Moderate their greed

MANILA, Philippines – It took just a phone call from former elections chief Benjamin Abalos to someone who was supposedly First Gentleman Jose Miguel Arroyo for the government to disregard its original build-operate-transfer plan for a national broadband network and approve a Chinese loan facility for the $329-million NBN deal with ZTE Corp.

Rodolfo Lozada Jr., a potential witness in the NBN controversy, made the revelation at a hastily called press briefing before dawn yesterday at the De La Salle High School in Greenhills, San Juan.

Lozada also spoke of how former socioeconomic planning secretary Romulo Neri asked him to “moderate the greed” of Abalos and other individuals involved in the NBN project.

Lozada, resigned president of the state-run Philippine Forest Corp., said it was Abalos who egged on Mr. Arroyo to get a loan package for the “overpriced” NBN project with ZTE Corp. of China.

Lozada, who served as consultant to Neri for the NBN project, said he and Neri wanted the project done through BOT so that there would be no cost to the government.

Lozada said his troubles started when he, following instructions from Neri and supposedly from the President, insisted that project be implemented through BOT and not through a loan package separate from the CyberEducation project.

He said a displeased Abalos promptly called the First Gentleman to inform him of his and Neri’s reluctance to secure a loan for the project. He said it was Abalos himself who claimed that he was talking to Mr. Arroyo. But Lozada said he himself didn’t hear the voice on the other end.

“But the following day, true enough a letter from the Chinese ambassador came. If you can check I think sometime in December, a letter addressed to Mike (Arroyo) came in from the Chinese ambassador saying that there is now money available for loan for the NBN project independent of the CyberEducation project,” Lozada said. “It’s because the loan for CyberEd has been agreed on already. So now, there’s another loan.”

“This project for me is just one transactional example of a dysfunctional government procurement, like a systemic dysfunction of how we procure projects,” an emotional Lozada said at the briefing.

 “There are others that have escaped scrutiny, but the system is the same,” Lozada said.

He stressed that he did not deal directly with the First Gentleman and that he only met him at a dinner hosted by Abalos sometime “towards the third week of December.” 

“I’m pretty sure of the timing, for a dinner in Makati Shangri-La. He (Abalos) asked me to invite Joey as well because FG will be there with us,” Lozada said.

“Actually the First Gentleman did not say much, except that Chairman Abalos told him that pare OK na kami nina Joey, okay na kami sa NEDA,” Lozada said. “Joey” was businessman Joey de Venecia III who first squealed on the alleged overpricing in the NBN project.

“Ah ganun, so buti naman OK na OK na (I see. Good, good it’s ok),” Lozada quoted the First Gentleman as saying.

Lozada said Abalos gave the impression that things were already settled even if they were not.

While he could not say exactly how much the project was overpriced, Lozada said “chairman Abalos was asking us to protect $130 million out of the $262 million” project cost.

“That was difficult,” Lozada said.

‘Moderate their greed’

Lozada said that when told of Abalos’ demand, Neri gave him a specific instruction: “ ‘Jun, you moderate their greed.’ I was naive to accept that order. So I do not know what moderating greed means.”

He said that at that time, Abalos was already worried about losing his $130- million commission.

But Neri said Lozada must have misinterpreted his instructions. “I must have used colorful language. When I say that it means ‘look for ways to reduce the project cost’ which is really part of our normal job at NEDA.”

Lozada said it was late September or late October when he was first introduced to the project by Neri, who let him meet Abalos in Wack Wack Golf and Country Club in Mandaluyong City together with his usual companions Ruben Reyes, Leo San Miguel, and ZTE representatives Yu Yong and Fan Yan.

“And we had lunch in Wack Wack, wherein we talked about the NBN-ZTE, and the good secretary asked me to help him out understand what this whole project is all about,” Lozada said.

“If I remember right, the secretary told chairman Abalos to course his project proposal through the proper channels. NEDA received the first copy sometime in October, of the first version of the CICT (Commission on Information and Communications Technology) feasibility study,” Lozada said.

“It was prepared by ZTE, and of course CICT. It was signed by the then secretary. All questions were referred back to Asec (Assistant Secretary Lorenzo) Formoso (of the Department of Transportation and Communications),” Lozada said.

Tabloid reference

Lozada said he was shocked to discover that the financial projection for the NBN project was based only on an article in the Sept. 20, 2006 issue of Abante Tonite tabloid.

“When the secretary gave me a copy to review, the first thing that really caught my attention when I was reviewing the financials was the financial projections were based on Abante Tonite Sept. 20, 2006 issue wherein they were quoting how much government was spending for (telecommunication) expenses,” he said.

“So I found it funny then that a multibillion peso project was based on a data reference from a tabloid. So anyway, that was what I remembered,” Lozada added.

Lozada also disclosed that Neri introduced De Venecia to him early November when the businessman presented his own NBN proposal.

“The secretary asked me if it was appropriate and I said yes. So he encouraged Joey (de Venecia) to pursue the project development further. And when the secretary asked me if there was a synergy between the two projects, I said yes. But both of them were pitching for the same project. So the secretary told me to reconcile the two proponents. And at that point it was really a good project,” Lozada said.

“I immediately went to work and proposed a structure for the two proponents wherein both of them can achieve both of their objectives. Since Joey’s objective was to do a BOT with government, which was completely aboveboard, and Chairman Abalos’s objective was to do a project on a loan basis, the project structure I proposed was that Joey becomes the lead contracting party to government because it’s on a BOT basis anyway, and that Abalos achieved his objective of supplying, by becoming a supplier to Joey’s project,” Lozada explained.

No ‘win-win’ deal

Lozada said he thought he had worked out a “win-win” arrangement until Abalos demanded “protection” for his commission.

“I guess the trouble started when Chairman Abalos wanted to protect his $130 million…how shall I put this…commission from the project. He said as long as the $130 million is protected, he’ll agree that Joey will become the main proponent,” Lozada said.

He said he told Abalos that the amount might be too big and might arouse suspicion.

“In the vernacular, sabi ko bubukol po ito, at sabi ko siguro kalahati pupuwede (I said this might raise suspicion and I also said maybe half of the amount would do),” he said.

Lozada said he relayed the information to De Venecia because it would be his project.

“His reaction was like really ballistic,” he said. He said De Venecia was worried about where the money would come from. “I told him that is your problem,” Lozada said.

“So at that point, I don’t know if the listener can realize how much money is being discussed. These are millions of dollars. At that point I was telling them this is already your problem as long as you make sure you get this thing together because we do not want another (Charlie) Atong Ang – (Ilocos Sur Gov. Luis) Chavit Singson scandal to rock this country,” Lozada said, referring to fight over excise tax and gambling money between Ang and Singson, two of deposed President Joseph Estrada’s close friends. Singson testified against Estrada, which eventually led to his downfall.

Sometime in December, Lozada said ZTE officials were already getting frantic over the slow progress of the project.

He said ZTE representatives Yu Yong and Fan Yan were seriously following up the project because “they have already given enough advances to Chairman Abalos.”

“I told them the project was moving along so they should not be alarmed. It was also at this point because of Joey’s hesitance to agree on the $130- million commission that Chairman Abalos started considering doing the project on his own,” Lozada said.

Lozada said he told Abalos it was not possible for him to directly undertake the project because it should be done through BOT as ordered by the President. He said it was during this time when Abalos told him that he was informing the First Gentleman of the problem.

He said that sometime in January 2007, Neri again invited him to lunch at Shangri-La with Abalos, ZTE officials, and the Chinese commercial counselor. He said that during the meeting Abalos again tried to impress to ZTE officials that the project was already a go.

“Maybe there was a parallel track because from our end it was not yet a go. So, there was some negative reaction from the ZTE person and the secretary (Neri) noticed some awkward moments and he immediately asked to leave. He said he had to go and then he asked me to stay behind,” Lozada said.

Lozada said Abalos and the ZTE officials engaged in an altercation and the Chinese demanded that Abalos make good his promise to facilitate a loan deal for NBN, just like the one for the NorthRail project.

“I don’t know what’s their beef about the NorthRail. They keep on mentioning ala-NorthRail loan agreement. That was the last meeting I had with the chairman,” Lozada said.

Death threats, curses

On Jan. 18 last year, Lozada said Abalos called him up early evening and asked him threatening questions.

“I remember the date very well. This is the only date that I can remember because this is the date I quit the project. I said bye to the project,” Lozada said.

“I was then in Dumaguete in Negros together with Henry Teves, when Chairman Abalos called me up, it was some like early evening and asked me questions like - Alam ba ni Neri ang ginagawa mo? I said opo. Alam mo bang malapit ako sa militar? Opo. Alam mong malapit ako sa intelligence? Opo. Alam mo bang malapit ako? Opo (Does Neri know about what you’re doing? I said yes. Do you know that I’m close to the military? I said yes. Do you know that I’m close to the powers-that-be? I said yes. And do you know that I’m just nearby? I said yes) ” Lozada said.

He said Abalos then started cursing “in Tagalog” and said that he had an incriminating CD copy of a phone conversation between Lozada and De Venecia. “Mga hayop kayo tinatraydor niyo ako (You animals, you are betraying me),” Lozada quoted Abalos as telling him.

“I just took it with a grin and then Chairman Abalos ended up his tirade with: Huwag kang magpapakita sa aking hayop ka sa Wack Wack o sa Mandaluyong at ipapapatay kita (Don’t let me see you in Wack Wack or in Mandaluyong or I will have you killed),” Lozada said.

He said he quit the project because “I told the secretary (Neri) I don’t think this project is worth risking my life for. All I did was try to help the good secretary to understand this.”

He said NEDA, the Investment Coordinating Committee, and the Cabinet Committee eventually approved the $329-million deal with ZTE in April 2007.

He said that when he quit as NEDA consultant, the project cost was only $262 million. “When it was  approved, I don’t know what happened then,” Lozada said.

“And the day after it was approved, the President together with some of officials went to China to witness the signing of the agreement. So I guess that’s where all my narration of the events of the ZTE would end,” Lozada said.  - with Non Alquitran, Rainier Allan Ronda