RP, China to review broadband project

Cabinet to take up deal and recommend action By Juliet Labog-Javellana
Inquirer
Last updated 01:31am (Mla time) 09/10/2007

SYDNEY — On the sidelines of the Asia Pacific Economic Cooperation Summit here, President Gloria Macapagal-Arroyo talked with Chinese President Hu Jintao Sunday about the controversial national broadband network (NBN) project whose $329-million contract was won by China’s ZTE Corp.

 

The meeting, called at the last minute, came amid calls from leaders of the Philippine Congress to scrap the ZTE contract, which was allegedly attended by bribery and overpricing.

 

The day before, Ms Arroyo said she would await the recommendation of her officials before deciding what to do about the NBN contract.

 

At the meeting between the Philippine and Chinese leaders, there was no specific mention of the ZTE contract, only the NBN project, Press Secretary Ignacio Bunye said Sunday.

 

The NBN is envisioned to establish a seamless connectivity of landline, cellular and Internet services among all government offices nationwide.

 

Bunye said the two leaders had a brief discussion on the NBN project under the subject of ODA (official development assistance).

 

“She assured President Hu that she would discuss the matter with her Cabinet. In the meantime, she suggested that Trade Secretary Peter Favila and Chinese Commerce Minister Bo Xilai work together to resolve the issue. President Hu agreed with President Arroyo’s suggestion,” Bunye said.

 

China and the Philippines signed a $1.8-billion loan agreement on Aug. 25 in Makati City.

 

Favila said last week that $400-million of the loan facility to be extended by China Export-Import Bank was not specifically intended for any project. He said it was up to the Philippines to “nominate” a project for funding.

 

In ceremonies attended by Ms Arroyo, Communications Secretary Leandro Mendoza and ZTE vice president Yu Yong signed the $329-million NBN deal on April 21 in Boao, China, shortly before the Philippine copy of the contract was stolen. The supply contract has been reconstituted.

 

Bribery

 

Asked about allegations that ZTE executives had bribed certain Filipino officials to clinch the deal, Ms Arroyo said Saturday: “I don’t know much about it either.”

 

Nueva Vizcaya Rep. Carlos Padilla has filed corruption charges against Mendoza and other officials involved in the deal, and named Commission on Elections Chair Benjamin Abalos Sr. as the broker.

 

Abalos was reportedly given free trips to China and women by ZTE to lobby in its behalf.

 

Jose de Venecia III, a son of Speaker Jose de Venecia Jr. and cofounder of Amsterdam Holdings Inc. (AHI), a proponent of the NBN project, has said Abalos tried to bribe him with $10 million to back out of the project.

 

Abalos has denied De Venecia’s allegation.

 

Romulo Neri, former director general of the National Economic and Development Authority (NEDA), has neither confirmed nor denied that he was offered a P200-million bribe.

 

But reports said that when Neri, now chair of the Commission on Higher Education, informed Ms Arroyo about the bribery, she told him not to accept the money but approve the deal anyway.

 

The House of Representatives and the Senate are set to investigate the ZTE deal.

 

Asked if she had made a decision on the controversial contract, Ms Arroyo said: “No, not yet.”

 

“I have to discuss it with the Cabinet members who are in charge. We haven’t discussed it yet. I’ll await their recommendation,” she said in an interview with reporters who covered her trip here for the APEC summit.

 

It was the first time Ms Arroyo commented on the ZTE controversy, in response to a question.

 

But she indicated she did not want to talk about the ZTE contract and other political issues during a nearly two-hour late Saturday night chat she had with reporters in her presidential suite at the Four Seasons Hotel after the first day of the two-day APEC summit.

 

“Stick to APEC issues, please,” she told the reporters, as she tugged at her necklace.

 

Ms Arroyo, accompanied by Bunye, Foreign Secretary Alberto Romulo and her husband Jose Miguel Arroyo, had just come from a dinner and cultural presentation at the iconic Opera House on the first evening of the two-day summit.

 

China-funded projects

 

In Manila, two sources close to the President said Ms Arroyo would meet with her Cabinet Tuesday to decide the fate of more than $2-billion worth of projects to be bankrolled and undertaken by Chinese firms, including the NBN.

 

The sources said Ms Arroyo had indicated to her Cabinet officials in Sydney that she would consider either “putting on hold for further review or canceling outright” the Chinese projects based on her advisers’ recommendations.

 

Included in the review were projects whose contracts had already been signed — the ZTE deal, the North and SouthRail projects, and the Manila Waterworks and Sewerage System (MWSS) pipeline.

 

Cyber education project

 

Other projects with no contracts that would be covered by the review are the Laiban Dam water supply, Cyber Education Project, and major housing projects in the pipeline.

 

One of the sources said Ms Arroyo had decided to turn to her Cabinet for advice in view of the mounting criticism against Chinese projects, specifically the ZTE contract.

 

Mandaluyong Mayor Benhur Abalos, son of the Comelec chair, was part of the President’s delegation to Sydney.

 

Ms Arroyo introduced the mayor and some members of the House of Representatives to leaders of the Filipino community during the convention of the Global Filipino Networking on Friday. With a report from Gil Cabacungan Jr.

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