By Carlos H. Conde
International Herald Tribune
Published: February 17, 2008
MANILA: When Rodolfo Lozada Jr. decided to become a whistleblower in the corruption scandal that is bedeviling the administration of President Gloria Macapagal Arroyo, he said he was only trying to save his own skin. After all, he said, he had been kidnapped by the police, allegedly on orders from the president’s men.
The scandal has been a political nightmare for the administration for months. And now, it is business groups that are being dragged into the fray because of Lozada’s testimony in the Senate last week and his statements on television.
Lozada was a little-known government bureaucrat who had been given the job of reviewing a $330 million contract between the government and the Chinese firm ZTE to build a broadband Internet network connecting Philippine government offices. The deal, Lozada said at the Senate hearing, was overpriced by more than 100 percent. The scandal forced the president to cancel the contract in September.
According to Lozada, police officers abducted him on his return from Hong Kong on Feb. 5, in what Lozada said was an attempt to prevent him from testifying at the Senate hearing. The government did admit that it sent the officers, but only to protect him from unspecified death threats. Lozada said he was held for nearly 24 hours before he was let go. He said he never asked the government for protection.
On Saturday, in a television face-off with those he accused of having had a hand in the corruption scandal, Lozada alleged that Donald Dee, president of the Philippine Chamber of Commerce and Industry, had earlier advised Romulo Neri, Arroyo’s former economic planning secretary who had approved the ZTE contract, to avoid the Senate hearings in September by going with the president to New York.
Lozada also alleged that Dee had told Neri that Neri could always get more than the 200 million pesos, or $5 million, allegedly offered him by Benjamin Abalos, the former election commissioner, for approving the contract. Abalos, an Arroyo ally, is said to have brokered the deal with ZTE.
Abalos has repeatedly denied the charges, including the one that he demanded $130 million in kickbacks.
Dee said during the television broadcast: “I really resent that Lozada has included me. I will not let this pass.”
Dee’s group is generally viewed as an administration ally. Dee himself has echoed the administration’s line on the issue, saying in the past that it was not doing the country any good.
Another business group that is now in the middle of all this is the Makati Business Club, an influential forum of the country’s biggest corporations. Last week, the club stopped short of asking for Arroyo’s resignation, asking instead for the resignation of Neri, among other officials.
“We must see to it that those who are revealed to have broken the law, no matter how high up, must be made to account for their transgression,” the club said in a statement last week. “We cannot stand on a very shaky political foundation,” it added.
This prompted a sharp rebuke from the administration, with one cabinet official allegedly calling one of the club’s officers, threatening to unleash the might of the country’s tax-collection agency, the Bureau of Internal Revenue, on the club’s members. Although the administration denied ever threatening the club, the club responded last week by challenging the government to “bring it on.”
This is not the first time that business groups in the Philippines have been involved in political scandals. Indeed, in most of the country’s political upheavals, the business sector was always in the mix.
The difference this time around is that, as can be seen in the case of the Philippine chamber and the Makati Business Club, they are at opposing sides of the fence.
“This scandal has a polarizing effect on the business community,” said Jose Enrique Africa, an economist at the Ibon Foundation, a Manila economic research group. “In the case of the Makati Business Club, it shows how intolerable government corruption has become.”
As the scandal unravels, Africa added, it reinforces the view that the Philippines is a volatile place for business and that more needs to be done in fighting graft.
Ramon Casiple, executive director of the Institute of Political and Economic Reforms, said that in the short term, some investors might hold back a bit - as what happened late last week, when the markets went down slightly because of the anti-Arroyo protests - but in the long term, business should not be badly affected by the scandal, “assuming it won’t get out of hand politically.”
ZTE on Friday denied any wrongdoing.
“ZTE has neither done anything wrong, nor has it bribed anyone to get this project,” the company said.
