SPECIAL REPORT
Life after CA ruling: Review of Lozada’s NBN exposé
By Erwin Oliva
INQUIRER.net
First Posted 20:32:00 09/14/2008
Filed Under: Technology (general), Graft & Corruption, NBN deal
(First of six parts)
Note: This special report is an excerpt of the author’s Master’s Project submitted to the Konrad Adenauer Asian Center for Journalism at the Ateneo de Manila University as final requirement for fellows of the Masters in Journalism program.
AND SO THE COURTS HAVE DECIDED.
The Court of Appeals has dismissed the plea for protection of National Broadband Network (NBN) deal witness Rodolfo “Jun” Lozada Jr. under the writ of amparo, ruling that he was not kidnapped. Let’s review how the whole story unraveled and how Lozada found himself in his current predicament.
Sometime in August 2007, Lozada, a professional electrical and communications engineer, was trying to find a way to reveal what he knew about a multi-million dollar government project that he found “sickening.”
Back then, he met with this writer and another journalist in Quezon City when the Senate was about to start its investigation on the $329-million NBN project.
“I was looking for a way to expose this in public,” he said more than a month after he decided to become a witness in the Senate investigation into the allegedly graft-tainted project.
Lozada said he felt his life was in danger and that his conscience was bothering him. He knew he was a walking time bomb, an insider who knew too much about the corruption in government deals, in particular the NBN project. But he did not want to come out, although he was trying to reach out.
The NBN was an ambitious project designed to replace an aging government telecommunications network and provide government a faster, broadband network. But the project eventually exposed flawed government procedures and policies on dealing with multi-billion peso information technology projects. It also revealed the system of corruption, bribery and kickbacks that have benefited supposedly highly placed officials including a former poll official and the husband of President Gloria Macapagal-Arroyo.
The NBN promises to connect 2,295 national government offices and 23,549 barangays (villages) and municipal offices nationwide, according to the Department of Transportation and Communications (DoTC).
It would, as the DoTC put it, “exclusively cater to the needs of the national government agencies and local government units.” But as it turned out, the government used this to justify the multi-billion dollar project that violated procurement laws and was tainted with bribery.
By late January 2008, the Senate had contacted Lozada to testify on the deal, but he did not want to face lawmakers, for fear that “he would be forced to tell the truth.” In a story now familiar to many Filipinos, Lozada recounted that he fled to Hong Kong in the hope of evading giving a testimony under oath. Upon his return to Manila on February 5, he was met at the Ninoy Aquino International Airport (NAIA) by police and airport officials and driven around Metro Manila to as far south as Laguna province. He would later tell Senators that he thought he was facing a fate that befell Bubby Dacer, a public relations expert who disappeared in 2000 and whose body was found somewhere south.
On February 8, 2008, just days after he claimed to have been abducted by government agents at the NAIA, Lozada decided to come out and expose alleged irregularities in the NBN deal and revived discussions on how government bids were tailored fit for favored suppliers. A former president and CEO of the Philippine Forest Corp., Lozada had decided to turn key witness in the Senate investigation to narrate his involvement in the project.
Tapped by National Economic Development Authority (NEDA) Director General Romulo Neri to evaluate the technical and financial viability of the project, Lozada revealed that he was later tasked to reconcile two competing proposals from groups backed by “good political sponsors.”
One proposal allegedly came from Benjamin Abalos Sr., a party mate and close political ally of the President Arroyo, whom she appointed in June 5, 2002 to head the Commission on Elections.
Abalos was reportedly brokering the deal for ZTE Corp., the supplier chosen by the People’s Republic of China to implement the project after it decided to extend a $329-million loan to the Philippines.
The other proposal came from Jose “Joey” De Venecia III, son of House Speaker Jose De Venecia II, and stockholder of a local company called Amsterdam Holdings Inc. (AHI) which was proposing to implement the project through a build-operate-transfer (BoT) financing scheme.
On September 26, 2007, Neri revealed during a Senate investigation that he had been bribed by Abalos.
Neri and Abalos were in Wack Wack Golf & Country Club in Mandaluyong City, playing golf when Abalos allegedly offered him the bribe. Both were said to have been discussing the NBN project when the bribe offer was made.
Neri later reported the bribe offer to President Macapagal-Arroyo, who in turn allegedly told him not to accept it.
On April 21, 2007, Arroyo flew to China to witness the signing of several agreements with the Chinese government barely a few weeks before the mid-term elections on May 14, 2007.
She flew to China leaving her husband, First Gentleman Mike Arroyo who was still recuperating from a major heart surgery at the Intensive Care Unit of St. Luke’s Medical Center.
DoTC Secretary Leandro Mendoza and ZTE Corp. vice president Yu Yong signed the NBN contract in Haikou International Airport just before the President boarded her plane bound for Manila.
On that same day, April 21, 2007, the Office of the Press Secretary issued a press release that likened Macapagal-Arroyo to a “thief in the night” who flew to China and brought back with her “an avalanche of Chinese investments to the tune of $904.38 million,” according to a Newsbreak article on September 10, 2007.
These agreements included a supplier contract with ZTE Corp., a document which was later reported lost by DoTC Assistant Secretary Lorenzo Formoso III in a forum by the Action for Economic Reforms (AER) and the Ateneo de Manila University Policy Reform and Advocacy on June 10, 2007.
Formoso, who was made in charge of Telof, said during the forum that the original supply contract was lost by a government attaché in China but was later reconstituted.
The process
Neri was head of NEDA at the time it evaluated the NBN project’s financial and economic viability.
The NBN proposal came originally from the Commission on Information and Communications Technology (CICT), a policy-making body that oversees government activities in information and communications technology.
The project’s implementation was transferred to DoTC after Telof was moved from the direct supervision and control of CICT back to the DoTC on February 13, 2007 through Executive Order 603.
Telof was formerly known as the Bureau of Telecommunications, a public telecommunications service facility created in 1947. In 1987, it was reorganized and renamed the Telecommunications Office.
In his testimony during the Senate investigation, Neri pointed out that the NBN project went through the usual review process of the NEDA Investment Coordinating Committee (NEDA-ICC).
The NEDA-ICC is a committee of the NEDA Board composed of the Secretary of Finance as chairman; the NEDA Director-General as co-chairman; and the Executive Secretary, the assistant secretaries of Agriculture, Trade and Industry, Budget and Management, Energy, the Central Bank of the Philippines, and the BOT Center executive director as members.
NEDA-ICC evaluates the “fiscal, monetary and balance of payments implications of major national projects.”
The NEDA ICC is also the body that recommends to the President “the timetable of their implementation on a regular basis, and advises the President on matters related to the domestic and foreign borrowings program,” according to the agency’s website.
The NEDA-ICC is also referred to as the ICC Cabinet Committee, according to Neri.
Projects going through NEDA Board and ICC deliberations are reviewed for their social, technical, financial and economic feasibility. There are at least three levels projects have to go through: technical board level, the Cabinet board level and finally, the NEDA Board, which is chaired by the President.
As Neri recounted, the DoTC and the CICT endorsed the NBN project to the NEDA-ICC on October 28, 2006 “as a government project and not as a BoT [build-operate-transfer] project,” according to the Senate hearing transcripts in 2007.
A government-to-government project usually involves tied loans from a foreign creditor which nominates a contractor or supplier. A BoT project, on the other hand, is a financing scheme that grants authority to a third party to construct, operate and maintain an infrastructure usually built by government.
The project was part of the envisioned “cyber corridor initiative” cited in President Arroyo’s 2006 State of the Nation Address. The initiative aims to develop key areas for information and communications technology-related services, such as call centers and business process outsourcing. The Cyber corridor is composed of high-tech service hubs, which is similar to the government-supported economic zones for other industries.
The CICT and later DoTC projected that the NBN project would save government P3.6 billion a year in telecommunications expenditures. The Philippine government spends roughly about P4 billion a year in telecommunications, according to DoTC.
But Neri was short of revealing what he knew about the NBN project when he invoked “executive privilege” on what he and President Arroyo discussed after he revealed the bribe attempt from Abalos.
Neri, who held the key to the unraveling the real story behind the controversial NBN project, had secured a Supreme Court order stopping the Senate from arresting him.
He has refused to appear again in the joint Senate committee hearings of Senate Committee on Accountability of Public Officers and Investigations (Blue Ribbon), Senate Committee on Trade and Commerce, and Senate Committee on National Defense and Security.
An executive privilege is a right given to government executives not to disclose any sensitive information related to executive discussions with the President and other executive officials.
(To be continued)
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