators, in March 2007, there will be a mutiny among the citizens”, he concluded.

Tiger Li, president of Daming Wuzhou E-City Card Technology and actual vice-president of General Manager of ERG Transit Systems tells us from Beijing, China, that he worked for over five years with TIMM executives in the bus payment system “in a project called Transantiago”: “The project involved a lot of experience in IC card paying system. We have eight years’ experience in credential systems or IC cards in China. And we are now working in 23 different cities in China”, he says. The Chinese know that experience is a key factor when projects that involve millions of users of public transportation are being developed. Tiger Li warns: “When we started operating, we faced many unexpected problems we solved step by step. That is why we firmly believe that it is very irresponsible to start the project for 5,100 buses with not enough experience in this field”.

But Tiger Li´s warnings were unheard. Ever since former President Ricardo Lagos launched the Plan Transantiago, 1,700 new buses have been incorporated. 3,600 old machines that were supposed to “disappear” are still running. The 4,5 million supposed users –today 5 million- should have had access to the Multivia cards Sonda, the technological operator of the AFT, was responsible for. The BIP card is still a “pilot project” and nobody has doubts that the AFT will have problems with the startup of the software which is supposed to register and transmit data of the ticket to the system. But this is not the only pitfall. The operators who were adjudicated the main routes and the secondary roads expected to be their “exclusive” operators. This promise wasn’t fulfilled either. There is a calculated 35% oversupply in the bus fleet. Besides, the figures given by the Superintendencia de Valores y Seguros (SVS – Insurance and Stock Superintendent) confirm that the operators have registered loses: SuBus failed to collect $7,300 million, while Alsacia and Express have a deficit of over $ 22,000 million (both Chilean pesos). Despite everything, the government still justifies the delay in the Plan Transantiago. Fernando Promis, Transantiago coordinator, who in March acknowledged that there were “problems with technology”, says today that “there are some tests being done in advance. There will not be a new delay”, he declares.

According to AFT and government authorities, the “pilot phase” for the electronic ticket payment will start on September 15. The BIP card will be available on only 200 buses of the Metropolitan Region (Santiago), equipped by Sonda with a validation system –magnetic collectors- for the payment of the ticket with the card and electronic passenger counting. A technology that TIMM claims as its property. This “trial period” with 200 buses and 1,100 “free cards” is completely misleading. The cards that were handed are not compatible with the Subway Multivia cards and are not integrated to the Subway ticket payment system. Moreover, it is hardly enough cards to put the system on trial for normal times. 1,100 cards will prove nothing, but it will be enough for the government to show that everything is “running smoothly”. If the trials do not work conveniently, it is possible that Transantiago simply does not start on February 10. If the computer system fails, a “new” software cannot be created before February. The doubts persist.

Faulty bidding

When President Bachelet inaugurated Metro Line 4-A –which will benefit 60,000 daily users-, she assured that by 2010 the Metro will have a total of 105 kilometers and will link 21 communes: “The size of the Metro will increase for the inhabitants of Santiago on February when Transantiago starts to operate. The development of the Metro is not isolated, it is part of a plan of integrated public transportation that will change the face of the city. (...) With Transantiago we will move to shorter trips and the complementation of the services. Santiago will be a much more pleasant place to live in. The development of public transportation is also being developed in other regions: Bío-Bío plan in Concepción, the progress in the bidding of the routes in Valparaíso and TranAntofagasta will make more integrated and pleasant cities”, she said. But it is odd that President Bachelet ignores that on the last week of August Chilean-Japanese engineer Roberto Sone –one of the owners of TIMM and his representative in Chile- filed a lawsuit for US$ 390 million against Sonda and NEC Chile. It was the government who accused Sonda of being “responsible” for the delay in Transantiago, because they didn’t have the technological equipments ready. Andrés Navarro Haeussler –who owns Sonda- had doubted the presentation of the lawsuit by TIMM, and himself filed a lawsuit against Roberto Sone for claiming rights he is not entitled to. TIMM denounces that Sonda and NEC used “confidential information” from their equipments, collectors, GPS systems, passenger counters, publicity screens, cameras, sensors and software, wining the AFT bid in a faulty manner. But Bachelet, who should know what is going on, simply remains silent. Until know the government is a silent accomplice. It is known that the authorities are restless, but they prefer to keep quiet because they know that Transantiago could simply collapse and they do not want to assume the “political costs” of such a large scale earthquake. TIMM’s denounce and submitting the case to the court is causing a tremendous questionings as to the adjudication of the AFT bid and Transantiago itself. The lawsuit puts the whole bidding process under scrutiny, a project that is seem as one of the “great undertakings” not only of the government of Lagos, but of the Concertación as well.

Paul Fontaine, former AFT General Manager and one of the few officials who have spoken, denies that TIMM was inside the project and says that when the consortium was looking for a technological operator, “Sonda, NEC, Telefónica, Alstom and Entel, among others, were called in but not TIMM. We never had meetings with them nor were we in any way related to this company”, he says. But proofs contradict him. The government and the Ministry of Transportation have remained silent until now, as if nothing was going on, but Transantiago could blow up under their noses any time now.

Appropriation of technology and information

TIMM owns technologies, systems and equipments capable of providing the services required by the AFT. Since 2004 it received business proposals from NEC and Sonda in order to take part in the project “Preliminary Study of the Proposal for the Bidding for the Transantiago Financial Administrator (AFT –in Spanish- 2004)”, in the frame of the services associated to the publicized Plan Transantiago. The aim was to be prepared to participate in the bidding that would adjudicate to a Consortium –formed by banks and technology companies- the administration of the funds of public transportation, the management of the money and the control of the fleets of buses. They spoke of US$ 700 million per year and a juicy commission of 1,9% over that amount, plus the right to collect a similar amount for the rental of equipment and the necessary infrastructure for providing the services.

TIMM denounces that its information and technology was illicitly appropriated and used without their authorization and infringing “confidentiality agreements”: “Sonda and NEC had access to the information and used it, without authorization and without paying one single cent for it, in order to take part, the former with the strong collaboration and aid from the latter, in the Consortium lead by BancoEstado to elaborate and formulate the proposal in the bidding process, which allowed the named Consortium, in the end, to be adjudicated the AFT bidding”, lawyers Sergio Lewin and Sergio Oyarce declare.

“The technological developments, procedures and know-how which constitute confidential and strategic information are protected by copyright and/or industrial property laws, whose full ownership belongs fully to TIMM enterprises and Roberto Sone”, they add.

On December 15, 2004, TIMM and NEC made a “Confidentiality and Non-Disclosure Agreement”. According to this contract, NEC could not disclose the information protected by this agreement, nor use it for its own benefit: “NEC violated the confidentiality agreement, making illicit use of the privileged information provided by TIMM, handing it to Sonda, who, on its own turn provided it to BancoEstado who used it to elaborate, design and present the proposal that was adjudicated the AFT bidding. On January 8, 2005, TIMM and Sonda also signed a “Confidentiality and Non-Disclosure Agreement” by reason of the “Preliminary Study of the Proposal for the Bidding for the Transantiago Financial Administrator.” Sonda was not authorized by TIMM to disclose such information protected by the confidentiality agreement, and less so to use it for its own benefit”, say lawyers Sergio Lewin and Sergio Oyarce in the lawsuit filed by TIMM in court.

According to TIMM, the objective of the confidentiality agreements was to study the bidding proposal and undertake jointly the business that would result from the AFT bidding. However, one TIMM handed the information to NEC and Sonda, both ignored the links that exist between them, leaving it out of the proposal. Sonda, in strong collaboration with NEC and using TIMM’s information, patents, copyright and industrial property, started the “business”. NEC also benefited because Sonda promised to adjudicate it some of the Transantiago subcontracts.

In the public proposal Sonda included data which is contained in the operation manuals of the equipments which are fully designed by TIMM, who had given NEC and Sonda demo equipment and scale models, all of which appeared later as part of the proposal presented by Sonda to the AFT bidding. But they didn’t only copy some paragraphs or drawings, they also included TIMM’s technology as their own. These documents are only a crude example of the plagiarism that Sonda made of practically the entire Manual owned by TIMM. One of these “documents” prepared and contributed with by Sonda in the proposal presented by BancoEstado to the bidding is “Document 5.7: Provider or Technological Integrator Data”. It indicates literally: “Sonda and NEC are working as technological providers for this strategic project. (...) Two important foreign consortiums have been invited to take part in this project, both with a wide and successful experience in different places of the world, implementing integral solution absolutely equivalent to those required by Transantiago, with proved technical quality and adequate response to the deadlines established; they are Siemens and TIMM”. Sonda even quotes as part of its own experience projects it never took part in and which correspond to companies belonging to Mexican holding Grupo Financiero Inbursa –which belongs to Carlos Slim Helú- of which TIMM is part.

Going into the Stock exchange?

Several months ago Sonda announced that it would place 25 per cent of its property in the Stock Exchange, on the last quarter of 2006. The press informed that Andrés Navarro Haeussler wanted to “attract foreign investors through the 144th mechanism and the regulation of the S. of the American Securities Act”. Consorcio Financiero and Santander Investment are acting as consultants to Sonda who intended to assure around US$ 200 million for his shares and, this way, financing “projects in Europe and the US”. According to financial reports, in 2005 Sonda invoiced sales for over US$ 355 million, a third of which were done abroad. For 2006 he expected benefits for a mere US$400 million. Sonda has business in Chile, Mexico, Argentina, Brazil, Colombia, Uruguay, Costa Rica, Ecuador and Peru and wants to expand even further. “Its investment plan has already started in Mexico and Colombia where it recently bought some companies. Moreover, it announced its going into the stock exchange and asked for its inscription in the register of values of the Superintendencia de Valores y Seguros (SVS)”, said El Diario Financiero.

But TIMM’s lawsuit could strongly restrain Sonda’s plans, leading well informed investors and business men away. El Mercurio itself –who has been quite complacent with Andrés Navarro Haeussler and Sonda- informed that “the attacks it has had to face prior to going into the stock exchange lead the technological company to consider the postponement of the opening. But it decided on going ahead. Before explaining the details of its coming opening into the stock exchange, in the last meetings with the analysts, Sonda has had to answer to all sorts of questions about the lawsuit for indemnity for damages for US$ 390 million that was filed against it. This way, it has had to acknowledge that the judicial action is becoming an important threat.”

How businessmen and investors will react after TIMM’s lawsuit claiming “appropriation of technology” and Sonda’s going into the stock exchange will remain in the shadowlands.
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Arnaldo Pérez Guerra
Writes for La Insignia