ISSUE ANALYSIS No.18
September 28 , 2007

The political stakes involved in the NBN fiasco are high that administration officials and their allies may just likely bury it.

A Scourge in the Arroyo House

Among the scoundrels in government, there is an unwritten rule that if the iron is too hot to handle, just drop it, and it will be business as usual. There is also the pervasive culture of cover-ups and sham investigations. Many quarters are expecting that the national broadband network (NBN) scam could trigger a split between the Arroyo camp and its erstwhile political allies led by House Speaker Jose de Venecia and former President Fidel V. Ramos and that this could even lead to a people power revolt.

Recent indications show no such thing will happen, as yet. As soon as the storm subsides, each party involved in the alleged scam will probably kiss and make up as if nothing happened. To insulate the President and her husband from the scam, it is likely that one of the parties allegedly involved, Chairman Benjamin Abalos of the Commission on Elections (Comelec), will be made a sacrificial lamb. Whatever happens, all these will leave a country badly shamed by the dirt that has thickened on a government wracked by one scandal after another.

Jose “Joey” de Venecia III, son of the House speaker, blew the whistle on an alleged $10-million bribe try by Abalos months after his own company, Amsterdam Holdings, Inc. (AHI) lost to China’s Zhong Xing Telecommunications (ZTE) that was awarded the $329.5-million contract. The alleged bribe by Abalos, who is said to have brokered the deal, was meant to shove de Venecia out of the bidding, with Mike Arroyo, the President’s husband, warning him to “back off.” In a Senate hearing on Sept. 26, Commission on Higher Education (CHEd) Chairman Romulo Neri, confirmed that he was offered a P200 million bribe by Abalos. The money, reports indicated, was for Neri’s alleged endorsement of the contract with ZTE early this year or at the time he was still the economic planning secretary. The contract was signed last April in Boao, China by ZTE Corp Vice President Yu Yong and Transportation and Communications Secretary Leandro Mendoza. President Gloria M. Arroyo witnessed the signing.

Mrs. Arroyo at first flip-flopped on the new scam until she finally decided to cancel the contract along with another cyber project, also with a Chinese corporation. The NBN deal raised anew demands for an investigation of Mrs. Arroyo, who had given the green light for the project along with at least 20 other deals cut with the Chinese government this year.

Unnecessary and costly

The NBN project was meant to link government institutions and offices by broadband technology. The huge intranet was supposed to cut government spending in telecommunications by P3.6 billion every year. But academic experts say that either there is no need for such technology, which is appallingly costly, that there are actually under-utilized broadband backbones, or that the domestic private sector can handle it.

The project has all the makings of a colossal scam under the Arroyo presidency(1). This is not only because it involves top government officials including the President and her husband but also of the sheer lack of transparency, the alleged overpricing, and pay-offs involved, as well as the possible quantum political implications. It also involves China, a former socialist state, whose corporations have earned notoriety for investing in large-scale projects in the Philippines that were clinched without satisfactory bidding and transparency. The Chinese firms’ projects have led to the wholesale demolition of slum populations and the imminent uprooting of farming villages and upland communities rich with mineral resources.

Abalos several times came under congressional inquiry over the mothballed P1.3-billion Automated Counting Machine contract with Mega Pacific. The contract that was to begin the modernization of the elections system was voided by the Supreme Court due to irregularities. There had also been calls for his removal by impeachment over widespread fraud involving the Comelec in recent elections. Now, for his questionable role in the NBN deal Abalos faces an impeachment complaint filed at the House Sept. 27 by former representative now Iloilo Vice Governor Rolex Suplico. The complaint, which was endorsed by three House members including Bayan Muna’s Teodoro Casino, charges the Comelec chair with culpable violation of the Constitution, betrayal of public trust, graft and corruption, and bribery.

By exposing the Abalos bribe attempt, De Venecia III may have cast a figure as a well-meaning businessman but he cannot entirely extricate himself from the NBN mess with clean hands, either. The anti-graft and corrupt practices act (RA 3029) prohibits close relatives of top government officials from participating in government transactions. His company, AHI, founded only in 2002, is reportedly under-capitalized thus raising questions whether the firm is qualified to undertake the multi-million broadband project. Aside from the fact that AHI is actually not registered in The Netherlands, it has reportedly incurred a $10-million debt with ZTE(2).

De Venecia ouster

Arroyo’s allies in the House, led by Rep. Luis Villafuerte, have tried to repair the damage by circulating feelers about the possible ouster of Speaker de Venecia, speculating that the pressure would force the latter’s son from treading on dangerous grounds anymore. But both father and son have cleared the name of Mrs. Arroyo – they called her “my President” - for a possible involvement in the NBN controversy.

The Speaker is a seasoned traditional politician who has remained unscathed by rough seas since the Marcos years(3). He ran for President and lost, and took back the position that he has held for several terms. De Venecia and former President Ramos backed Mrs. Arroyo from a possible impeachment and for her to stay in office in 2005 in the midst of the 2004 presidential election fraud(4). In return, Mrs. Arroyo supported De Venecia’s charter change move that was supposed to pave the way for the latter’s prime ministership.

The Speaker cannot pick a fight with Mrs. Arroyo or her husband over the NBN deal as it would also eventually put his House leadership under threat. Moreover, he needs the President’s support for the charter change plan which he has not altogether shelved. This may leave the coalition between Lakas-CMD, De Venecia’s party, and Kampi, Mrs. Arroyo’s party, intact even just for purposes of short-term convenience. Such a setting constitutes an obstacle against any move to impeach Abalos over the NBN mess and election-related cases. Ruling coalition votes will be marshaled to stop the impeachment out of fear that hailing the Comelec chief into the impeachment court is like opening a Pandora’s box that could pin the President and her husband once more to electoral fraud and other scams.

The political stakes involved in the NBN fiasco are high that administration officials and their allies may just likely bury it. How the anti-Arroyo opposition camp including the presidential hopefuls will handle this would be interesting to look at. If left unsolved, the scam will leave the people – the primary victims of state plunder, corruption, and misgovernance – wondering whether to allow such things to happen without making those responsible to account for their crimes.

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(1) Before the NBN scam, Mrs. Arroyo, her husband, allies, and other officials were linked to major cases of alleged corruption including the P1.1 billion Diosdado Macapagal boulevard project, the $2-million extortion charge against former Justice Secretary Hernando Perez, the P200-millon Jose Pidal secret bank accounts case, the $503-million Northrail project, the P728-million fertilizer fund, PhilHealth, and others.
(2) De Venecia III used to serve as chief operating officer of Multi-Media Telephony, Inc. whose franchise was approved and extended by Congress in 1995 and 1997.
(3) Speaker Jose de Venecia is known as the staunch defender of the enactment of pork barrel allocations in the national budget. His name was also dragged into the PEA-Amari deal, tagged as the “grandmother of all scams” during the Ramos administration. He supported Ferdinand Marcos’s 1973 constitution that gave legitimacy to martial rule during which he was alleged to have acquired P5 billion in private debts from his defunct Land Oil Resources, Corp.
(4) De Venecia again became instrumental in the defeat of the the second impeachment of Arroyo in 2006.