The State Department and the Export-Import Bank drew sharp criticism at a congressional hearing yesterday for promoting and guaranteeing a $644 million loan for a Philippine nuclear power plant without investigating the plant's safety and ownership.
"Is it no problem to you that this plant is being built near five volcanoes" asked Rep. Clarence D. Long (D-Md.), chairman of the House Appropriations Subcommittee on Foreign Operations. "Don't you care if the plant is safe."
"That would be foolish," replied Ex-Im Bank President John L. Moore Jr., who admitted he was not fully informed of safety studies done on the plant's location at the edge of the South China Sea. "But it is my understanding that additional strength is being built into the plant to withstand any eruptions of those volcanoes."
Moore and Deputy Assistant Secretary of State Louis V. Nosenzo were asked repeatedly if they knew of any involvement in the project by Herminio Disini, who is related by marriage to Philippine President Ferdinand Marcos Disini was desribed as civil contractor and insurance agent for the plant and Philippine agent for the company (Westinghouse Eelcric Corp.) building the plant.
Declaring that matters of conflict-of-interest were not the concern of the Ex-Im Bank, Moore said the question was turned over last November to the Justice Department for investigation. Moore said the Justice Department's criminal fraud division is investigating whether any illegal payments had been made in connection with the Ex-Im Bank loan.
"If there have," Moore said, "then the due process of law will take its course."
Nosenzo said it was not the State Department's role to question portential conflicts of interest in promoting overseas business ventures. He said there was no way "to detect the kinds of questions you are raising."
Long pointed out that the only safety studies done in connection with the loan for the plant's construction were by the Nuclear Regulatory Commission, which sent one safety expert to the Philippin Islands for two weeks. The Nuclear Regulatory Commission said it normally studies site safety of an atomic plant over a period of "six man years."
"Of great concern to us," the NRC said in a letter to Congress May 24, 1977, "is the fact that a review of this kind is an implication that we have signed off on a site evaluation study of the Philippin plant." The NRC denied that it had done so.
Moore and Nosenzo defended the project by insisting the Philippines needs nuclear energy to fuel economic growth. They said that if the United States did not finance the project the Germans or the French would. Moore said Germany had bid on the plant just before the Ex-Im Bank approved the loan.
Nosenzo was asked why State promoted such a project. Long said he had read cablegrams from U.S. embassy officials in Manila pleading the plant's case, calling it the "Aswan Dam" of the Philippines.
"Quite often, an embassy asks for projects in particular countries," Nosenzo replied. "It's not unusual."
Moore said $71 million of the $277 million loan the Ex-Im Bank granted outright to the Philippines had already been disbursed and that "all but $20 million" had been committed.
"If we call a halt now," Moore said, "you'd have a frustrated contract and I guess you'd go back to the fundamentals of law" to resolve the financial questions.