GMA aware of corruption in NBN deal before signing

February 24, 2008

President Arroyo yesterday admitted she was aware of the purported corruption in the ZTE-National Broadband Network (NBN) deal that the government forged with the Chinese firm in April last year.

The Chief Executive, during a radio interview over dzRH, however, stressed that she was only informed of the irregularities in the broadband project the night before signing the supply contract.

“I was told about corruption the night before the signing of the supply contract. How could we cancel it the night before the signing,

given that another country was involved in this contract?” she said.

Mrs. Arroyo added she pushed through with the contract because of the compromise with China, whose government-to-government business relationships could have been affected.

The President witnessed the signing of five contracts between the Philippines’ Transportation and Communications Secretary Leandro Mendoza, Education Secretary Jesli Lapus, Trade Secretary Peter Favila and China’s ZTE, Tsinghua Tongfang and other Chinese contractors last April 21, 2007.

It was Mendoza and ZTE president Yu Yong who signed the NBN contract that was witnessed by Mrs. Arroyo.

The Philippine government’s copies of the contract, which were reportedly stolen, had been reconstituted.

“That was canceled a long time ago. The moment somebody informed me about the irregularity, I sought a way on how to cancel the contract. I was informed just the night before the signing of the supply contract, but it just wasn’t…that was only one of the signing (sessions). So how can you cancel something the night before. There was another country that you had spoken and agreed with. So the signing of the contract had to go on,” she added.

Mrs. Arroyo said she immediately talked to the Chinese president to inform that they needed to cancel the project because of this controversy.

“But at the first opportunity, I quickly spoke to the president of China to tell him that the project had to be canceled,” Mrs. Arroyo said in Filipino, referring to the Oct. 2 visit to China, or some six months after the signing of the supply contract in Boao, when she proposed the actual scrapping of the ZTE deal before President Hu Jintao.

The Chief Executive did not identify the person whom she claimed informed her of the irregularity in the ZTE deal, but in the Senate inquiry in September last year, then National Economic Development Authority Secretary General Romulo Neri admitted that he told the President that ZTE’s alleged broker, former Commission on Elections Chairman Benjamin Abalos Sr., offered him a bribe, telling him that he had “P200,” presumed to be P200 million in it for Neri if he approves the ZTE deal.

Neri in his testimony disclosed his conversation with the President, recalling that Mrs. Arroyo told him not to accept the “bribe offer” from Abalos, but still approve the ZTE deal anyway.

Neri was removed by Mrs. Arroyo from Neda in August last year and was transferred to a low level Cabinet position, as head of the Commission on Higher Education (Ched) for unknown reasons, which happened a month before the controversy was blown up in the Senate by whistleblower Jose “Joey” De Venecia III, son of the recently ousted Speaker Jose de Venecia Jr. and owner of a losing NBN bidder Amsterdam Holdings Inc.

De Venecia III revealed in the Senate last year that while Abalos was having difficulty in having him and his firm back out from the bidding process, First Gentleman Jose Miguel “Mike” Arroyo was with Abalos and pointed a finger at his face, and angrily shouting at Joey to back off from the ZTE-NBN deal.

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