GMA, FG linked by new witness to NBN kickbacks

February 27, 2008

Charges of alleged overpricing and kickbacks in the botched ZTE deal was bolstered by a new witness yesterday who openly named the First Couple, former Commission on Elections (Comelec) chairman Benjamin Abalos Sr., and couple of alleged cronies as main players, saying they partook of huge cash advances that amounted to an alleged hefty $41 million.

Of the stated kickback amounts, at least $35 million went to the pockets of President Arroyo and First Gentleman Jose Miguel “Mike” Arroyo, the witness, Dante Madriaga, a consultant of ZTE Corp’s Filipino partners, testified yesterday before the Senate.

The alleged kickbacks were way beyond the actual project cost bagged by the China-based ZTE Corp. as the contract was initially pegged at $50 million only, a minuscule figure compared to the final tag price of the proposed National Broadband Network (NBN) project which now costs $329 million.

Part of the alleged pocketed kickbacks that was secured was said to have been earmarked as additional funds for the “war chest” for the administration for the then upcoming 2007 national elections.

Madriaga presented himself before Senate probers to disclose what he knows of the supposed rigging of the contract and distribution of kickbacks purported to have been done by the group he called “greedy group plus, plus” – a group he said that is comprised of the so-called “Gang of Four” and the First Couple.

He identified Abalos, Ruben Reyes who is alleged to be a golfing buddy of the former Comelec chair, a certain Gen. (ret.) Quirino dela Torre and Leo San Miguel as comprising the “Gang of Four.”

Madriaga, an electronic engineer by profession got himself into the ZTE mess through his friend Leo San Miguel, to lead the so-called design team of the NBN project, corroborated some of the claims made by another witness Rodolfo Noel Lozada and businessman Jose “Joey” de Venecia III who is the losing bidder in the deal as far as alleged involvement of Abalos and some Palace officials.

At one point former Presidential Chief of Staff Michael Defensor’s name also cropped up as Madriaga identified him as among those present in ZTE-related meetings where Abalos was present and which he supposedly attended.

Attesting to the veracity of his claims, Madriaga said San Miguel and ZTE’s Fan Yang told him on separate occasions of the advance payments they made, which came in three tranches between Aug. 2006 to March last year, to the purported Filipino“consultants”, the last of which was the alleged $30 million for the administration’s election kitty.

Madriaga provided what could be the explanation on the presence of Mrs. Arroyo in Boao, China in April 2007 where the supply contract was signed to stand as a witness, saying it was a condition set by the Chinese contractors.

He said he was told by both Fan Yang and San Miguel that ZTE will only approve and remit the additional advance payment of $30 million if Mrs. Arroyo would be present to grace the said affair.

He added that the signing payment was coursed through China then to the Caymans Islands.

Funds received from ZTE officials as sweeteners were alleged to have ended up in the account of Reyes in Caymans where his company is said to be maintaining an account and the Reyes account acted as the group’s “clearing house.”

Madriaga attested that that Fan Yang and San Miguel confirmed to him the release of the advances, $1 million sometime in Aug. 2006; $10 million in March 2007 and $30 million in April last year.

“There was a success fee of $10 million, Leo (San Miguel) told me and this was confirmed by Fan Yang. I asked them when will we get the money, and Fan Yang said it was already taken cared of. We got it within the week. But I didn’t get any. Actually, I don’t have a take on what they will have. I just want them to pay me,” he told Senate probers.

Under questioning from Senate President Manuel Villar Jr. and Senate President Pro Tempore Jinggoy Estrada, the latest witness on the ZTE probe linked not only the presidential spouse but also Mrs. Arroyo.

As far as Mrs. Arroyo is concerned, Madriaga said the President can not deny knowledge of the transaction since “as far back July 2006, the President even designated Trade Secretary Peter Favila to negotiate on government’s behalf under the memorandum of understanding that she signed.

As to Mr. Arroyo, Madriaga claimed to be present to the so-called “back off incident” involving the First Gentleman and De Venecia III, narrating to Senate probers that the presidential spouse even walked in front of him after the said encounter and he himself heard the First Husband cursing the former Speaker’s son.

Madriaga even added that some members of the Presidential Security Group (PSG) accompanying Mr. Arroyo “assigned” to Reyes, overheard the presidential husband cussing De Venecia III.

Asked by Estrada and Villar how he came to know about Reyes maintaining some PSG as supposed bodyguards, Madriaga said the said presidential escorts themselves told him then.

On the said kickbacks, Madriaga claimed that only Reyes and Abalos benefited from it. “Leo said he did not receive any. He and Torch,” referring to Dela Torre, whom opposition Sen. Panfilo Lacson identified as a retired general and former comptroller of the Philippine National Police (PNP).

As to the $10 million, Madriaga alleged that half of it went to the First Couple and the remaining $5 million went to the Abalos group.

He even said that the division of the loot in the Abalos group was supposedly based on a “hierarchy” with the former Comelec chair purportedly bagging the bulk of it.

Allegedly, actual project cost would amount only to $50 million but with the supposed initial kickbacks of $80 million, its purported contract ended up $130 million, Madriaga said, explaining that ZTE people would not allow their Filipino counterparts be the ones only to get away with supposed “loot”, as often, they would have a counterpart fund. This is the reason it went to as much as $329 million, Madriaga said.

“I was also told (by ZTE officials) that whatever the Filipino group makes, (they will also get),” he said.

“But from the very beginning, his boss (Leo San Miguel) said, they were protected here,” referring to the allegations that the ZTE has the backing of Malacañang.

Lozada, asked by Villar if Madriaga’s story corroborated his, answered in the affirmative.

“So far, the issue on the ZTE getting worried because the project was not moving well…and the pressure coming from the group of Abalos sometime Nov. 2006 where he called up FG (Mr. Arroyo)…it was the most significant part because it (approval from the Chinese government that the project will be secured through loan agreement), came out on a weekend,” he said.

“I guess along that line, it’s fitting into mind, based on my recollection,” he added.

Madriaga, when his credibility was put to a test by senators, claimed that he had long wanted to testify but was hindered by his lack of connection as to whom to approach as well as the idea of putting in peril his family.

“I’m hindered by the fact that I know no one among you here now…and yes I’m afraid. I’m afraid to face the Senate because I have seven children,” he said.

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