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Philippines: Another Scandal rocks Arroyo regime

by FDC & Akbayan Monday, Sep. 24, 2007 at 5:10 AM

ZTE deal to cost US7 million after 20 years of repayment

Philippines: Another...
zte.jpg, image/jpeg, 405x460

Wearing white elephant masks to depict the potential character of the controversial national broadband network (NBN) project, members of the Freedom from Debt Coalition (FDC) staged a picket outside the Senate Tuesday in time for the Blue Ribbon Committee hearing on the project won by Chinese firm ZTE Corp., and stressed its debt burden on the Filipino people.

Citing pronouncements form government officials, the debt-watchdog calculated the maximum 3 percent interest for the US9,481,290 project and its repayment in 20 years, with the repayments starting five years after the release of the loan.

FDC president Ana Maria R. Nemenzo explained that with interest payment alone, the Filipino people will be forced to shell out about US million annually or about US8 million in twenty years for a project that is a ‘white elephant’ in the offing.

She added that because of the automatic appropriations law on debt servicing, taxpayers will be forced to pay about US million a year which includes the principal amortization.

“At the end of the repayment period, the total amount of this reeking project will be about US7 million,” Nemenzo said.

A “white elephant,” in terms of projects and loans, is a supposedly valuable possession whose cost, particularly cost of upkeep, exceeds its usefulness, and is therefore a liability. In some parts of Southeast Asia, white elephants are considered both as a blessing and a curse. It is a blessing because it is associated with peace and prosperity; while it is a curse because the animal could be put to no practical use.

FDC explained the reasons why the ZTE deal is a potential white elephant:

= There is no existing financial analysis and plan for the said project;

= The implementing agency is blind to any feasibility studies and has not initiated any detailed engineering studies, plans, specifications and design for the said broadband project. This entire aspect was tasked to ZTE alone;

= It suffers from a crisis of transparency. It is alleged that there is a lack of competitive bidding which led to the overpricing of the project. A similar project proposal by the Amsterdam Holdings Inc. at US0 million costs a lot cheaper than the ZTE's offer; and,

= It also suffers from a crisis of relevance. The question is: do we really need it in the first place?

It was reported that the Philippine government already owns two broadband networks—the Philippine Administrative Network Project (PANP) supposedly to modernize our government's news and information network and the Philippine Research, Education and Government Information Network (PREGINET) tasked to interconnect academic institutions, government offices and research and development centers in the country.

“Why do we need a third one? Whatever happened to these two networks? Have they become white elephants as well?” Nemenzo asked.

“Considering the stink this transaction has already emitted, the ZTE deal is already a curse and a potential liability. Therefore, the ‘Contract for the Supply of Equipment and Services for the National Broadband Project’ signed in Boao, China last April 20 must be abrogated as soon as possible. Let us nip in the bud this illegitimate and unnecessary debt while it’s still early. To dillydally is not an option,” stressed Nemenzo.

“We believe there are a lot of ‘white elephants’ out there. We must stop the rampage and stampede of these ‘white elephants’ or illegitimate debts—debts that were incurred by governments to finance ill-conceived development projects or loans that were claimed under fraudulent contracts and corrupt practices,” Nemenzo asserted.

The group urged the Senate to protect the public from this kind of anomalous and debt-creating agreements and to prevent the administration from borrowing the US0 million loan facility granted by China to the Philippines which is apparently intended for the NBN deal.

“It is not Mrs. Gloria Macapagal-Arroyo, DOTC Sec. Leandro Mendoza nor COMELEC Chair Benjamin Abalos who will foot the bill to this scandalous deal, but the Filipino people,” stressed Nemenzo.

During the Asia-Pacific Economic Conference in Sydney, Australia early this month, Trade Secretary Peter Favila divulged the information that China will not cancel the loan facility if the Philippine government junks the broadband deal. He added that canceling the ZTE deal would not affect RP-China relations.

“The problem here is that the loan facility was negotiated first before any concrete need was identified and developed into a project, rather than the other way around,” said Nemenzo.

The group also urged the Senate “to rehabilitate Mrs. Arroyo’s administration from debt-addiction.”

“We would like to remind the Senate, as well as the House of Representatives, that Mrs. Arroyo’s total gross borrowings and debt payments are already larger than that of her predecessors combined. Among the post-Marcos presidents, Mrs. Arroyo holds the record of being the most aggressive borrower and the most loyal client of lending agencies for prioritizing debt service over the basic needs of the Filipino people,” the FDC leader said.

According to FDC, as of end-2006, Mrs. Arroyo has borrowed a total of P3.1 trillion and has spent P3.24 trillion for debt servicing.

Last week, FDC slammed Mrs. Arroyo’s pronouncement that her administration will honor contracts and agreements it has entered into as long as the deals “go through the required processes, despite media attacks." The group stressed that there is no honor in honoring unnecessary and overpriced contracts tainted with bribery.

Also, FDC has called for the resignation of Chairman Abalos for his alleged role in brokering the ZTE deal and of Secretary Mendoza and his two Assistant Secretaries Lorenzo Formoso and Elmer Soneja for pushing and keeping mum on a project that will only put the country deeper in debt. ###

ZTE deal: A contract of horror, not honor

There is no honor in honoring unnecessary and overpriced contracts tainted with bribery.

Thus say the debt-watchdog Freedom from Debt Coalition in reaction to Mrs. Gloria Macapagal-Arroyo’s pronouncement that her administration will honor contracts and agreements that it has entered into as long as the deals “go through the required processes, despite media attacks."

“There is no honor in sealing the deal with the Chinese firm ZTE Corp. There is only horror for generations after generations of Filipinos who will foot the bill to this white elephant in the offing,” said FDC secretary general Milo Tanchuling.

A “white elephant,” in terms of projects and loans, is a supposedly valuable possession whose cost, particularly cost of upkeep, exceeds its usefulness, and it is therefore a liability. FDC cited as examples of “white elephants” in the country the mothballed Bataan Nuclear Power Plant (BNPP), the Austrian medical waste incinerators and the “Telepono sa Barangay” project.

“Besides, how can the people and the media ignore the odor this deal secretes? It smells like a rotten egg,” he added.

During the launching ceremony of the Bishops-Ulama Conference-Armed Forces-PNP Forum for Peace at Malacañang Wednesday night, Mrs. Arroyo also said that she will create a body that will ensure transparency and good governance in public investments. She plans to create the Procurement Transparency Group under the Government Procurement Policy Board.

FDC said that this group will just be another layer of bureaucracy and additional cost for the government and will only address future dealings, but not the agreements on national broadband network (NBN) and cyber education projects.

“This haphazard decision of Mrs. Arroyo just to appease the clamor of the public against the controversial contracts shows irrationality on the part of the administration that is pushing for rationalization of government services. This group she plans to create will only duplicate the existing function of its superior agency,” Tanchuling explained.

“Again, we ask: where are the contracts signed in Boao, China? Walk the talk, Mrs. Arroyo. Show us these contracts,” dared Tanchuling, adding that honoring these contracts would only put the country deeper in debt.

FDC also reminded Mrs. Arroyo that her total gross borrowings and debt payments are larger than that of her predecessors combined.

“We would like to jog Mrs. Arroyo’s memory that among the post-Marcos presidents, she holds the record of being the most aggressive borrower and the most loyal client of lending agencies for prioritizing debt service over the basic needs of the Filipino people,” Tanchuling said.

According to FDC, as of end-2006, Mrs. Arroyo has borrowed a total of P3.1 trillion and has spent P3.24 trillion for debt servicing.

“For almost two decades, we have been asserting that our country’s long history of indebtedness is largely because of our government’s debt addiction. We must stop the rampage and stampede of these ‘white elephants.’ We must put an end to illegitimate debts—debts that were incurred by governments to finance ill-conceived development projects or loans that were claimed under fraudulent contracts and corrupt practices,” Tanchuling asserted.

De Venecia's testimony makes Abalos' impeachment more compelling

Deputy minority leader and AKBAYAN Rep. Risa Hontiveros said today that the testimony of Joey de Venecia makes the impeachment of Abalos more compelling. "The statement, which was given under oath, would make COMELEC Chair Abalos accountable for violating the Anti-Graft and Corrupt Practices Act and for betrayal of public trust," Rep. Hontiveros said.

"At the very least, the minority should meet to discuss whether the testimony is enough to impeach Abalos. Since Iloilo Vice-Governor Rolex Suplico has not filed his complaint yet, the minority might tackle the possibility of linking up with Jose de Venecia III about the matter," Rep. Hontiveros said, adding that she would immediately talk to Rep. Ronaldo Zamora to convene an emergency meeting.

She clarified that a statement under oath is strong enough. "If he's able to present other witnesses who can provide corroborative statements, then the case would be damning," Rep. Hontiveros said. "There are, after all, cases of bribery where finding documentary evidence is nearly impossible, especially if these involve under the table negotiations."

The solon also challenged First Gentleman Mike Arroyo to return to the Philippines to face de Venecia's accusations. "He should categorically state if he was truly with Abalos and whether he also pressured De Venecia to back off from bidding for the ZTE contract," Rep. Hontiveros said. "Was he also aware that of the alleged bribe money that Abalos himself offered to de Venecia? The more silent he is on the accusation, the more difficult it would be to dissociate himself from the controversy."

The solon added that AKBAYAN would ensure that the individuals mentioned in the testimony would be summoned to the House hearing on the deal. "DOTC Sec. Leandro Mendoza and Ruben Reyes should be summoned to attend the hearing, and if they refuse, a subpoena should be issued immediately. Reyes, a businessman reportedly close to military officers involved in the 'Hello Garci' wiretapping controversy, is reportedly a golfing buddy of Abalos," Rep. Hontiveros said.

She also renewed calls to have the deal cancelled. "We certainly don't want another PIATCO or another onerous contract. The ZTE deal is already tainted, and clearly the law was violated during the bidding of the contract. For the interest of all, the government should cancel the contract while an investigation is being pursued," Rep. Hontiveros said.

Tuesday, 18 September 2007

Gloria Macapagal-Arroyo (GMA) challenged: tell First Gentleman to attend congressional inquiries, too

AKBAYAN Rep. Risa Hontiveros said today that GMA's decision to allow Cabinet secretaries to attend the Senate blue ribbon inquiry on the ZTE deal should be taken with a grain of salt.

"Telling them to attend the hearings is not enough. We have to wait for the Cabinet officials' statements under oath before we can judge the sincerity of her action. Furthermore, if she is really serious about being transparent on the deal, she should ask First Gentleman Mike Arroyo to come back, attend the hearings, and clear his name," Rep. Hontiveros said

Rep. Hontiveros also dared the President to revoke E.O. 464 and MC 108, which have been repeatedly invoked by Cabinet officials to avoid congressional inquiries. "Allow Congress to perform its oversight functions without Malacañang hiding behind excessive legalism," Rep. Hontiveros challenged the President. "Congressional inquiries only become political circuses when the President allows Cabinet members to attend hearings but prevents them from saying anything."

"The explosive testimony of Jose de Venecia III demands nothing less than full disclosure from those who were obviously involved in the deal, including the First Gentleman," Rep. Hontiveros stressed.

She also lashed out at the President for dismissing the issue as a vaudeville act and a tale of conspiracy.

"There is indeed a conspiracy taking place, but it is not coming from within the opposition. What the ZTE deal shows is that the real conspiracy involves hoodlums in government using their power to bag kickbacks from onerous deals," Rep. Hontiveros said, adding that the First Gentleman, COMELEC Chair Abalos and certain Cabinet secretaries should be blamed for the controversy.

The attempt to get into the truth behind the controversial ZTE deal should not be portrayed as an act of economic destabilization. "It is corruption involving public officials that's blocking confidence in the economy. Why would people invest in the country if government officials themselves violate anti-corruption procedures? Instead of hiding behind the smokescreen of excessive legalism and destabilization scare, President GMA should come clean about controversies like the ZTE deal," Rep. Hontiveros said

Wednesday, 19 September 2007

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