[PHOTO AT LEFT - Members of the Freedom from Debt Coalition picket the Commission on Elections main office in Manila yesterday. Photo by EDD GUMBAN]

MANILA, SEPTEMBER 3, 2007 (STAR) By Paolo Romero - Malacañang has imposed a gag order on Cabinet officials regarding the controversial $330-million deal between the government and Chinese firm ZTE Corp. for the national broadband network (NBN) project ahead of a congressional investigation into what critics described as an anomalous transaction.

However, the gag order apparently was not transmitted to two Cabinet secretaries who attended budget hearings at the House of Representatives yesterday.

Finance Secretary Margarito Teves told reporters yesterday that there is still no “perfected contract” for the NBN project, while Budget Secretary Rolando Andaya Jr. told congressmen in the course of budget hearings that he has not seen whatever document was signed in China on the NBN deal or any other transaction.

Andaya also said the government is not yet booking the so-called NBN contract as an “obligation” since there is no provision in the 2007 budget and in the proposed 2008 outlay for it.

Palace sources said Chief Presidential Legal Counsel Sergio Apostol was reprimanded by Cabinet officials yesterday for issuing a statement on the controversial deal over the weekend.

“He (Apostol) was told to clear his statements on this particular issue first; if not, not to speak at all on the issue,” the official said.

“What I know is that there is a supplier’s contract, but there is no loan agreement yet (with the Chinese government). A supplier’s contract is nothing without a loan agreement,” Teves told reporters during a break in the House hearing on the proposed P1.227-trillion 2008 national budget.

Teves said as finance secretary, he would be involved in the loan negotiations with China.

Since the controversy broke out last July, Palace officials have become increasingly reluctant to comment on the issue and tossed the matter to Transportation Secretary Leandro Mendoza, who signed the deal on behalf of the government last April 21 in China.

Secretary to the Cabinet Ricardo Saludo, however, said last week that he believes that the Department of Transportation and Communications (DOTC) has made sufficient and satisfactory explanation on the deal while ZTE has proven itself to be a top-notch company with a good track record.

Saludo said Cabinet officials expected to be summoned in the congressional inquiry would seek permission first from President Arroyo in compliance with the Supreme Court ruling on Senate vs. Ermita in the case against Executive Order No. 464, which was supposed to govern the appearance of top government officials in public hearings in Congress.

ZTE issues statement

Officers of ZTE Corp. finally issued a statement to shed light on the NBN contract.

Zhang Shumin, ZTE director of sales, said that since March this year, ZTE’s participation in the proposed broadband project has been subjected to malicious and unjustified attacks by other parties.

“We have been quiet because we know these are all baseless accusations. The time has come, however, to let the public know the truth. There was complete transparency in the proposal, evaluation and approval of ZTE’s application for the Philippines’ NBN contract,” Zhang said.

“I have to clarify here again the fact that ZTE, China’s largest listed telecoms solution provider, is the first proponent for the NBN project contrary to allegations by competitors,” he said.

He said that ZTE submitted its original proposal to the Commission on Information and Telecommunications (CICT) in April 2006, earlier than other applicants, and made a number of iterations to address the multi-dimensional requirements of the government.

CICT eventually endorsed the proposal to the National Economic and Development Authority in September 2006, and after careful evaluation by the Infrastructure Division of NEDA, the proposal was forwarded to the DOTC for assessment.

In March 2007 the ZTE proposal was jointly endorsed by the DOTC and CICT to the NEDA board for review, which the NEDA board approved.

“There was no undue haste in the evaluation of the ZTE proposal. It went through a six-month evaluation from CICT and NEDA, and another four months at the DOTC for final evaluation and comparison to other proposals which, incidentally, were late in submission. The dates our proposals were submitted and endorsed to various government agencies have been officially recorded and are totally verifiable,” Zhang said.

No ‘perfected contract’

Teves said the NBN deal “has to go through several processes and procedures for it to be perfected.”

Responding to a question, Teves said he did not know if subjecting the transaction to a public bidding is one of those procedures since it would be funded by a government-to-government loan.

His statement that there is no “perfected contract” on the NBN deal jibes with an earlier assertion by Trade Secretary Peter Favila that the transaction with ZTE has yet “to mature into a contract.”

The two Cabinet members, however, differ on their understanding on what was signed in Boao, China on April 21 during President Arroyo’s brief visit there.

While Teves said it was a supplier’s contract, Favila has said it was a memorandum of understanding or memorandum of agreement.

Secretary Mendoza, however, said that what was signed was a contract, and that he has full authority from the President to enforce the contract.

In yesterday’s interview, Teves said he has not seen the supplier’s contract.

He also said funding for the NBN project and for the $466-million cyber education program of the Department of Education (DepEd) is not included in the $1.8-billion loan package the government signed recently with China.

He said a big part of the $1.8 billion would be used for the Northrail railroad project.

Andaya said the funding for the NBN project is expected to come from foreign financing.

“As I see it we’re not yet sure whether there are funds for the NBN project and this will not come from the budget,” he added.

NBN deal discussed at Wack Wack meeting

Teves also insisted that the NBN deal was discussed in a dinner meeting called “a few months ago” by Mendoza and attended by Chairman Benjamin Abalos of the Commission on Elections and ZTE officials.

He said Mendoza informed him that Abalos and ZTE officials would attend the conference, which was held at the Wack Wack Golf and Country Club in Mandaluyong City.

Abalos and Mendoza frequently play golf at Wack Wack where Abalos is a former club president and currently a director.

“I went there to listen because I wanted to know more about this project,” he said.

Teves said that he did not inquire what Abalos’ role was in the meeting.

He said about a year ago, upon the Comelec chairman’s request, he met with him and ZTE officials at the finance secretary’s residence in Alabang, Muntinlupa, to discuss possible investments by the Chinese firm in Mindanao.

Teves’ account of the Wack Wack meeting is different from that of Abalos, who, in an interview over the weekend, made it appear that he came upon the conference by accident in one of his visits to the golf club.

Abalos said he dropped by to exchange greetings with Mendoza and Teves as a matter of courtesy.

Nueva Vizcaya Rep. Carlos Padilla, who exposed Abalos’ involvement in the NBN deal in a privilege speech last Tuesday, said the controversy is becoming more muddled due to the failure of concerned officials to reveal all that they know about the transaction.

Meanwhile, retired police general Edgar Dula Torres denied that he was present during an alleged meeting at the Wack Wack Golf and Country Club, wherein Abalos tried to convince Jose de Venecia III, son of Speaker Jose de Venecia Jr. and co-founder of Amsterdam Holdings Inc. (AHI), to withdraw their bid and give way to ZTE Corp. for the national broadband network project. AHI is a rival of ZTE in the NBN project.

Dula Torres said he has long retired and had no association with these people, including Leo San Miguel and contractor Ruben Reyes.

“This is not true. This is preposterous. I have not attended any meeting with these people,” Dula Torres said.

In a related development, economists from the University of the Philippines complained yesterday that the DOTC has been suspiciously uncooperative and refused to give them a copy of the contract for the controversial national broadband project forged by the government with ZTE Corp.

In a recent forum spearheaded by the UP Center for Integrative and Development Studies (CIDS), Dr. Raul Fabella, dean of the UP College of Economics, and Dr. Cayetano Paderanga, a former head of the NEDA, aired their frustration over the failure of the DOTC to give them a copy of the NBN contract so that they can review the agreement.

They said that they have already sent to the DOTC way back in June official requests for copies of the contract to study if the deal was advantageous or disadvantageous for the country.

Lawyer Josefina Trinidad-Lichauco, a former DOTC secretary and a resource speaker at the conference, condemned the NBN contract as a “monstrous anomaly” which is questionable because the project has not gone through a public bidding.

Lichauco assailed Secretary Mendoza for evading questions on the NBN contract.

Iloilo Vice Gov. Rolex Suplico, a former congressman, said the NBN project that was unilaterally awarded by the DOTC to ZTE proved the irregularity of the contract.

“The statements of both Abalos and Teves regarding their roles in the awarding of a controversial $330-million government telecommunications contract to a Chinese firm are full of inconsistencies and only muddled further the issue,” he said.

Suplico had earlier filed a petition with the Supreme Court seeking the nullification of the contract and the issuance of a temporary restraining order to stop the implementation of the contract.

“We appeal to the Supreme Court to take these things into consideration because the interest of 88 million Filipinos are bound to be adversely affected if the government implements the deal without determining if they did the right thing or not,” he said.

The Freedom from Debt Coalition (FDC) demanded an “independent and impartial” investigation of Abalos for allegedly brokering the NBN deal.

FDC president Ana Maria Nemenzo also sought the relief of Transportation Secretary Mendoza and assistant secretaries Lorenzo Formoso and Elmer Soneja.

“While it is true that Chairman Abalos was not a signatory to the agreement, he should have stopped DOTC Secretary Mendoza from signing the contract in China as it was done during the election period – a clear violation of the Omnibus Election Code,” Nemenzo said. – With Jess Diaz, Rainier Allan Ronda, Delon Porcalla, Sheila Crisostomo

Chief News Editor: Sol Jose Vanzi

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