PALACE  WON'T  CANCEL  ZTE  BROADBAND  DEAL

MANILA
, SEPTEMBER 6, 2007 (STAR) By Marvin Sy and Rainier Allan Ronda - Malacañang said yesterday the government will not cancel the P330-million national broadband network (NBN) deal with Chinese firm ZTE Corp., adding that it has nothing to worry about despite the disputes raging over the project.

Executive Secretary Eduardo Ermita said that the Cabinet officials concerned with the ZTE deal were all confident that it is legal and will stand up to public scrutiny.

The controversial issue has so far drawn two cases filed before the Ombudsman and the Supreme Court.

Nueva Vizcaya Rep. Carlos Padilla filed a case against Transportation Secretary Leandro Mendoza and two of his assistant secretaries before the Ombudsman for allegedly giving undue advantage to ZTE in the NBN project that will connect all government agencies and local government units through the Internet.

Iloilo Vice Gov. Rolex Suplico, on the other hand, had asked the Supreme Court to declare as unconstitutional the ZTE deal for violating existing laws and jurisprudence and for being inconsistent with government policies on public transparency, accountability and self-reliance.

Lawyer Oliver Lozano had filed an impeachment case in the House of Representatives against Commission on Elections Chairman Benjamin Abalos Sr., although Senate Minority Leader Aquilino Pimentel Jr. expressed doubts that the impeachment against Abalos will prosper.

Pimentel said Abalos and National Economic Development Authority (NEDA) Director General Romulo Neri should be summoned to the planned Senate public hearing on the ZTE contract.

Neri was reportedly offered P200 million to support the ZTE deal but the NEDA chief refused and reported the bribe attempt to President Arroyo.

Mrs. Arroyo allegedly told Neri not to accept the bribe but sign the ZTE contract anyway.

Neri, who is currently acting chairman of the Commission on Higher Education, neither confirmed nor denied the report that he was offered a P200-million bribe to approve the ZTE contract.

“I cannot comment on that (alleged bribe offer). I cannot prove whatever I say,” Neri told The STAR.

Neri admitted that he approved the NBN project when he was at NEDA.

“We approved the broadband project. But we did not approve the suppliers. The choice of supplier was Department of Transportation and Communication’s choice,” Neri clarified.

He said the NBN project’s concept is good and the controversy is over the choice of the supplier and the project cost.

Ermita said that he recently discussed the ZTE contract with Mendoza, who informed him about the two cases filed.

“If there are complaints pertaining to this particular issue which is a very hot issue, I think the recourse here would be to go to court,” Ermita said.

“If there are people who question the conduct, transparency of any transaction pertaining to any government project, maybe the best thing for them is to come out with evidence and go to court so that this could be resolved with finality,” he added.

Ermita said that the President has not given any order regarding the ZTE issue.

“The marching order (of the President) is for the DOTC to justify itself before the courts. Definitely there is no order to discontinue just because of the uproar,” Ermita said.

He argued that there should not be any assumption of irregularity regarding the deal and that the court should be the one to determine this.

“If there’s something wrong to be found out later, the least that can happen is for it (NBN project) not to push through,” he said.

‘There is nothing to hide’

As far as Mendoza is concerned, Ermita said that the secretary has already discussed the issue with the President.

Mendoza informed the President that she does not have to believe everything that is coming out in the media and that the courts will come out with the truth.

“The President is confident that the Cabinet officials involved are competent in handling it and would come out with a good conclusion,” Ermita said.

He added that Mendoza continues to enjoy the confidence of the President in spite of the allegations being raised against him and the ZTE deal.

“There is nothing to hide as far as we are concerned. There is nothing to hide as far as that particular activity is concerned, that’s why we are leaving the matter up to the appropriate Cabinet members. Definitely there’s nothing to worry about,” he added.

As far as Abalos is concerned, Ermita said that Malacañang would not interfere, considering that the Comelec is an independent constitutional body.

He said that Abalos is very capable of taking care of himself, being an experienced lawyer.

Howard Xue, ZTE global marketing director and chief information technology consultant, assured the people that the NBN contract was not overpriced or expensive.

He said the problem is that critics automatically assume that since its contract amounts to $330 million while the proposal of rival firm Amsterdam Holdings Inc. (AHI) was $240 million, the deal is overpriced.

“If our proposal is unfavorable to the Philippines, I wonder how you would describe our competitors? There is such a thing as clever presentation to hide the overall costs (of the project) and use propaganda to condition the minds of the public,” he said.

He said the ZTE deal involves a P330-million loan package from the Chinese government with three percent annual interest.

The loan package includes a five-year grace period and at least 15 years to pay while AHI will take out a $240-million loan at commercial rates, presumably not less than 6.5 percent interest and only 10 years to pay.

JDV: Cancel the deal

Speaker Jose de Venecia Jr. urged Malacañang to cancel the ZTE deal.

De Venecia said he had avoided making any comment on the ZTE contract because his son Joey is a major shareholder in rival firm AHI.

“Whether the project is superior or not is not for me to say because of delicadeza, although in principle, I am in favor that it be cancelled as pointed out by Senate President Manuel Villar,” he added, hinting that the country would be at the losing end in the ZTE deal.

A group of lawyers led by Vice Governor Suplico will file on Sept. 12 another impeachment complaint against Abalos in Congress over the poll official’s lobbying for the Chinese firm to bag the controversial NBN project.

Suplico, a former Iloilo congressman, told reporters who attended yesterday’s forum at the Tree House restaurant in Quezon City that Abalos will be held liable for culpable violation of the Constitution, bribery, graft and betrayal of public trust.

“At the earliest, our volunteer lawyers will file the impeachment complaint on Wednesday next week, or at the latest on Friday (Sept. 14). We will be ready with the case. I was informed by our lawyers that we have a case (against Abalos),” he said.

Independent Rep. Carlos Padilla of Nueva Vizcaya, who named Abalos as the official who brokered the questionable deal with ZTE Corp., promised to endorse the impeachment case once it reaches the House of Representatives.

“Hopefully, we will be able to get some evidence because since this issue started, many have been volunteering to give us evidence,” he said.

House Minority Leader Ronaldo Zamora and Camarines Sur Rep. Luis Villafuerte were non-committal, saying they still have to assess the real value of the impeachment complaint.

“We will see if it will reach the level or category of a genuine impeachment complaint. Right now, I haven’t seen anything yet. But I’m sure with Rolex around, he will come to us well prepared,” Zamora said.

“It is still premature for that. We have not yet established the set of facts,” Villafuerte added.

Division of kickbacks

Sen. Panfilo Lacson said the kickbacks amounting to almost $200 million were divided among officials involved in the national broadband network (NBN) deal, including the “Big One and the Little One” at the Palace.

“The Palace slip is clearly showing, and probably showing it all in ordering a gag on Cabinet officials regarding the ZTE deal. Here is a scam that costs 300 percent – from $130 million to $330 million,” Lacson said.

“The interesting question is, how much would go to whom? Inside information has it that $55 million would go to a Commission on Elections official, $68 million was supposed to bankroll the May 14 mid-term elections, $75 million to the ‘Big One and the Little One’ and the balance to some corrupt Department of Transportation and Communication officials and the rest of the usual boys,” Lacson disclosed.

If the PEA-Amari reclamation area anomaly in Pasay was the mother of all scams and the Diosdado Macapagal Boulevard overpricing scam was the grandmother, Lacson said the “ZTE deal is probably the great grandmother.”

Lacson said Mrs. Arroyo could not be excluded from the anomaly because she flew to Hainan, China even if First Gentleman Jose Miguel Arroyo was gravely ill and had just undergone delicate heart surgery at the St. Luke’s Medical Center in Quezon City, just to witness the signing of the contract.

“What’s so important in going to Hainan even for a short visit to witness the signing? She wouldn’t go there if it were not so important to her. She didn’t stay very long, not even 10 hours, she flew back. How important is this agreement to her?” Lacson asked.

Quoting insiders, Lacson said the ZTE initially offered $132 million for the broadband deal.

“If they would bid at $132 million, they would already have at least $30 million profit. But the amount went up to $262 million because a lot of officials asked for kickbacks,” Lacson said.

The deal rose to $330 million because of the $68 million additional grease money that officials wanted for the project.

“Based on my information, a down payment of $5 million was given. The problem of ZTE now is that it is a publicly listed corporation in China. If publicly listed, you have to write off the down payment in your books if nothing happens in the contract,” Lacson said.

Lacson said the initial $5 million went to one group alone and the amount had reached $20 million in the course of the negotiations.

“There’s another problem. If we go through this broadband network, we will be entrusting our security to a foreign country. In this country we have available backbones, there are existing ones already. Why should government still deal with a foreign government when this is very sensitive in the sense that communications through broadband could be monitored by other countries?” Lacson argued.

Senate President Manuel Villar and Sen. Francis Escudero said scrapping the NBN deal would be the proper action to take in the wake of tumultuous developments surrounding the contract.

Villar also expressed dismay over the reported gag order imposed on Cabinet officials.

He filed Senate Resolution 125 “expressing the sense of the Senate that the gag order policy is an assault on the constitutional guarantee on the people’s right to information and the state policies on transparency and accountability.”

“The government and its officials should not be onion-skinned, as public office is a public trust and anyone who accepts to serve the civil service is presumed to be in solidarity with the national commitment to the principle that debate on public issues should be uninhibited, robust and wide-open,” Villar said.

Escudero said the anomalous ZTE deal should be totally abandoned quickly and uncompromisingly, with no less than Mrs. Arroyo at the forefront.

Senators Joker Arroyo and Miriam Defensor-Santiago said the status of the contracts must be checked first to determine whether the deal had been consummated.

Arroyo said “corruption” among officials must be looked into and that the opposition should not ignore the issue just because only Abalos and not Mrs. Arroyo was being linked directly to it.

Santiago said she would also like to look into the loss of the original contract.

“I don’t understand why a document so important can be lost in this day and age. That, for me, is already a hallmark of suspicion,” Santiago said. – With Jess Diaz, Delon Porcalla, Aurea Calica


Chief News Editor: Sol Jose Vanzi

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