Philippine National Broadband Network controversy

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The Philippine National Broadband Network controversy (or the NBN/ZTE deal, NBN/ZTE mess) is a political affair that centers upon allegations of corruption primarily involving former Commission on Elections (COMELEC) Chairman Benjamin Abalos, First Gentleman Mike Arroyo and Pres. Gloria Macapagal-Arroyo regarding the proposed government-managed National Broadband Network (NBN) for the Philippines and the awarding of its construction to the Chinese firm Zhong Xing Telecommunication Equipment Company Limited (ZTE), a telecommunications and networking equipment provider.

The issue has captivated Filipino politics since it erupted in Philippine media around August 2007, largely through the articles of newspaper columnist Jarius Bondoc of the Philippine Star. It has also taken an interesting turn of events, including the resignation of Benjamin Abalos as COMELEC chairman, the alleged bribery of congressmen and provincial governors (dubbed as "Bribery in the Palace"), the unseating of Jose de Venecia, Jr. as House Speaker, and the alleged "kidnapping" of designated National Economic and Development Authority (NEDA) consultant-turned-NBN/ZTE witness Rodolfo Noel Lozada, Jr.

1 History
2 Reactions
3 References
4 External links

[edit] History

[edit] Causes

On April 2007, Department of Transportation and Communications (DOTC) Secretary Leandro Mendoza and ZTE Corp. Vice President Yu Yong entered into a US$ 329.5 million contract for a national broadband network (NBN) that will improve government communications capabilities.^[1] On the 21st of the same month, Mrs. Arroyo flew to China and witnessed the contract signing between the Department of Transportation and Communication and ZTE Corp. in Boao province^[2], despite the fact that, at the time, the First Gentleman was still recovering from a critical condition, having recently undergone surgery for aortic aneurysm.

On August 29, Nueva Vizcaya Congressman Carlos Padilla hinted in a privilege speech that Commission on Elections (COMELEC) Chairman Benjamin Abalos went to China to broker a deal for the NBN project. The following day, Abalos denied brokering for the NBN project, although he did admit going to China four times.^[1]

On September 5, Senator Aquilino Pimentel called for a Senate investigation about the NBN project.^[1] As a result, three committees held joint hearings about the issue: the Accountability of Public Officers & Investigations (aka the Blue Ribbon Committee) headed by Alan Peter Cayetano, the National Defense and Security committee headed by Rodolfo Biazon and the Trade and Commerce committee headed by Mar Roxas.

[edit] Senate investigations

[edit] De Venecia's testimony

Jose "Joey" de Venecia III, son of House Speaker Jose de Venecia, Jr., testified on September 10 that he was with Abalos in China and that he heard Abalos "demand money" from ZTE officials. The younger de Venecia was president of Amsterdam Holdings, Inc. (AHI), the company that lost its bid to ZTE for the NBN project.^[1]

On September 11, the Supreme Court of the Philippines promulgated a temporary restraining order (TRO) on the $329-million national broadband network (NBN) contract between the Philippine government and China's ZTE based on separate certiorari suits filed by Iloilo Vice-Governor and former Representative Rolex Suplico and Joey de Venecia III. Under political pressure from the opposition group, the court gave ZTE fifteen days to comment on the injunction. Suplico, a former opposition congressman, alleged that the agreement was sealed without public bidding and violated the Telecoms Policy Act, which required privatization of all telecommunications facilities. Congressman Padilla sued DOTC and ZTE officials of violating the Anti-Graft and Corrupt Practices Act, the Telecommunications Policy Act, the Build-Operate-Transfer (BOT) Act and the Government Procurement Act at the Office of the Ombudsman. AHI also petitioned the Court to direct the DOTC to provide copies of the contract, since it should have won the same.^[3] The younger de Venecia testified on September 18 that Mike Arroyo, President Gloria Macapagal-Arroyo's husband, personally told him to "back off" from pursuing the NBN project.^[1]

Also on his testimony, he said that the First Gentleman shouted to him "Back Off!" when the two met at a golf course.

[edit] Neri's testimony

On the September 20 Senate hearing, Cabinet officials attended the hearing except for former National Economic and Development Authority (NEDA) Chairman (now Commission on Higher Education Chairman) Romulo Neri, who was sick. On September 22, 2007, president Arroyo suspended the broadband contract with ZTE after the bribery scandal sparked major problems in her government.^[4]

Neri and Abalos finally faced each other on the September 26 Senate hearing; Neri testified that Abalos told him "Sec, may 200 ka dito( You have 200M pesos in this deal)" while playing golf at Wack Wack Golf Club; they had been discussing the ZTE deal at that time. Abalos denied making the apparent bribe attempt. Neri later invoked executive privilege in response to some Senators' questions.^[1] He later shunned succeeding Senate hearings still citing executive privilege

On September 27, 2007, ZTE petitioned the Supreme Court to lift the TRO alleging, in its urgent omnibus motion, inter alia, that the injunction cost the company millions.^[5]

Abalos announced his resignation as COMELEC chairman on October 1; Resurreccion Borra succeeded him as COMELEC chairman. President Arroyo on her October 2 trip to China, said to Chinese President Hu Jintao her "difficult decision" to cancel ZTE Corp.'s contract for the NBN project.^[1]

The Supreme Court on May 26, 2008, in a 9-6 decision penned by Teresita Leonardo-de Castro ruled that “The subject Order dated January 30, 2008, citing petitioner Romulo L. Neri in contempt of the Senate Committees and directing his arrest and detention, is hereby nullified.” The court specifically found that “the conversations (in the Philippine National Broadband Network controversy) between President Arroyo and former Socioeconomic Planning Secretary Romulo Neri are classified informations; it tilted the balance of power in favor of Congress, favoring secrecy over public disclosure in the Neri petition.”^[6]^[7]

[edit] Lozada's kidnapping and testimony

On January 30, 2008, the Senate produced warrants of arrest to Neri and Rodolfo "Jun" Lozada, Jr., former chief executive officer of the government-run Philippine Forest Corporation and a consultant of the NEDA. Neri then went into hiding while Lozada skipped the Senate hearing and went to Hong Kong.^[8] Meanwhile, House Speaker de Venecia lost a motion of confidence vote on February 5, which unseated him as House Speaker; his partymate at Lakas-CMD, Prospero Nograles of Davao City, succeeded him as speaker.^[9]

On February 5, as the Senate arresting team waited on the Ninoy Aquino International Airport (NAIA) on Lozada's arrival,^[10] Lozada was taken by unidentified people "out of town" and Lozada's kin appealed for help on his whereabouts.^[11] On February 7, Lozada finally surfaced as police took him to La Salle Green Hills, Mandaluyong City. Lozada linked Mike Arroyo and Abalos to the ZTE scandal.^[12] On the same day, the Supreme Court stopped the Senate from arresting Neri, ordering a status quo; Neri then resurfaced after the threat of arrest was taken off.^[13]

The next day, on a Philippine Senate hearing, Lozada confirmed his NEDA boss Romulo Neri's testimony that Commission on Elections (COMELEC) chairman Benjamin Abalos and Arroyo's husband Mike Arroyo were behind the kickbacks in the deal. Lozada's statement was made after he was "abducted" on the orders of Department of Environment and Natural Resources (DENR) secretary Lito Atienza, Neri, former Presidential Management Staff head Michael Defensor, Secretary for Special Concerns Remedios Poblador and Deputy Executive Secretary Manuel Gaite.^[14]

On February 11, upon continuation of Senate hearings, the government denied on kidnapping Lozada. Lozada claimed he was driven around Metro Manila and even reached Los Baños, Laguna, before he was transported to the La Salle Green Hills seminary. According to DENR Secretary Atienza, Lozada, who is his boss as the Philippine Forest Corp. is under the DENR, asked for his help as "he feared for his life" as he returned from Hong Kong. Joey de Venecia later claimed that ZTE advanced USD 1 million to Abalos; senators pointed out that this qualifies as "plunder" under Philippine criminal law since the advance was given when the foreign exchange was at about PHP 50 to $1, thus equaling the PHP 50 million floor for plunder.^[15]

Deputy Executive Secretary Manuel Gaite appeared on the February 26 hearing. He had previously said that the P500,000 he gave to Lozada's brother was for Lozada's expenses while staying at Hong Kong. Gaite said he "can't rationally justify" the reason why he gave Lozada the hefty amount. He said that his action "was moved by my conscience and my faith." Lozada earlier claimed that the P500,000 was a bribe.^[16]

[edit] Madriaga testimony

Also on the February 26 hearing, Dante Madriaga, a ZTE-employed engineer, claimed that USD 41 million was sought as "advances". ZTE then withheld more money, saying they needed to see President Arroyo's face at the signing of the contract.^[16]

[edit] Ombudsman cases

The Ombudsman Ma. Merceditas N. Gutierrez subpoenaed First Gentleman Mike Arroyo, Neri, the de Venecias and Abalos to hear their side of the story. The case was filed by former vice president Teofisto Guingona, Jr., several lawyers, Fr. Jose Dizon and party-list Representatives Joel Villanueva and Ana Theresia Hontiveros-Baraquel, among others.^[17]

[edit] Reactions

After the Lozada testimony, several sectors and prominent people such as Joey de Venecia and senator Panfilo Lacson called for president Arroyo's resignation, while Senate President Manuel Villar and senator Alan Peter Cayetano called for a leave of absence.^[18]^[19] Vice President Noli de Castro on the other hand, asked President Arroyo and other government officials "should be charged" if they would be found directly involved in the alleged anomalies.^[20]

On February 12, the Makati Business Club and about 80 other groups called for Arroyo's resignation.^[21]

An estimated 1,000 people held a protest rally in front of the Ninoy Aquino statue in Makati City to demand the resignation of Arroyo in February 15.^[22] More than 1,000 people, including former President Corazon Aquino and Lozada, attended the Sunday mass at the La Salle Green Hills' St. Benilde Gymnasium.^[23]

The Catholic Bishops' Conference of the Philippines (CBCP), due to the Filipino people's clamor for a united political stance, called an emergency meeting on February 25. Archbishops Angel Lagdameo of Jaro, Gaudencio Cardinal Rosales of Manila and Archbishop Leonard Legaspi of Caceres announced the collective stance of the bishops, and in their statement they said, "They refused to call for her resignation saying they wanted her, President Gloria Macapagal-Arroyo, to be part of the moral reform process."^[24] Lozada, Aquino and several personalities attended the mass during the anniversary of the People Power Revolution at the Baclaran Redemptorist Church in the Manila suburb of Parañaque. The homily centered on the retort where Arroyo claimed that "People Power" is dead.^[25]

A massive interfaith prayer rally was held at the Ninoy Aquino statue in the Makati central business district (CBD) attended by Aquino and Estrada,^[26] despite several blockages by the Philippine National Police (PNP) of people willing to join the rally.^[27] While the rally was ongoing, the Air Transportation Office declared a no-fly zone in the Makati CBD for the duration of the rally. The order prohibited aircraft such as helicopters from covering the rally.^[28] The rally drew 15,000 people according to the PNP,^[29] although a leftist group estimated as much as 205,000 people while the the rally organizers had an 10,000 -15,000 attendees as an estimate.^[28]

A rally with about 300 participants was also held at the Mabuhay Rotonda near the Quezon City-Manila boundary by pro-Arroyo groups.^[30]