Arroyo backs off from ZTE’s $329-M deal, CyberEd project

(Update 6, 7:59 p.m.) President Gloria Macapagal Arroyo on Saturday ordered the suspension of the controversial National Broadband Network (NBN) project bagged by China's ZTE Corp. for $329.4 million, as well as the $460-million Cyber Education Project, that would both be funded by loans from the Chinese government. Trade and Industry Secretary Peter Favila on Saturday told reporters at a press conference in Mandaluyong City that President Arroyo instructed him to suspend the deal with ZTE amid talk that the contract was riddled with anomalies. Mrs Arroyo made the order days after her husband, First Gentleman Jose Miguel "Mike" Arroyo, was accused of telling Speaker Jose De Venecia Jr's son to back off from the NBN project. Favila said the government also decided to suspend the Department of Education’s $460-million Cyber Education Project, funded through a loan from the Chinese government. The project aims to improve public education by using the Internet. Arroyo's order was also made before Wednesday's hearing at the Senate, where Romulo Neri, former director general of the National Economic and Development Authority (NEDA), is set to testify. Neri holds key information on the ZTE deal because the proposals for the NBN project were reviewed by NEDA during his term. On September 5, Neri was reported to have been offered P200-million bribe to support the NBN project with ZTE. Neri neither confirmed nor denied the report. Executive privilege As of posting time, Favila did not tell media what was the basis of President Arroyo's decision. "Kung ano po yung direktiba sa akin ng pangulo ay iniimplementa ko lang. Sabi niya isuspinde, so kung ano man po iyong reason behind that ay executive privilege po 'yan (I'm just implementing the President's directive. I can't tell the President's reason for suspending the deal. It's an executive privilege) ," Favila said in Saturday's interview with QTV's Balitanghali Favila said he has yet to tell ZTE officials about the President's order to suspend the deal. "Hindi po, hindi po ako nakikipag-usap sa ZTE. Ang akin pong mga kausap dito ay iyong mga opisyales po ng Chinese government bilang inyong kalihim ng trade and industry. Gano'n din po kausap ko 'yong katuwang kong ministro sa Beijing. (I didn't talk to ZTE officials. I'm talking with Chinese government officials as trade and industry secretary. I'm also talking to my Chinese minister counterpart)." Malacañang also did not fully explain the basis of Mrs Arroyo's directive, and only said that the Chinese government understood the President's move. "On instructions of the President, Secretary Peter Favila conveyed to his counterpart the government's desire to suspend the implementation of the broadband deal," said Press Secretary Ignacio Bunye, in a statement posted on the Palace Web site. "Minister Bo Xilai said his government understands and respects the decision of President Arroyo and will continue to support her and her programs, " Bunye added. I advised Arroyo GMA News Flash Report at 5 p.m. Saturday reported that Transportation and Communications Secretary Leandro Mendoza has admitted telling Mrs Arroyo to suspend the NBN-ZTE deal. The report quoted Mendoza as saying that his advice to Mrs Arroyo was made in deference to the Supreme Court's order against the deal. Last September 11, the high court issued a temporary restraining order against the implementation of the project. Mendoza reportedly said that he gave the advice to the President because the ZTE deal was being used for destabilization plots against the Arroyo administration. As this developed, ZTE officials called a meeting for their next move after the announcement of the deal's suspension. ZTE officials promised to give a statement on the government’s decision after their meeting , GMA News’s Flash Report said. ZTE has been accused of bribing Philippine government officials, including Commission on Elections Chairman Benjamin Abalos Sr, in exchange for the NBN project. It was also alleged that the cost of the project was marked up by 33 percent to cover the bribes that were said to be pocketed by Philippine government officials. ZTE and Abalos vehemently denied the allegations. Praise from JDV At the House of Representatives, De Venecia praised the decision, saying the President has "shown courage and good judgment" in suspending the deal. The Speaker said the suspension could pave the way for the cancellation of the ZTE deal or for converting the NBN project into a build-operate-transfer (BOT) scheme. However, it was not yet clear what deal was ordered suspended by Mrs Arroyo because based on the testimony of Palace officials at the Senate, the deal did not yet have an executive agreement and only a supply contract. De Venecia said placing the NBN project under the BOT scheme had been suggested by his son, Jose "Joey" de Venecia III. "Yan ang proposal ng anak kong si Joey." De Venecia III is co-owner of Amsterdam Holdings, Inc (AHI) that lost in the bidding for the NBN project. He earlier accused Mrs Arroyo's husband of intimidating him to "back off" from bidding in the NBN project. The younger De Venecia also accused Abalos of brokering the ZTE deal in exchange for kickbacks. Mrs Arroyo's husband and Abalos denied the allegations. However, the Speaker said his son would no longer be interested in pursuing the broadband project even if the government decides to put it under the BOT scheme. "Di na siya interesado. His company is no longer interested." Iloilo Vice Governor Rolex Suplico, who earlier filed a petition at the Supreme Court to stop the implementation of the ZTE project, echoed the Speaker's position. “Suspension mean a possible revival when conditions are ripe like a thief in the night. It is like giving Dracula a sleeping pill for the night. The Palace should not be insensitive to public clamor," he said The former lawmaker said the suspension was also a ploy to prevent Neri from testifying in the Senate hearings on the deal. Senate won't stop At the Senate, radio dzBB on Saturday quoted Senate Blue Ribbon Committee Chairman Alan Peter Cayetano as saying that the upper chamber's hearing scheduled for Wednesday will push through despite the deal's suspension. The same report said Cayetano voiced fears that the deal might be revived once accusations of anomalies surrounding the project cool down. He reportedly said the suspension betrayed Malacañang’s repeated claims that the deal was aboveboard. Cayetano said the Senate still expects to hold the next hearing on the issue with Commission on Elections Chairman Benjamin Abalos and Neri in attendance - with reports from Amita Legaspi, Fidel Jimenez, GMANews.TV