The Stinky NBN Deal

From left to right: Benjamin Abalos, Rolex Suplicoand Romulo Neri at the Senate hearing on Wednesday in Manila.

By Rasheed Abou-Alsamh

IT HAS been riveting to watch the ongoing Senate hearings into the contract to build a national broadband network that the Philippines signed with the Chinese telecommunications company ZTE.

It is not that often that people in developing countries get to see non-elected government officials squirm on live television while they are relentlessly grilled by elected representatives of the people. And it is a scene that I have never seen happen in an Arab country.

The administration of President Gloria Macapagal Arroyo from the very beginning of this saga has been extremely remiss in explaining the parameters of the whole contract to the public. Indeed, at times it has seemed like the bureaucracy itself was not sure for what $329 million of the Philippine people’s money was going to be shelled out for. Was it for a national telecommunications backbone just for the government and its affiliated agencies? Or were public schools going to be able to use it to gain access to the Internet for its students and teachers? And why wasn’t the already existent private telecommunication backbones built by PLDT and Globe good enough for government use?

In terms of the contract itself the government has been shifting its parameters. Former Socioeconomic Planning Secretary and Director General of the National Economic and Development Authority Romulo Neri, in testimony before the Senate on Wednesday, admitted that NEDA last year had recommended that the deal for the broadband network be on a build, operate and transfer (BOT) basis that would not involve the expenditure of any funds by the government.

But that is not what the deal turned out to be when it was signed with ZTE earlier this year in China by the president herself. When she signed the deal, it had suddenly transformed itself into one that would cost the government $329 million, which would be financed through a soft loan from the Chinese government.

Neri invoked the shield of executive privilege on Wednesday when asked what the president told him to do with the ZTE proposal after he told her that Commission on Elections head Benjamin Abalos had allegedly offered him a P200 million bribe to give the ZTE deal his blessings. It would be extremely beneficial if the Senate and the Philippine public could find out if President Arroyo urged Neri to allow the ZTE contract to go through, and why she would urge such a thing.

At the Senate hearings last week, several senators grilled the Secretary of Transportation and Telecommunications Leandro Mendoza and his undersecretary. Both were asked why the approval of such an important contract did not pass through the Senate. Mendoza claimed that since a provision for it was included in the national budget, which Congress has to approve every year, then this was how it got approved by the legislature. But several senators pointed out that burying the ZTE deal in the budget without pointing it out to senators or congressmen was just pure trickery.

What set these Senate hearings off to begin with were the allegations of bribes being offered to Joey de Venecia III, who heads a company called Amsterdam Holdings which submitted a bid for the broadband deal, by Abalos. De Venecia claims that Abalos offered him $10 million to back off from competing for the contract, supposedly to leave the field wide open for ZTE to secure the deal.

Abalos, after missing the first round of Senate hearings last week, this week categorically denied having offered a bribe to De Venecia. But his embattled performance was far from convincing, his permanently scowling face belying a deep anger inside him. Some have speculated that he was the mastermind of the whole ZTE deal, and that he was being made the fall guy now that things were heating up in order to protect the president from any messy fall out.

Indeed, the whole relationship between Abalos and De Venecia raises more questions than it answers. To begin with the whole ZTE deal seems to have been cobbled together on golf courses in Manila and China, and, if Philippine Star columnist Jarius Bondoc is to be believed, in sleazy hotel rooms in southern China with female escorts allegedly provided to Philippine officials by ZTE officials.

Abalos has denied the story of him having enjoyed the company of female escorts in China, but he has not denied having traveled to China at least five times between November 2006 and August 2007. On Wednesday, he agreed to submit his passport to the Senate committee to have it photocopied. Although Abalos claims to have personally paid for such trips, he surprisingly says he has no receipts to prove it.

In addition to this, although Abalos claims that he was not a part of the official Philippine delegation negotiating the broadband deal with ZTE, he admits to being good friends with high ZTE officials and to regularly playing golf with them in both China and Manila.

The exclusive Wack Wack Golf Club, of which Abalos is the president, is turning out to be the pivotal meeting place for much of the negotiations of the ZTE deal. Abalos admits to having met De Venecia there several times, but claims that each time it was by chance. Both he and De Venecia admit to having flown to China together to meet ZTE officials, and De Venecia says that Abalos introduced him as his partner. But if De Venecia was offering the government a cheaper deal than ZTE to build the broadband network, how could Abalos claim he was a partner when the Comelec chief was so close to the ZTE officials? And why did De Venecia agree to go to China with Abalos in the first place? Was he just using Abalos as a way to get a portion of the ZTE deal for his own company, since he claims to have already known ZTE officials and to have done business with them in the past?

The sight of the president’s daughter, Luli Arroyo, last week trying to besmirch the reputation of De Venecia by claiming that his past drug use may have affected his brain, was a new low-point in Philippine politics. De Venecia’s subsequent discussion of his college addiction to marijuana and beer in last week’s Senate hearings was courageous and in a league far above Luli’s cheap, personal attack.

The Senate hearings are continuing and will hopefully shed some light on what really happened behind the scenes when the ZTE deal was conceived. I’m just happy that such a stinky deal has been suspended by both the Supreme Court and the president herself. Despite the technical goodies that the deal would have afforded Philippine government users in terms of communications, a deal so bizarrely and sleazily conceived is better stopped in its tracks now. New transparent deals can always be signed in the future, after we get to the bottom of this slimy one.