ZTE Deal Too Big, Reeking to Remain Swept Under the Rug

The $329.5-million deal with China’s ZTE Corp. for a national broadband network deal is too big and reeks too much for Malacañang to sweep it under the rug with a “suspension” order and a series of gag orders on its officials.

Sen. Panfilo M. Lacson stressed this Saturday as he noted more and more scandals and anomalies involving the anomalous deal are coming out, exposing in the process the insatiable greed of some officials.

“The stench of the national broadband network contract with ZTE Corp. is too much to ignore. If not rescinded, it will expose more scandals and anomalies by itself,” he said, a week after President Arroyo ordered the suspension of the deal.

Mrs. Arroyo ordered last week the suspension of the deal, weeks after the Supreme Court issued a temporary restraining order against it, but kept mum on the reason behind it. Palace officials, on the other hand, refused to cancel the deal.

During a Senate hearing last Wednesday, Commission on Higher Education (CHED) chairman Romulo Neri – then the socio-economic secretary when the deal was signed in April – testified on a P200-million bribe offer from Commission on Elections chairman Benjamin Abalos to pass the deal. But Neri clammed up when asked about Mrs. Arroyo’s actions on the matter.

Lacson said that when the Senate resumes its hearing, he will ask ZTE Corp. and the Department of Transportation and Communications (DOTC) to submit the bill of materials (BOM) on the equipment and the bill of particulars on engineering services.

One of the questionable items there is the allocation of $20 million for training and project management, normally considered a “freebie.”

On the other hand, reports indicated that Mrs. Arroyo authorized negotiations for awarding the contract to ZTE through “special authority” documents to two Cabinet officials, months before the National Economic and Development Authority (NEDA) started evaluating the project.

“People will see clearly how this administration almost succeeded in feeding us all to the sharks whose insatiable greed is beyond comprehension. Why allocate $20 million for training and project management as stipulated in the supply contract signed in Hainan when normally they are thrown in for free?” Lacson said.

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All Right, Sir: Quo Vadis, Cavalier

By Sen. Panfilo M. Lacson

"Oh lead to righteous way, those solid ranks of gray
Thy Virtues to display, Academy oh hail to thee."

Through all these years, the long gray line keeps getting longer. Many have fallen out of line, but more have chosen to stay. For four years, each and every cadet imbibes the virtue of courage, integrity and loyalty. We find them extremely difficult to learn at first, but since cadets are all together at it, in an environment made most conducive to being honorable, it has become more of a source of pride in us all. And so comes graduation, and the real cruel world thereafter. The idealist, still very much armed with the Academy virtues suddenly come face to face with everything that is the opposite of what was taught in the hallowed grounds of Fort Del Pilar -- corruption, cowardice, treachery. So, when young graduates encounter in their fields of assignment, some upperclassmen who have already succumbed to the temptations of misplaced values, or have turned blind eye to such commissions, the effects could be very frustrating, if not disastrous.

Almost thirty-one years ago, I stepped out of the gates of the Philippine Military Academy as a fresh graduate. Joining the now defunct Philippine Constabulary, I was barely in my 20s then. I was young, eager and with a burning idealism to perform a duty I was prepared for four long and arduous years as a cadet - to serve and protect our country and people. There was a joke then that joining that branch of service of the Armed Forces of the Philippines was the fastest to forget the PMA motto, "Courage, Integrity, Loyalty".

Etched in my heart and mind at that time was the ironclad commitment to protect my name and integrity. To remain fiercely loyal to the virtues taught at the Philippine Military Academy, I am absolutely sure, is the same vow that fills the heart and mind of every cadet who passes the august halls of our alma mater. That commitment, I am proud to say continues to fill my heart and has lingered in my my mind - "All Right, Sirs".

For all of us, who share this common bond, nothing is more important than the Academy virtues while we are in the PMA. Outside the Academy, in a world burdened by shifting values and politics, it must still and should always be Courage, Integrity and Loyalty. We must at all times be ready and able to respond to the "challenge" by any PMA'er. "All Right, Sir" is the nexus between two cavaliers. It is wrong to assume, and even think that this "challenge" will not matter anymore once we leave the Academy. It is also incorrect to say that only an upperclassman has the prerogative to challenge an underclassman. In fact, it must be a sacred duty of any PMA'er to "challenge" another PMA'er. We must forever be proud that we share a common language known only to us - a language that is not extinguished, a language that puts to test our integrity and honor. This is the reason why, after the Senate "Question Hour", I have the highest respect for another PMA'er, the Secretary of National Defense and former Cadet Corps Honor Committee Chairman (1965-1966) Angelo T. Reyes. When I "challenged" Cavalier Reyes and he refused to answer, I knew that he still values the Honor System. I was sure that integrity and honor still reign in his heart. I am not saying here that he lied and violated the oath that he took when he testified in that Senate Question Hour and therefore he could not respond to another PMA'er's "challenge". Justifiably so, when a cavalier is not one hundred per cent sure that everything that he does or says is absolutely honest and true, it is most honorable to refuse to answer. Secretary Reyes did something brilliant. He invoked his oath before the Senate.

We had a long telephone conversation that evening after the question hour where I expressed to him the high respect that I am expressing now. I also told him, if he would "challenge" me a thousand times if I had gotten involved in illegal drug activities in any way except catching drug traffickers and confiscating drugs, I would answer, "All right, sir" a thousand times. I told him if he would challenge me right then and there if I stashed dollars abroad, or had committed money laundering, or had engaged in kidnap for ransom, I would answer, on my honor, "All right, sir".

In all my places of assignment, in all my thirty years of military and police service, I adhered to the principle that I imposed upon myself - "What is right must be kept right. What is wrong must be set right." Looking back, my uncompromising adherence to that principle has created for me a lot of enemies, both within our organization and outside. No regrets. If I would live again another time, I would live by the same principle.

When I assumed the post of Chief, Philippine National Police in November 16, 1999, I gathered all my senior officers, many of whom were upperclassmen in the PMA for a command conference. I told them it was time that we led the PNP by good example, as it is basic leadership principle that leaders must set the example for their men to follow. I told them the PNP leaderships in the past may not have been so strict but that I expected the officers and men to start projecting a good image for the PNP, not much in what we say, but more in what we do. I believed then as I still believe now that to be an efficient organization serving the public, the PNP must gain the respect and trust of the people.

At that time, it was common knowledge in Camp Crame that some police officers were using recovered stolen motor vehicles for official and personal purposes. I lost no time in issuing a directive to have these vehicles returned as soon as possible. The response was very encouraging. Within a period of about two weeks, the officers concerned returned more than six hundred (600) vehicles which were immediately examined and processed for return to their rightful owners. I felt like the whole police organization told me afterwards, "All Right, Sir".

Almost simultaneously, we conducted a no nonsense drive against mulcting cops. These vultures preying on hapless motorists, public utility vehicles, merchandise truckers, vegetable dealers and the like must be checked and stopped. There was an unfortunate incident at the start of the campaign when one policeman was shot dead by an erring police officer. That incident prompted the Senate to grant a posthumous award to the policeman concerned - the first time ever that the Senate made such a gesture of appreciation for our police organization. Many arrests and dismissals from the police service followed in a relentless drive against the so-called "kotong cops". From the positive feedback that we got from the public especially those directly affected, it was clearly a successful campaign. Again, I saw an image in my mind of many devoted members of the police organization proudly saluting the nation and shouting, "All Right, Sir".

I also stopped the bad habit of some senior police officers who used to play golf during office hours, leaving their subordinate officers to serve the public in their stead. I wanted them to be at their desks and in command of their posts. That was a natural and fair thing for me to ask of my subordinates because I was at my own post all the time myself. I was truly prepared to be "challenged" anytime by my subordinates and promptly reply, "All Right, Sir".

I was surprised, even shocked at the quantity of gasoline allocated to the office of the Chief, PNP which I discovered when I assumed office. Even if I were assigned a hundred cars, I would not be able to consume that much gasoline. That led me to conduct a check of the whole budget allocation between PNP headquarters and field operations. I found out that the field units were getting less than their just share of the PNP budget. Immediately, a serious study was conducted to rationalize budget allocation and this led me to re-allocate resources on a 85% to 15% sharing scheme in favor of field units. We cannot have an effective police force without adequate logistical support. Imagine a police officer asking a crime victim for gasoline money so he could conduct follow-up operations. Or, think of a police officer not being able to type a police report because he ran out of paper or typewriter ribbon. Supervision was at its closest as it was at its best to make sure that the directive was followed to the letter. The response from the field was very positive in that their resources tripled or even quadrupled as a result. Again, when I came face to face with junior officers in their field assignments who started to feel the positive effects of the newly introduced resource allocation scheme and with some victims of crimes who were reporting to me the progress of investigation, even only in my mind, I replied to my own challenge, "All Right, Sir".

One of our interesting and enjoyable tasks is to encourage policemen to stay trim and fit. We set a target date for pot-bellied police officers to attain a 34-inch waistline. It was a successful program. We saw some policemen go down from a 40-inch waistline to 34 inches in just a few months. And whenever we met around the oval of the PNP grandstand, be it on regular exercises or during physical fitness examinations, we casually greeted each other, "I'm still alright, sir".

I put a stop the moment I assumed as Chief, PNP to the practice of utilizing PNP funds to pay for the PR services of media practitioners, broadcasters and reporters in order to project a favorable image of the PNP and selected officers to the public. I was, and still convinced up to now, even when I am already in this field where image projection is practically the source of survival, that the best image-building activity is to do one's job efficiently, serve the people honestly and spend the taxpayers' money wisely. Subsequent events will prove that this is still a sound theory. I still believe that while perception may be important, truth will almost always outlast perception.

Then came the mother of all my policies - THE NO -TAKE POLICY. I lived and led by example. I refused bribe offers from illegal gambling operators. I took time out of my busy schedule to personally talk to suppliers of the PNP to tell them in their faces that nobody, but nobody was authorized to accept rebates or commissions from anybody. Commissions and rebates must be applied to discounts and/or additional supplies to benefit the PNP as an organization, never its individual members. It is very much part of PNP records - expenses of the office of the Chief of the Philippine National Police were at its lowest during my watch. Grateful victims of kidnapping that we rescued offered significant amounts of money as a "reward" for doing a good job. I consistently declined those offers. The words of Thomas Jefferson come closest to how I feel: " I am sure that in estimating every man's value either in private or public life, a pure integrity is the quality we take first into calculation, and that learning and talents are only the second".

I can truly say that I am proud of the accomplishments of the PNP under my watch. To any PMA graduate who would come up to me and "challenge", I can proudly respond, "All Right, Sir".

That is why it pains me now that all the idealism that I fought for in my thirty years of service and all the malpractices that I checked and declared war against are now being made the issues confronting my integrity. What makes it even more painful is the thought that some cavaliers are at the forefront of self-proclaimed crusades against my person as if I am an evil of society. For most PMA'ers like me, who value integrity and honor like life itself, being accused of accumulating money from criminal activities gives excruciating pain.

At the end of each day, we must be ready to look at the mirror and ask ourselves, "All Right, Sir?" and give a quick reply, "All Right, Sir." I can never appease my detractors much less my enemies. But I find peace and strength with my clear conscience and conviction that I am doing the right things for the people I have sworn to serve. Emerson expressed this feeling when he said. "Nothing is at last sacred but the integrity of your own mind."

Those who voted me into the Senate will want me to carry over to my new office the same ideals that I learned and inherited from the Philippine Military Academy. I am proud to be an alumnus of the PMA. A PMA graduate is more than a military man. He is a man with a mission to serve the people. He has a cherished tradition to uphold. He is a true servant of the people. He practices the virtues of Courage, Integrity and Loyalty at all times, even when nobody is looking.

I will need Courage, Integrity and Loyalty in my new role as senator of the republic.

I will need Courage to face the vicious and malicious accusations against me. There is a militant segment of our society who demands that I resign from the Senate although my accusers have not come up with a single piece of credible evidence. Where do I summon Courage? According to Mark Twain: Courage is resistance to fear, mastery of fear -- not absence of fear. I have a mandate from ten and a half million Filipino voters. I intend to carry out my mandate.

Integrity is what I do not intend to lose, even when I am in a field where too many have forgotten the basic moral values first taught and learned at home. I have a standing policy among my staff members in the Senate - nobody, including myself is authorized to demand or accept commissions from contractors for projects of my countrywide development funds or any name they wish to call it.

My Loyalty is to God, country and people. God dictates my conscience, while the Constitution is the repository of the country's aspirations and the Filipino people's will.

"When bells for us are rung, and our last taps is sung..."

Certainly, it was difficult, but somehow, I managed. For the last thirty years, I can look at anyone's eye and say, I have kept my virtues the Philippine Military Academy imbibed in me, even when they deem honorable people here as species nearing extinction. That when I come face to face with my Maker, I can proudly salute, and say, "All Right, Sir"! In the end, it will be my most treasured possession - the PMA values that our dear alma mater have provided us - more than the training, education, skills and camaraderie... more than life itself.

Statement on the Suspension of the $330-M ZTE Deal

It would have given us more comfort if the government suspended the project to review its viability and cost-effectiveness. The next question is, for how long will it remain suspended?

The announcement, however, should not deter the Senate committees from pursuing the investigation on the ZTE national broadband network contract. The people want the truth and nothing less.

On the other hand, the suspension of the deal is redundant, but deemed necessary by Malacañang especially after the dismal performance of its Cabinet members in trying to defend the deal before the Senate hearing on the matter.

Indeed, no amount of fancy terms and technicalities could convince the senators - and the public - from harboring a sense of distrust about the nature of the deal. Thus the suspension order, announced on a weekend with "executive privilege" written all over it, to cover the stench of a stinking deal.

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Lacson with Students from the University of Makati

Sen. Panfilo M. Lacson poses for a picture with students from the University of Makati Students, who visited the Senate Monday to observe a regular session at the Senate.

Lacson to Palace, Senate Allies: Get Your Acts Together on ZTE Deal

Malacañang and its allies in the Senate should first get their acts together.

Sen. Panfilo M. Lacson extended the unsolicited advice Thursday as he noted the conflicting statements on the matter by two pro-administration senators and no less than President Arroyo.

“No less than Mrs. Arroyo said the government must comply with the contract, as part of ‘abiding by the rule of law.’ Yet two of her allies in the Senate say there is no contract yet. Which is which? Malacañang and its allies are betraying each other,” Lacson said.

He was referring to Mrs. Arroyo’s comments during a chance interview Wednesday night that as long as the contract went through the required processes, the Philippine government is “required to comply” with it.

In contrast, pro-Malacañang senators claimed there is no basis for an investigation because the deal is a mere supply agreement and not yet a contract.

“When is the right time to investigate a stinking deal? Do we start the investigation when it is already too late and we are truly bound to ‘abide’ by it?” he added.

During a privilege speech last Tuesday, Lacson presented copies of the original and reconstituted $330-million contracts where ZTE is to “design, supply, install, test, commission and deliver the Network,” in exchange for $329.481 million.

Both copies of the two contracts carry the signatures of DOTC Secretary Leandro Mendoza, for and in behalf of the Republic of the Philippines; and Yu Yong, vice president of ZTE, witnessed by Assistant Secretary Lorenzo Formoso III and ZTE chairman Hou Weigui, with no less than President Arroyo as a ceremonial witness.

On the other hand, Lacson raised questions on the propriety of senators who are bound by Senate rules on ethical standards, with respect to conflict of interest.

“Who is Attorney Rogelio Vinluan? If it is true that ZTE has engaged Angara Abello Concepcion Regala & Cruz or ACCRA Law Office to be its legal counsel, it tells us a lot why our colleagues want the investigation into this stinking issue stopped,” he said.

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Statement regarding the verdict on former President Joseph E. Estrada

While I am saddened, even shocked by the guilty verdict, it is not for a layman like me to judge the Sandiganbayan justices who rendered the decision.

I may choose to disagree or be disheartened by the sentence of reclusion perpetua but the justices obviously had better access to all the information and evidence they need to arrive at their unanimous decision.

The next legal battle for the former president is just about to unfold. I hope that the Supreme Court can arrive at a decision that is fair and just to all concerned.

In the meantime, I will in my own personal capacity do whatever I can to console and provide whatever moral support to the former President.

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Legacy of Corruption*

* Privilege Speech by Sen. Panfilo M. Lacson, delivered Sept. 11, 2007 *

Mr. President:

I rise today on a matter of personal and collective privilege. I rise as a Filipino who has been paying by way of onerous tax impositions and deprivation of proper services, the burden of a huge public debt. I rise on behalf of two generations that will come after us who will be saddled with paying the debts this administration has contracted and obligated.

In the Special Joint Investment Coordinating Committee (ICC) and Technical Board Meeting of the President’s Cabinet held on 26 March 2007, the Department of Transportation and Communications took up with the economic team, particularly Finance Sec. Margarito Teves and then NEDA Director-General Romulo Neri along with their support staff, the so-called National Broadband Network Project.

Conceptualized in view of the Cyber-Corridor Initiative enunciated by President Gloria Macapagal Arroyo during her State of the Nation Address on July 2006, the NBN is supposed to serve as a comprehensive solution to fast-track the national information and communications technology infrastructure (ICT).

Indeed, on 21 November 2006 while presiding over a NEDA Board meeting which she chairs, President Arroyo laid down the following conditions for a government broadband network:

. It should be established along a build-operate-transfer or such similar undertaking using private funding;

. There should be no government subsidies;

. There should be no “take or pay” conditionalities and instead a “pay for use” facility;

. And it should result in a substantial reduction of government telecommunications expenses
Very good!

However, in the ICC meeting with DOTC and Telecommunications Office (TELOF) proponents on 26 March 2007, what was presented as the NBN Project completely changed the broad terms of reference set by President Arroyo on 21 November 2006.

What Assistant Secretaries Lorenzo G. Formoso III and Elmer Soneja presented for ICC consideration was an NBN project that would cost the Republic of the Philippines an estimated 19.4 billion pesos of which 19 billion would be sourced through foreign loans, and 380 million pesos from the DOTC/Telof budgets. It would involve the utilization of Voice Over Internet Protocol, or VOIP-based single infrastructure network.

To justify such a huge project cost, the DOTC/Telof officials cited savings from the retirement of old government communications network, savings on communications expenses due to VOIP use, savings on internet connections, and a centralized internet data center. On top of that, there would be savings because of internet connections to be used by the public school system.

No financial analysis was submitted since the said project will not generate revenues, but supposedly result in government savings on telecommunications expenses, estimated at a total of 3.7 billion pesos annually. But the DOTC/Telof officials clarified that the government would be able to save only 50% of its fixed-line telephone expenses and 80% of its telefax expenses. The NBN will not save on cellphone usage.

Then NEDA Secretary Romulo Neri pointedly wondered how savings could be generated on the retirement of the obsolete analog system carried by Telof. Asec Formoso replied that they would no longer have to buy expensive spare parts.

Secretary Neri wondered how huge savings could be generated from present internet usage, when in truth and in fact, very few government offices have internet connections. He also asked how the DOTC/Telof quantified the savings in education, and would these not overlap with the previously-approved Department of Education’s Cyber-Education Project, the infrastructure cost of which was another 26 billion pesos.

Undersecretary Paul Valderrama asked an even more basic question. Why must government have its own interconnectivity infrastructure, when there are private sector players in the industry?

Using contorted reasoning, the answer was in effect --- because of the President’s vision of a Cyber Corridor her cabinet must simply operationalize.

Mr. President, two eminent members of the academe, Professors Raul Fabella and Emmanuel de Dios of the UP School of Economics had already debunked the economic sanity of this project and I shall no longer perorate on these. Far be it for this layman in economics to add or detract from their well-written and well-researched paper, already made public.

Suffice it to say that we have a broadband backbone in PLDT, another in TELECPHIL, both well-run by the private sector. Even the National Power Corporation has one.

But because there was a Cyber Corridor grand vision, we had to have a National Broadband Network, and a separate Cyber-Education Project, the total cost of which would conservatively add up to some 40 billion pesos, and more when we count the maintenance and operating costs of these new government-owned facilities through the years.

Both Secretary Teves and Secretary Neri asked about the very obvious overlaps between the two cyber-corridor projects, one for DOTC and another for DEP-ED.

Again, the reason advanced by the technical men of DOTC was that: One, the Chinese Government wanted the NBN and the Cyber-Education Projects treated separately. And two, Secretary Jesli Lapus of DECS had indicated that he wanted the CEP network solely dedicated to his department.

Kanya-kanyang ahensya; kanya-kanyang bilyun-bilyong proyekto. Kanya-kanyang middleman; kanya-kanya rin bang kurakot?

May fixer sa NBN; may middleman rin sa Cyber-Ed. Hindi pwedeng pagsamahin, dahil sinadyang pinag-iba ang disenyo at teknolohiya. Ergo, magkahiwalay ang komisyon.

Sa NBN ang fixer ay isang ubod ng makapangyarihang opisyal tuwing tatlong taon, tuwing may halalan.

Sa Cyber-Ed, iba naman ang taga-ayos. Pero saka na natin talakayin ito.

Mr. President, I have here the minutes of that ICC-Cabinet Committee and Technical Board Meeting of 26 March 2007.

Despite the clear objections and apprehensions of the erudite gentlemen in finance and economic planning, the DOTC proceeded post-haste with their NBN project.

On the same day, 26 March, the DOTC, through Asec Soneja proceeded to eliminate other proponents of the NBN. It told Amsterdam Holdings, Inc. (AHI) that its proposal was incomplete. On 3 April, AHI took exception to Soneja’s finding and requested proper re-evaluation. On 10 April, Soneja rejected AHI’s position.

On 20 April 2007, Ambassador Kristie Kenney of the United States of America, wrote to Secretary Romulo Neri, expressing her government’s interest in the NBN, and asking the national government “… to avoid undue haste and take time to carefully review (other) proposals”, which would include the proposal of Arescom, Inc., an American company which had likewise been eliminated by DOTC.

On that same day, 20 April 2007, the same Romulo Neri who three weeks earlier questioned in so many respects the DOTC-proposed NBN project, had signed a letter addressed to China’s Minister Bo Xilai of Commerce, and Li Ruogu, Chairman and President of the Export-Import Bank of China, nominating the NBN Project.

Something very strange must have happened between 26 March and 20 April. Did the DOTC adequately explain away Secretary Neri’s cogent and reasonable apprehensions?

Or did the fixer, who once boasted to his ZTE friends that he would be “the most powerful official of the Philippines” come the elections of 2007, get to convince Secretary Neri? How, if so?

Most everybody in government have a high regard for Secretary Neri’s probity and integrity. Before media he would neither confirm nor deny that he was offered a kickback of 200 million pesos by the Comelec Chairman, who had taken an inordinate interest in pushing the NBN project, with his friends at Zhong Zhing Telecommunications Equipment bagging the project.
But before close friends, Secretary Neri confided the truth. That is one truth we in the Senate and our counterparts in the House should hear.

What or who could have pressured the otherwise upright Mr. Neri to suddenly sign approval of the NBN project he and his staff vehemently objected to earlier? The man who boasted to be the “most powerful” come election time, or someone who truly is most powerful, all of the time?

I personally think it was heroic of Sec Neri to reject 200 million pesos in bribe money reportedly offered by someone who wanted “one last hurrah” before he leaves government early next year.

But I also think it was idiotic of him to have signed the approval of the NBN contract on 20 April 2007, or a day before the President witnessed the signing ceremony of the NBN Supply Contract with DOTC and ZTE executives in Hainan, China.

I wish I could find a word, an adjective if you will, to describe Mr Neri.

Mr. President, distinguished colleagues:

I have here a copy of the “Contract for the Supply of Equipment and Services for the National Broadband Project” between the Government of the Republic of the Philippines through the Department of Transportation and Communications and ZTE Corporation, signed in Hainan Province in China.

The 39-page contract was signed on 21 April 2007 by Leandro R. Mendoza, DOTC Secretary for and in behalf of the Republic of the Philippines, and Yu Yong, Vice-President of ZTE Corporation.

Signing as witnesses were Lorenzo G. Formoso III and Chairman Hou Weigui of ZTE.

Present and beaming while the contract was being signed for and in behalf of the Republic was Her Excellency, President Gloria Macapagal Arroyo, who had gone to Boao in Hainan Province officially to attend an economic forum.

This copy was reported to have been stolen that very same night in a hotel room in Hainan, as alleged by the signing witness, Asec Formoso, two months after, only on 20 June 2007, before a forum on the subject of the NBN organized by the Ateneo Professional Schools.

Lost --- stolen, my foot!

Yet, two weeks thereafter, during a cabinet meeting in Legazpi City on 3 July, President Arroyo ordered then up and about Justice Secretary Raul Gonzalez to review the NBN-ZTE transaction and come up with a recommendation before the opening of this 14th Congress on July 23.

On 26 July, the DOJ issued Opinion No. 46, Series of 2007, upholding the validity of a contract that was lost and stolen! Miracles do happen in the DOJ, where they review contracts that do not exist, and pass approval of the same.

Even the Presidential Legal Counsel Sergio Apostol declared before the press that there is no NBN-ZTE project, because there is no contract.

Yet DOTC Secretary Leandro Mendoza insisted that there is a contract, while his Assistant Secretary, the project’s whiz kid, kept saying all along that the contract, having been stolen in a hotel room, would be reconstituted.

Mr. President, from my sources at the DOTC, here in my hand is the so-called “reconstituted” contract. Except for intercalating pagination on every sheet, it is word-for-word similar to the “lost” original signed contract.

Mysteriously Mr. President, the “re-constituted” contract is signed exactly on the same manner and the same space by its two principal signatories, Mendoza and Yu, as well as by the witnesses Formoso and Hou. And each page has been initialed by the contract reviewer on exactly the same spot in every page.

Who did Formoso think he could fool about his cloak-and-dagger yarn of a theft in the hotel room of a DTI trade attaché in Hainan?

I would say, they were purposely hidden because as soon as the President and Secretary Mendoza came back to this country, the stink that is the NBN-ZTE mega-deal began to smell all over, thanks to the enterprising stories of Mr. Jarius Bondoc of the Philippine Star, and later, the paper of the UP professors.

And what does the contract state, Mr. President ?

“To design, supply, install, test, commission and deliver the Network”, the Republic is obligated to pay 329 million 481 thousand 290 US dollars, broken down as follows:

194 million, 51 thousand, 628 US Dollars for the Equipment;

Plus Engineering Services of 118 million, 605 thousand, 650 US Dollars;

Plus Managed Services of 14 million, 875 thousand, 507 US Dollars; and,
1 million, 948 thousand, 505 US dollars for Training Services.

For a total, I repeat, of 329,481,290 million American dollars.

The NBN-ZTE deal is to be financed by the Export-Import Bank of China, and paid by the Republic through its Shenzhen Branch.

Upon release of the loan, the Republic would immediately pay 15% of the contract price for the Equipment as advance payment.

For each Provisional Acceptance of equipment, and upon receipt of the commercial invoices, we pay 35% of the contract price.

Roughly similar terms of payment are involved in the engineering services, which together with the equipment purchase, constitute the bulk of the contract.

Evident in the Scope of Work is the realization that the DOTC has tasked ZTE with the preparation of all the detailed engineering studies, plans, specifications and designs for the broadband project.

ZTE is supposed to complete supply and installation, testing and commissioning within 36 months from the effective date of the contract.

Ah! Legacy… 36 months. That would be after 2010, when a new government shall have presumably taken over, the project is turned over. Whether it works as well as it should, given that the contractor themselves will plan, design, test and implement, that’s the problem of the next government. That’s the problem of the generation that will pay for the huge loans contracted for the project.

After all, the “commissioners” shall have received their commissions well in advance, and would be laughing all the way to some foreign banks.

As usual, Mr. President, there could be “change orders”, which of course, will mean a change in costs. After all, the whole project has yet to be designed, by the contractor, and the technology involved could change as quickly as each equipment is delivered, and each service is rendered.

For all intents and purposes, Mr. President, the signatory to this contract has declared that he has the full power and authority to obligate the Republic. The presence of no less than the President lends more than just symbolic imprimatur to it.

The effectivity of the contract shall be subject to the fulfillment of certain conditions precedent, namely:

The issuance of a Forward Obligational Authority (FOA) by the Department of Budget and Management.

Conclusion of the Loan Agreement between Eximbank China and our Department of Finance. Secretary Teves tells us that this requires concurrence on our part of the Monetary Board.

Legal Opinion of the Department of Justice. This has been done, by a DOJ that certified on a “stolen” and therefore un-presented and un-read contract. In fact the DOJ admitted on 26 July 2007 that it was never given a copy of the contract or relevant agreements, and its review was made on the basis of the DOTC’s and CICT’s representations.

The broadband backbone, as well as the cyber-education project, on top of a so-called French Protocol, and a Preginet contract of the DOST, among several others in varying stages of completion or in the pipeline, constitute a long list of IT projects entered into by this government, Mr. President.

Altogether, their combined value will reach more than a trillion pesos. They constitute a major part of what the present administration proudly claims will be its “legacy” to the nation.

A legacy too costly, not because they are intrinsically good, or necessary, or can pass the tests of cost-benefit or public-service effectiveness. But because what is under the table is larger than the table itself.

And they will be paid, by the toil and sacrifices of generations yet to come, while those who profited handsomely, indeed, exceedingly well, in over-pricing and kickbacks, shall have more than several generations of their descendants could ever spend.

We are somewhat mollified by the statement from Australia that this government will, after conferring with President Hu Jintao of China, review the NBN-ZTE mega-deal. We hope this is not another play of mirrors, where after the furor has quieted somewhat, the sinister work resumes towards approving a somewhat modified deal. Will the humongous commissions be trimmed somewhat, the “change orders” reinstating them eventually?

We ask the members of the President’s cabinet whose consciences are rightly bothered and who yet appreciate the meaning of “karma”, to now be possessed by the courage of their convictions, and tell the truth, the whole truth, no matter how sordid, and no matter who gets hurt.
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Mr. President, distinguished senators of the Republic of the Philippines - If all these are what constitute “legacy”, then the Filipino people would rather have none.

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(More information on the ZTE deal is available from the blog site of the Philippine Center for Investigative Journalism)

Lacson to Palace: Don't Insult People's Intelligence, Let 'Medy' Testify

Instead of continuing to insult the Filipino people’s intelligence, Malacañang should let controversial “presidential aide” Remedios “Medy” Poblador bare the truth behind attempts to cover up the “Hello Garci” mess in 2005.

Sen. Panfilo M. Lacson stressed this Sunday as he rebuffed claims of Cabinet members that Poblador “acted on her own” when she dispatched a government helicopter to bring Balanga Bishop Socrates Villegas to “rescue” former military spy Vidal Doble Jr. from the San Carlos Seminary.

“I urge Malacañang to bring Medy Poblador out to bare the truth. (Cabinet Secretary Ricardo) Saludo’s statement that Medy acted on her own in misleading the bishops into believing that a military assault on San Carlos Seminary was imminent on June 13, 2005 simply insults our intelligence,” Lacson said.

Last weekend, Saludo claimed Poblador acted on her own when she sent a government helicopter to “fetch” Villegas from Bataan. Villegas said he acted because Poblador had told him the military was about to assault the seminary.

“Is Medy really so powerful that she could dispatch a government helicopter to fetch Bishop Soc, even using the facilities of the Bataan police?” Lacson asked, noting that Poblador is one of two personalities allowed to ride with President Arroyo in her presidential limousine.

He also noted Doble’s statement before the Senate last Friday that Poblador was one of the personalities he saw at the quarters of then Armed Forces chief of staff Gen. Efren Abu, where his wife and two children were “detained.”

It was the “custody” of his family in the Armed Forces that kept Doble from baring the truth about the “Hello Garci” tapes in 2005.

On the other hand, Lacson noted that Villegas corroborated Doble’s testimony, adding there may have even been some misleading on the part of Poblador when she told the bishop that the military was about to attack the seminary at any time.

Villegas had said he “cooperated” in bringing out Doble from the seminary not because he wanted to help the government but because he wanted to protect the seminarians.

“More questions need to be answered now that Malacañang’s direct role in suppressing the truth has been bared wide open with the testimony of T/Sgt. Vidal Doble and the letter of Bishop Soc which completely corroborated Doble’s statement during the hearing of the Hello Garci controversy,” Lacson said.

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Lacson Seeks Parallel Probe of $329-M ZTE Deal

Warning that national security may be at stake, Sen. Panfilo M. Lacson sought Wednesday a parallel Senate investigation into the anomalous $329-million national broadband network deal the Philippine government inked with Chinese firm ZTE Corp.

Lacson noted that the broadband network, to be used primarily by government agencies, makes all communication that passes through it vulnerable to monitoring.

“Ordinary users may think Voice over Internet Protocol (VoIP) is a secure channel of communication. That makes it more dangerous. VoIP is vulnerable to monitoring by anyone with access to the network, including the firm that will build it,” he said.

Lacson said that while Congress has called for a similar investigation, he wants to focus on the security implications of the deal, which he said are chilling since they can potentially expose state secrets.

In effect, he voiced concerns that the government will be baring its soul before those who tap into and monitor the network.

“We can always hold accountable those who were involved in graft-tainted deals surrounding the contract. But giving away our state secrets is something we may never recover from,” he said.

He said even ordinary cell-phone and landline phone subscribers stand to suffer, as private service providers will likely charge higher rates to recover lost income.

“Private service providers have already invested billions to set up an infrastructure. With an impending loss of income, they will likely jack up their rates to recover their losses,” he said.

But despite all these, Lacson lamented greed pushed the government into signing the deal, with President Arroyo personally going to China last April to witness the signing.

He cited information reaching him indicating that almost $200 million in bribes changed hands, including $55 million for a Commission on Elections (Comelec) official, $75 million for a “Big One and a Little One,” and $68 million for “election expenses.”

He said he already has at least one eyewitness who is “ready and willing” to testify on the bribes involving the government officials.

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