Global Economics

Philippine President Scraps Controversial ZTE Deal


The decision comes amid allegations that high-ranking Philippine officials benefited from illegal kickbacks and commissions

President Gloria Macapagal-Arroyo has ordered a suspension of the national broadband network (NBN) deal between the Philippine government and China's ZTE, finally made a move to address the controversial issue contract.

According to a high-ranking official, the Arroyo made her decision--effective immediately--over the weekend, and more than two months after she ordered a review of the proceedings.

Local media reports quoted Trade and Industry Secretary Peter Favila, who made the announcement, as saying that the country's political leader is exercising an "executive privilege" in issuing the suspension order.

Reports also said the instruction from Arroyo came amid an ongoing Philippine Senate probe into allegations that the US$330-million NBN deal violated Philippine laws and benefited high-ranking officials through kickbacks and commissions.

Reports said the suspension order came ahead of an impending Senate inquest of former National Economic Development Authority (NEDA) chief, Romulo Neri.

The NEDA acts as the government's economic think-tank, and is authorized to approve and review government projects.

The country's former top economist, Neri had headed the NEDA when the agency approved the controversial deal with ZTE. He left in July to assume the top post at the Philippines Commission on Higher Education.

Amsterdam Holdings, a Philippine company which lost the bid for the NGN contract, had accused Neri and other high-ranking officials including Arroyo's husband, of their involvement in brokering the deal.

Senators who are part of the ongoing probe have summoned various government agencies, including the Department of Transportation and Communications (DOTC) to shed light on the accusations.

But Neri's testimony is most anticipated among the officials requested to participate in the investigations, since the controversial deal was approved during his helm. Neris is expected to attend the Senate probe this week.

DEAL IN CONTENTION

In April, the Philippine government and Chinese network equipment maker ZTE signed the deal in Hainan, China.

Losing bidders, which included U.S.-based manufacturer of broadband and wireless gear Arescom, questioned the legitimacy of the deal and alleged the project was overpriced.

Meanwhile, the head of the Department of Education (DepEd) expressed disappointment with Arroyo's decision to also suspend the agency's nationwide "Cyber Education" project along with the NBN deal.

In an interview with a local TV station Tuesday, DepEd Secretaty Jesli Lapus lamented the President's decision, stating that the Cyber Education project is "different" from the NBN. Lapus said the project carries a "budget of its own", which comes directly from the education department.

The project seeks to standardize the Philippines ' educational curriculum, through computer training, Internet access and online-based education.

Provided by ZDNet Asia—Where Technology Means Business

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