Arroyo: I know ZTE contract tainted but can’t cancel deal

(Updated 11:45 p.m.) President Gloria Macapagal Arroyo on Saturday said she learned that something was wrong about the Philippine government's $329.48-million National Broadband Network project with China's Zhong Xing Telecommunications Equipment (ZTE) Corp the night before she witnessed the signing of the NBN-ZTE contract. Mrs Arroyo told radio dzRH that the day before she witnessed the signing of the NBN-ZTE contract on April 21, 2007 in Boao, China, she was advised about the supposed irregularities in the project. However, she said she could not readily terminate the deal that would be funded through a loan from the Chinese government. On September 22, 2007, five months after she learned about the ZTE mess, and during the height of NBN-ZTE controversy that was linked to her husband, Mrs Arroyo canceled the NBN-ZTE contract. "Sumbong sa akin the night before signing of the supply contract, that was one of many signings. (Pero) paano mo i-cancel the night before, may ibang bansa kang kausap (Someone told me about it the night before the signing of the supply contract. That was one of many signings. But how can you cancel a deal the night before, when you are dealing with a foreign country)?" she said. Mrs Arroyo, however, did not say who told her about the irregularities, and what were these all about. On April 21, 2007, Mrs Arroyo witnessed the signing of five contracts between the Philippines' Transportation and Communications Secretary Leandro Mendoza, Education Secretary Jesli Lapus and Trade Secretary Peter Favila and China's ZTE, Tsinghua Tongfang, and other Chinese contractors. The contract for the NBN project signed by Mendoza and ZTE president Yu Yong, was among the five projects that were approved on the said date. The Philippine government's copies of the NBN contract, which were reportedly stolen, had been reconstituted. Romulo Neri, then director general of the National Economic and Development Authority (NEDA) had argued that the project should have been put under a build-operate-transfer (BOT) scheme. Rodolfo Noel Lozada Jr, a former consultant at the NEDA who reviewed the NBN project testified before the Senate that the project was padded by $197 million. Lozada also accused Benjamin Abalos Sr, former chairman of the Commission on Elections, of asking a $130-million "commission" from the project. Last year, Jose "Joey" De Venecia III, testified before the Senate that the President's husband, Jose Miguel Arroyo told him to "back off" from pursuing the project. De Venecia III, the son of ousted Speaker Jose de Venecia Jr, co-owns Amsterdam Holdings Inc, which submitted a proposal for the NBN project. De Venecia III also claimed that Mr Arroyo wanted a $70-million "commission" from the project. Lozada corroborated portions of De Venecia's statements before the Senate, claiming that Abalos talked to Mr Arroyo on the cellular phone complaining about the NEDA's reluctance to place the NBN project under the BOT scheme. Mr Arroyo and Abalos denied Lozada's allegations. On Saturday, Mrs Arroyo said that while she was unable to immediately address the problem on the NBN-ZTE contract, she later on took steps to "correct" the wrong by having the deal canceled in September 2007. "Pero sa unang pagkakataon kausap ko ang pangulo ng China para sabihin kailangan kanselahin ang proyekto. Sa una nagulat, sa pangalawa, naintindihan niya at magkaibigan pa rin kami kahit kanselado ang proyekto (The first chance I had, I talked to the President of China and told him we had to cancel the contract. At first he was surprised but he understood and we remain friends)," she said. Arroyo said this showed that she did not want corruption. "Ang taumbayan galit sa katiwalian ganoon din ako (If the people are outraged over corruption, so am I)," she said. She said the government had also taken other steps against corruption, including increasing the budget of the Ombudsman, and having various groups monitor government procurement. Earlier this week, she suspended 11 official development assistance (ODA) projects, and had transparency groups monitor the government's procurement and bidding. The groups include the Bishops Businessmen's Conference, Makati Business Club and Transparency and Accountability Network, according to Mrs Arroyo. "Ito ang reporma sa sistema para mabawasan ang katiwalian sa pamahalaan (This is one of the reforms in the system that we have undertaken)," she said. So far, she said the group had identified "20 biggest projects" to watch. - GMANews.TV