Posted by: Bruce Einhorn on September 26, 2007
Gloria Arroyo, the Philippine president, has cancelled a controversial $330 million deal that would have called for Chinese telecom equipment maker ZTE to supply equipment to the government’s planned broadband network. (For more on that move, click here.) ZTE rivals have been crying foul ever since April, when the Chinese and the Filipinos signed the deal, and the Supreme Court suspended the broadband project on Sept. 11.
The project may be over, but ZTE’s Philippine problems are not. ZTE says it has done nothing wrong and the accusations coming out of Manila are focusing on local officials, not people from the Chinese company. Still, the news is bound to be embarrassing for a company that wants to build up sales globally. Among the critics calling for a congressional investigation into the ZTE deal is one of the most powerful organizations in the country, the Catholic Church. According to this report in the local press both Archbishops Oscar V. Cruz and Angel Lagdameo yesterday called for Romulo L. Neri, former director general of the National Economic and Development Authority (which approved the government loan that helped ZTE land the deal), to tell investigators what he knew about the contract. And Neri seems to have heeded that call. In testimony before the Philippine Senate today, Neri said he had received a bribe offer of 200 million pesos (or $4.42 million) from another Philippine official.