Philippines shaken by charges of corruption

By Carlos H. Conde
International Herald Tribune
Published: September 18, 2007

MANILA: The husband of President Gloria Macapagal-Arroyo and the head of the Philippine elections commission were accused Tuesday of interceding on behalf of a Chinese telecommunications company that subsequently signed a $329 million contract with the government.

In his testimony at a senate hearing Tuesday, Jose de Venecia 3rd, chairman of a Filipino company that lost in the bidding, said the election commissioner, Benjamin Abalos, had intervened on behalf of the Chinese company to receive kickbacks.

Venecia also testified that Arroyo’s husband, Jose Miguel Arroyo, angrily shoved a finger in Venecia’s face during a meeting in March and told him to “back off” in his efforts to win the bid.

Venecia explained to senators that he took Arroyo’s gesture to mean that Amsterdam Holdings, Venecia’s company, should not participate in the bidding for the National Broadband Network project, which would link the Philippine bureaucracy’s telecommunications and Internet networks. He did not say that he believed Arroyo took kickbacks.

The government later announced the contract had been awarded to ZTE Corp., which says on its Web site that it is the largest listed Chinese telecommunications manufacturer and wireless solutions provider. ZTE’s phone lines were busy and the company did not reply to e-mailed requests for comment.

Venecia said Abalos, the chairman of the Commission on Elections, offered him a bribe of $10 million just to withdraw from the bidding. He told the senators that he had refused the bribe and that when he made public this month Abalos’s alleged offer, Abalos threatened to have him killed.

“It was Chairman Abalos who was pushing for the ZTE proposal,” de Venecia said under oath. “It was also Chairman Abalos who stood to receive for himself any kickbacks from the colossal overpricing” of the project, he added.

This scandal is just the latest in a string of corruption allegations against the Arroyo administration. And it came at a time when the government, encouraged by the economy’s strong showing in the first half of the year, has been trying to woo foreign investors and giving assurances that corruption in the Philippines, among the worst in Southeast Asia according to rankings by Transparency International, is being addressed.

It has also provided President Arroyo’s opponents more ammunition in a drawn-out political tussle that began with allegations that she cheated in the 2004 elections and that her husband wields more power than is generally accorded to a presidential spouse.

The issue has also pitted the administration against the opposition-controlled senate, which had invited government officials to the hearing but refused to appear.

Arroyo said she had instructed the transportation and communication secretary, Leandro Mendoza, to explain the contract not to the senate but to the Supreme Court, which recently issued a temporary restraining order on the project after a petition by Amsterdam Holdings.

At the Supreme Court, President Arroyo said in a statement Tuesday, “there are no politics and the court’s processes are based on evidence. We can determine there if the contract is legal and if it is in the interest of the public.” Last week, she said her government would honor its contracts.

Arroyo’s husband was reported to have left the country Monday, fueling speculation that he wanted to avoid being subpoenaed by the senate. His lawyer, Jesus Santos, dismissed Venecia’s allegations as black propaganda. “He’s in it for the media mileage,” Santos said.

The president’s husband has already faced accusations of corruption, among them that he received money from illegal gambling. He is widely regarded here as a power broker benefiting from his wife’s political influence, although he denies this. He has sued several journalists who dared to write about these allegations.

Abalos denied that he had attempted to bribe Venecia. “Do I have that kind of influence?” he said Tuesday. He called the charges “ridiculous.”

Abalos said in late August that he had met with ZTE officials in China and dined and played golf with them. On Monday, his lawyer said Abalos had merely introduced ZTE officials to Mendoza and other administration officials and that there was nothing improper about this.

ZTE, for its part, came out with a series of newspaper advertisements this month denying any wrongdoing.

In his testimony Tuesday, Venecia said his company had offered to build the project through a scheme that would be of no cost to government. The contract with ZTE, however, required a loan from the China Exim Bank. He also said the ZTE contract was overpriced by as much as 100 percent to account for the cost of kickbacks.

He said that Abalos offered the bribe in a meeting at the elections commission office in December. The alleged meeting with Jose Miguel Arroyo was meant, according to Venecia, to reconcile Venecia and Abalos.

As a result of Venecia’s testimony, there are now demands for the scrapping of the project. “This is corruption on a grand scale taking place at the highest levels of government,” said Renato Reyes, secretary general of the leftist group Bayan. “With these revelations, pushing through with the contract would be politically costly for the Arroyo regime,” he said.

About Carlos H. Conde

Researcher at Human Rights Watch (@condeHRW @hrw_ph). Former journalist (NYT, IHT, among others).
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