BY EVANGELINE DE VERA

THE first day of the Justice department’s fact-finding investigation on the NBN-ZTE deal provided the government a chance to justify its award of the national broadband project to China’s ZTE Corp. last year.

DOTC assistant secretary Lorenzo Formoso III said the ZTE’s $329 million contract price was the best deal compared to the unsolicited proposal of Amsterdam Holdings Inc. (AHI) of Jose "Joey" de Venecia III.

Formoso said given the kind of technology being offered by the Chinese firm, the multi-million contract price for the entire project was reasonable. The ZTE submitted its proposal in August 2006.

Formoso also belied allegations of ZTE star witness Rodolfo Noel Lozada Jr. that the contract was overpriced to accommodate to kickbacks of officials who were pushing for the approval of the project.

Formoso said Lozada was never part of the final negotiations. He said Lozada himself admitted this in his testimony at the Senate.

He said the original contract price of $262 million increased by $67 million because the original proposal would cover only 30 percent of the country while the $329 million proposal would cover the entire country.

Thus, he said, Lozada’s claim that former Elections chairman Benjamin Abalos would get $130 million in commission was improbable.

"The total contract price is $330 million, so pag tinanggal mo yung $130 million, $200 million na lang. That’s even cheaper than their original proposal which only covered 30 percent of the country. So saan nila kukunin ngayon pang-abono? Lugi pa sila. If you think about it, this is business. They also have to make money, pay taxes, so lahat ng margins ubos na. How will they even finish the project?" Formoso said.

He said only he and 15 engineering experts from the DOTC’s Commission on Information and Communication Technology (CICT) were always present when negotiating with ZTE officials.

Formoso said Lozada was not around when he presented the CICT’s evaluation to Ruben Reynoso, assistant director of the National Economic and Development Authority, on March 23, 2006.

He said the CICT recommended the ZTE proposal as its "technology is cutting edge and that the government could expect to recoup its investment in four years time as the NEDA placed the investment rate of return at around 27 percent."

Formoso said the NBN deal is a government-to-government transaction and was in line with the memorandum of understanding between the Department of Trade and Industry and ZTE Corp. to cooperate in the development of various programs in the country including telecoms. The MOU was signed July 2006.

He said software or applications were included in the original proposal of ZTE which the Philippine government does not need.

This, he said, prompted the Philippine government to ask for the exclusion of the software and instead asked the ZTE to increase the base stations for the project, resulting in a higher contract price.

Formoso said the ZTE proposal is advantageous to the government because it would entail a 20-year loan agreement at 3 percent annual interest.

Formoso said Joey de Venecia III had no business dealing with government because his father was Speaker when he made the AHI proposal. The young De Venecia submitted his group’s proposal to build the project for the government for $242 million on March 26, 2006.

Under the anti-graft law, the President, Vice President, Senate President, Speaker and relatives to the fourth degree of consanguinity, cannot take part in government contracts.

"If we awarded the contract to AHI, which Joey admitted that he owns, then we would in effect be complicit with the violation of the anti-graft law. Secondly, they did not comply with the BOT law. So if we allowed them to get the contract without complying with the law, then that would be gross negligence or even malfeasance on our part. So we’ll be charged with that as well," said Formoso.

Being just a "shell company" operating with just P5 million as capital, AHI has no financial capability to sustain the project aside from its lack of congressional franchise to operate a telecommunications firm, Formoso said.

He further said that from the beginning, Joey de Venecia did not want his name to appear as proponent of the AHI bid, adding that in the articles of incorporation of the company, there was no reference to him.

MORE COMPREHENSIVE

Formoso lauded the DOJ panel which he said are experts in cross-examination. "Being trained lawyers, you can see their questions are logically related to the next question. So it’s easy to follow the flow."

He said this is unlike the Senate inquiry where senators had different lines of questioning. "Rightly or wrongly, each of them has a different idea of how the investigation should go."

DOJ undersecretary Ernesto Pineda, panel chair, said their questioning was more comprehensive in looking into the technicalities of the contract. "Sa Senado, they use it in aid of legislation, although sometimes they use it for other purposes."

Pineda said the panel was able to establish that there is such a contract for the NBN project and it passed through the regular process. "Likewise, we were also able to establish that Amsterdam has no financial capacity to sustain a project such as this."

The panel has been tasked to study whether there were violations of the provisions of R.A. 9184 or the Procurement Reform Act committed by any government official in connection with the NBN-ZTE scandal.

Pineda said the panel will also scrutinize the affidavits of those invited by the Senate for possible perjury.

The panel did not allow Geraldo Dacayo, counsel for acting Higher Education chair Romulo Neri, to answer questions in his capacity as former planning secretary who recommended the approval of the NBN-ZTE contract.

The panel summoned Neri to appear on Friday. Joey de Venecia will face the panel tomorrow morning. In the afternoon, it will be the turn of Reynoso.

JUST BUYING TIME

UP professor Harry Roque said the ZTE probes of the DOJ and Office of the Ombudsman are nothing more but a political ploy by Malacañang.

Roque, one of the complainants on the liability of government officials in the ZTE deal, said he would not be surprised that once both probes are through, charges would be filed against Lozada and ZTE whistleblower Joey de Venecia.