China's ZTE Corp. built-in kickback of P10 billion

The Blue Ribbon Committee or Senate Committee on Accountability of Public Officers and Investigations should look deeper onto the ZTE Corp. P16 billion broadband project deals with the Philippine government. It appears to be over-priced by P10 billion. Happy hunting!

The Philippine Star

GOTCHA By JARIUS BONDOC

Why are they dealing with a firm like ZTE?

The Presidential Anti-Graft Commission fired its officer who started a probe of mighty Cabinet men. Vida Zora Bocar was axed last Monday. It was the same day I published her request for documents on the ZTE deal to beef up an investigation of DOTC Sec. Leandro Mendoza and Asec. Elmer Soneja. Superiors claimed Ms Bocar had violated the confidential nature of PAGC proceedings. She reasoned out — to no avail — that she had no control over what I wrote.

Ms Bocar did nothing wrong. In asking me for papers on my exposé, she was only doing her job as a thorough graft investigator. We had yet to meet.

But other forces were at play. Ms Bocar had begun looking into a potential P10-billion kickback from an unnecessary P16-billion project. That ruffled powerful feathers and endangered PAGC posts. One of those to be questioned is murmured to soon become executive secretary, to which the PAGC submits its reports and budget needs. Looking for an excuse to back out of the inquiry, PAGC higher-ups conveniently accused Ms Bocar of indiscretion. Will anyone now dare to submit evidence on the scam?

Pray that Ms Bocar’s bosses restrain themselves. May the words of Luke (3:14) touch them: “And the soldiers likewise demanded of him, saying, ‘and what shall we do?’ And he said unto them, ‘Do violence to no man, neither accuse any falsely, and be content with your wages.’”

* * *

Thrilled by its P16-billion telecom deal with the government, ZTE Corp. of China said it is bullish on RP. And so it is “investing in other” local industries: mining, rubber, agri-business.

The implication is that the P16 billion ZTE will supply in the form of broadband gear is its initial investment. It is far from true. Government will borrow from a Chinese bank the P16 billion to be paid to ZTE. Thus, it isn’t new money coming in; it is unnecessary money for a superfluous project. Existing telecom firms in Manila can provide the broadband service to the government. Yet with the ZTE deal, generations of Filipinos will have to repay a loan for a likely white elephant. And the loan amount has a built-in kickback of P10 billion for the Philippine approvers.

That is the same modus operandi ZTE employs in other countries. It comes in doling big cash to public officials in exchange for juicy contracts. Fortunately for people in other lands, ZTE has been exposed and driven out. Only in the Philippines is it being welcomed with open arms by a government that doesn’t know any better. Or does it?

I had written in a previous column that ZTE messed things up in Mexico, Ecuador, Ethiopia and Indonesia (Gotcha, 25 April 2007). Since then, more news items from around the world have detailed ZTE’s scams.

ZTE’s country manager in Liberia and his co-conspirators have been indicted for bribery. The ZTE man reportedly bribed regulators to ease out the real winner of a telecom project bidding. He also falsified bid papers to make it appear that ZTE was China’s largest telecom supplier, when it is only third. A report on the case says that ZTE violated corporate laws not only of Liberia but also of China against unfair competition.

A similar probe broke out in Libya. ZTE submitted false claims of track record and technical skill. Two of the fake papers reportedly contain the forged signatures of a private telecom executive in Manila and a junta leader in Burma.

The use of a false Burmese connection was cheeky. ZTE presently is being investigated also in Burma for corrupting a general who doubles as minister of post and communication. The officer had contracted ZTE to supply a $150-million system for 300,000 phone lines. The amount, to be borrowed from a Chinese bank, was ten times the real cost of the project, according to industry experts. Another ZTE contract for a million phone lines in another Southeast Asian country cost $30 million, a report from Bangkok stated.

Earlier ZTE indictments in Ecuador and Ethiopia also were for graft and bribery. In Indonesia the company is charged with price dumping.

The most celebrated ZTE case is in Mexico City, where residents have accused the mayor of addled priorities. The official had commissioned ZTE for high-speed Internet to 8.7 million citizens, plus broadband “hotspots” linking government offices and thousands of street surveillance cameras. Mexicans groan that what they need instead is water and electricity.

In Manila six business groups have urged President Arroyo to cancel the P16-billion deal signed by DOTC Sec. Leandro Mendoza with ZTE on Apr. 21. Executives and economists said the money could be better used building 36,000 classrooms, or 6,000 rural health clinics, or 120,000 artesian wells. Mendoza has yet to make the contract public, though.

* * *

E-mail: jariusbondoc@workmail.com

Signed RP-China telecom contract stolen