NBN Deal

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The National Broadband Network (NBN) Deal is a controversial contract between the Philippine and Chinese governments. The deal involves commissioning a China-based telecommunications company to set-up a broadband internet network in the country connecting all local government units (LGUs) and government agencies nationwide. The NBN Deal is just one of many investment activities to be developed in the Philippines as agreed upon in a July 2006 memorandum of understanding between the Department of Trade and Industry (DTI) and Zhong Xing Telecommunications Equipment International Investment Ltd. (ZTE). On April 21, 2007, Department of Transportation and Communications (DOTC) secretary Leandro Mendoza and ZTE Vice President Yu Yong formalized the deal and signed the US$ 329.5 million NBN contract in Boao, China, in a ceremony attended by President Gloria Macapagal-Arroyo.



Padilla's Complaint

Carlos Padilla

The controversy started to surface when Representative Carlos Padilla filed a complaint against Secretary Mendoza for allegedly giving undue advantage to ZTE during the bidding for the NBN contract. ZTE went up against Arescom, a US-based broadband manufacturer, and Amsterdam Holdings Inc. (AHI), a Filipino company, during the bidding. Padilla also disclosed that Commission on Elections (COMELEC) chair Benjamin Abalos Sr. allegedly served as broker for the China-based company during the process, playing golf and meeting with ZTE executives weeks before the NBN contract was signed in China. While Abalos admitted having trips to China and playing golf with ZTE executives, he denied playing middleman for the firm. The COMELEC chair also said he and his ZTE “golfing buddies” never discussed the NBN project during meetings.

Joey De Venecia's Statements

Joey de Venecia

Joey De Venecia III, son of House Speaker Jose De Venecia Jr., discussed details of the NBN deal at a forum as follow up to allegations of DOTC's bias for ZTE. De Venecia III is the cofounder of AHI, the Filipino company that lost the bidding to the China-based firm. He described Abalos as the “captain” of the group brokering for ZTE and even claimed the COMELEC chair offered him $10 million to back off from the broadband project. De Venecia also disclosed at a Senate hearing that the “mystery man” who was part of the group brokering for ZTE is actually the President’s husband - Mike Arroyo. The AHI cofounder further added that during a meeting at Wack Wack Golf and Country Club in March, the First Gentleman shoved a finger at him and told him to back off from the broadband project. Mike Arroyo left the country a day before the Senate hearing, raising suspicion that he was avoiding being summoned. Through his lawyer though, Arroyo confirmed meeting De Venecia at Wack Wack but says it was merely a “chance encounter”. The First Gentleman also denied pointing a finger and barking at the younger De Venecia.

P200 million

Romulo Neri

Former National Economic Development Authority (NEDA) director Romulo Neri, following reports of him being bribed in exchange for a contract endorsement, admitted to being offered P200 million by Abalos for his approval of ZTE's NBN proposal. Neri said he mentioned the offer to President Arroyo, who in turn told him to decline. The President would later confirm Neri telling her of of Abalos’ bribe in early 2007 and that she told him to decline. Abalos vehemently denied Neri's accusations, but in October 1, 2007, he resigned as chairman of the COMELEC. His resignation brought the impeachment case filed against him to an abrupt end.

NBN Project Suspended

Gloria Macapagal-Arroyo

According to Malacañang, it has made its own discreet investigation on the NBN deal and found nothing wrong with it. The Palace nonetheless suspended the broadband network project on September 22, 2007. And with the impeachment case against Abalos dead, Malacañang wants the Senate to stop its probe on the $329-million NBN project.

The Senate remained unfazed and was set to continue its investigation into the NBN project despite pressure from Malacañang. The Senate investigation is conducted jointly by the Committee on Trade and Commerce, Committee on National Defense and Security, and the Committee on Accountability of Public Officers and Investigations (Blue Ribbon committee). Senator Alan Peter Cayetano, chairman of the Blue Ribbon committee, said the Senate will summon the same set of guests, including Neri and Abalos, and that the First Gentleman would also be invited to the Senate hearing. Senator Cayetano added that he feared that if the Senate did not continue the hearings on the scrapped deal, it might be revived in another form. Senator Manuel Roxas, chairman of the Senate Committee on Trade and Commerce, said the chamber will continue to investigate the NBN deal despite President Arroyo's decision.

A "Star Witness" Emerges

Jun Lozada

On January 25, 2008, the Senate subpoenaed CHED Chairman Romulo Neri and former Philippine Forest Corp. president Rodolfo Noel I. Lozada Jr. (Jun Lozada) to appear at the resumption of the Senate hearings on the NBN deal on January 30. Lozada stated in a press conference on January 28 that he is not sure if he will attend the hearing as he already received death threats from unknown sources. The Senate offered Lozada protection, but he left for Hongkong two hours before the hearings were to resume. Neri, on the other hand, refused to attend the hearings without the approval of Malacañang. The Senate issued arrest warrants for both Lozada and Neri.

At noon of February 5, 2008, Police Security Protection Office (PSPO) deputy director, Senior Superintendent Paul Mascariñas, was ordered by Chief Superintendent Romeo Hilomen to provide Lozada with security upon his arrival in the country. Mascariñas went to Ninoy Aquino International Airport (NAIA) with six security personnel. Later, Senator Alan Peter Cayetano received word that Lozada would arrive at NAIA sometime that afternoon. Sen. Benigno "Noynoy" Aquino III and the Senate Sergeant-at-Arms went to the airport to serve the warrant of arrest against Lozada. However, they were not allowed to go past the arrival area.

At 4:40 p.m. of February 5, 2008, Lozada arrived aboard Cathay Pacific flight CX 919 from Hong Kong. According to NAIA assistant general manager Octavio Lina, the civilian escort and NAIA assistant general manager for Security and Emergency Services Angel Atutubo were waiting at the doorstep of the plane for Lozada to disembark. Lozada was then coursed through the departure area instead of the arrival area and left with police personnel in a vehicle. There are conflicting views as to what occurred next: Lozada said he was kidnapped while Atutubo stated that Lozada "went willingly" with his escorts. Mascariñas said that he asked Lozada where he wanted to go, and Lozada suggested going to his place, but the escorts sugggested going somewhere else "due to security reasons". According to Mascariñas, they continued to drive until they reached the South Luzon Expressway, while Lozada tried to contact his family and friends. On Radio DZMM, Lozada's sister Carmen appealed to members of religious organizations to help them find her brother. His wife Violet also appealed to those who had taken her husband, to bring him back. That evening, Malacañang denied knowing Lozada's whereabouts.

Meanwhile, according to Mascariñas' account, Lozada asked him to stop at Outback Steak House so that he could meet his lawyer and they could have dinner. During dinner, Lozada contacted someone and asked to stay at his place to the night. Lozada then requested his escorts to bring him to La Salle Greenhills (LSGH) dormitory. Before proceeding to LSGH, Mascariñas suggested that Lozada write a letter requesting for security detail. During that same time, conflicting accounts of Lozada's whereabouts appear in media. Some accounts stated that he was picked up by police and taken out of town, another report quoted his friend Vicente Romano III as stating that Lozada's family received a text message from Lozada stating that he was being driven around Laguna in circles, while yet another report stated that Lozada had texted his brother Arthur saying that he was kidnapped. At around 9:00 p.m., Neri received a call from Lozada, who said that he was OK. At that time, Mascariñas said, they had arrived at the LSGH compound where they were met by Lozada's family, including his sister and his wife and children.

In the morning of February 6, 2008, Philippine National Police (PNP) Director-General Avelino Razon confirmed that the police had Lozada, but declined to disclose Lozada's location for "security reasons". He also said that Lozada was being kept by the PSPO "upon Lozada's request". Opposition members Rep. Roilo Golez and Rep. Ruffy Biazon urged the Senate to charge the police with "obstruction of justice". Razon said that the PNP would "welcome" such charges. In the afternoon of that same day, Lozada's wife Violet filed before the Supreme Court a petition for habeas corpus to force the police to produce her husband. On the other hand, PSPO Chief Superintendent Romulo Hilomen said that before Lozada's arrival from Hongkong, Carmen Lozada went to Hilomen's office and gave him a written request for Lozada's security upon his arrival, which was the reason he sent security policemen for Lozada. He further said that Lozada was not met inside the airport, but outside of it. Lozada's brother, Arthur, however, denied that his brother or anyone from the family had ever requested the police for protection. Arthur filed a petition for a writ of amparo before the Supreme Court.

Shortly after 2:00 a.m. of February 7, 2008, Lozada, accompanied by nuns and priests, conducted a press conference at La Salle Greenhills. At around 4:00 a.m., members of the Office of the Senate Sergeant-at-Arms arrived at the press conference to take Lozada into custody and Lozada went with them. Senator Alan Peter Cayetano gave the assurance that the Senate would take care of Lozada and his family. Lozada's testimony at the Senate hearings regarding the kickbacks and commissions on the NBN-ZTE Deal sparked protest rallies and renewed calls for Arroyo's resignation.

The Senate conducted an ocular inspection at the NAIA concerning Lozada's disappearance on February 14, 2008, and found that according to the airport logbook, a member of the Presidential Security Group (PSG) was among those who fetched Lozada. The logbook's records stated that among the vehicles used to fetch Lozada were a gray Toyota Corolla Altis with plate number ZTJ-556 and a Ford Everest sport-utility vehicle with plate number WAA-525. Another was a Nissan Serena QRV van with plate number ZLJ-839, which brought Atutubo and Lina, who both went to the VIP room. Then, at 4:50 p.m., shortly after Lozada's arrival, "all vehicles parked (were) moved out upon arrival of VIP with Atutubo", according to the logbook. As a result, the members of the Senate concluded that Lozada was taken against his will.

A few hours after the Senate ocular inspection, the police disclosed the discovery of an assassination plot against President Arroyo, supposedly by the Abu Sayyaf Group and Jemaah Islamiyah. As a result, security was tightened in Metro Manila. Former President Joseph Estrada commented that the alleged plot was a "scenario" to divert attention from the ongoing investigations on the NBN-ZTE Deal.

On February 16, 2008, Senator Jamby Madrigal filed criminal and administrative charges in the Office of the Ombudsman against the President and her known political allies.

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