Supreme Court issues TRO vs $329-M ZTE broadband deal

(Updated 6:01 p.m.) The Supreme Court en banc has issued a temporary restraining order (TRO) against the implementation of the controversial $329-million national broadband contract between the Philippines and Chinese firm ZTE Corp. In a four-page resolution, the high bench ruled that, "Acting on the instant petition, without giving due course to the petition, to issue a TRO, effective immediately and continuing until further orders from this Court." It also prevented "respondents and any of and all persons acting on their behalf from 'pursuing, entering into indebtedness, disbursing funds and implementing the ZTE-DOTC (Department of Transportation and Communication) broadband deal and project.'" Magistrates sided with the TRO request of Iloilo Vice Gov. Rolex Suplico asking to declare the ZTE contract as "unconstitutional." This request was consolidated with the petition lodged by rival firm Amsterdam Holdings Inc (AMI), which was founded by Jose "Joey" de Venecia III. Joey is the son of House Speaker Jose De Venecia Jr. The high bench did not act on Suplico's plea to set oral arguments. It also granted the request of ZTE lawyers for 20 more days or until September 28 to comment on Suplico's petition. ZTE tapped the services of the Angara Abello Concepcion Regala and Cruz Law Offices for its legal concerns in the Philippines. In his taxpayer's suit, Suplico chided the government for "entering into indebtedness, disbursing funds for, and implementing the deal without competitive, transparent and public bidding." "The terms of the contract in question, insofar as it obliges the government to incur a foreign loan in the amount of $330 million runs afoul of constitutional and statutory proscriptions on incurring public debt and contracting and/or guaranteeing foreign loans," he said. Suplico insisted that the contract violated Section 20, Article 7 of the Constitution which requires the government to gain the consensus of Bangko Sentral's Monetary Board before entering into sovereign loans. Aside from allegedly failing to go through a public bidding, Suplico said the contract was in violation of the Telecoms Policy Act mandating the government to privatize all its telecoms facilities. The Department of Justice (DOJ) previously gave its conditional approval to the deal. President Gloria Macapagal Arroyo signed the broadband deal last April 20 in Hainan, China. DOTC officials earlier claimed that they lost the contract at a hotel room in China. They have maintained that there are no copies of the deal. Elections Chair Benjamin Abalos has received flak after being pampered by ZTE officials, something which he described as a courtesy mutually accorded by "golfing buddies." Abalos claimed that he merely pointed ZTE executives to Philippine officials while the agreement was forged. Senator Panfilo Lacson had claimed receiving information that the contract was padded by $198 million because of kickbacks that went to an elections official, as well as a "Big One" and a "Little One." In Congress, the Department of Science and Technology (DOST) told the House appropriations committee that the government never consulted them about the broadband deal even if the matter was within the agency's expertise. Worse, DOST Secretary Estrella Alabastro said the government allegedly ignored her office's proposal to source the project funding from foreign-assisted Official Development Assistance (ODA) funds, but the National Economic Development Authority (NEDA) allegedly failed to take action on this. The $329 million needed to bankroll the national broadband network project will be acquired through a 20-year loan. Under the reported contract terms, the amount will be payable in 15 years with a 3-percent annual interest and a five-year grace period. Trade and Industry Secretary Peter Favila as well as DOTC Secretary Leandro Mendoza are being eyed by congressmen to shed light on the controversy. Parañaque Rep. Roilo Golez warned the two Cabinet officials from invoking their rights to self-incrimination to skirt questions from congressmen. "It will be politically fatal [for them and the government] if they invoke their right against self-incrimination. And if they don't show up it will not be good for the administration. It would appear that they are trying to hide something," Golez said. For his part, House Minority Leader Ronaldo Zamora found the DOTC's excuse that the documents were lost to be unbelievable. "It is clear that the contract is now being changed. They are trying to suit the contract to respond to various claims. It shouldn't take all this long just to reconstitute this contract," he said. - GMANews.TV