Philippines + Scandal = Life Goes On

Despite days of protest and feeble echoes of "people power" aimed at toppling ever-besieged President Gloria Macapagal Arroyo over a multi-million dollar scandal, a deep feeling exists that pervasive corruption is so entrenched there are no good alternatives other than to wait for the current administration to finish its term.

In the latest act of political theater in a country where such gestures have been refined to a high art, on Monday a former official who has accused Arroyo’s husband and a political ally of corruption gave back a pile of cash he said was being offered to him in return for his silence.

"I am returning this because I failed to do my part of the bargain," Rodolfo Lozada told a Senate hearing looking into the burgeoning scandal over a failed national broadband deal. In a package handed over by Lozada were bundles of cash worth half-a-million pesos ($12,300).

He said the package was given to his family after he was dispatched to Hong Kong earlier this month by his boss, Environment and Natural Resources Secretary Joselito Atienza. He said the trip abroad and the money were intended to keep him quiet over a tawdry deal in which Arroyo's husband Jose Miguel Arroyo and the disgraced chairman of the elections commission, Benjamin Abalos, have been implicated for soliciting massive bribes.

The mess led Arroyo to cancel a $329 million deal with China's state-run ZTE Corp. to build a national broadband network to advance the country’s inadequate telecommunications infrastructure.

Lozada, a key whistleblower in exposing the issue, was lauded in newspaper ads Tuesday by a group calling itself the Brotherhood of Christian Businessmen and Professionals. "We call on all citizens and leaders of our country... Be Honest. Even if others are not, even if others will not, even if others cannot," the ad said. The blue-and-white motif for the appeal suggested that the ad’s sponsors were devotees of the Virgin Mary.

Also on Tuesday, Lozada's alma mater, the University of Santo Tomas, placed half-page ads praising him for what he has done and calling him a “true Thomasian.”

The outpouring of emotion for Lozada’s attempt to clean up his little corner of the nation was preceded by a rally last Friday in the Makati business district sponsored by the Catholic Church, prominent business leaders and wealthy social activists fed up with the continuing shenanigans of yet another embarrassing government. They turned up for an evening of protest music and speeches by various figures, including Joey de Venecia, the son of Jose de Venecia, the former House speaker.

On Sunday, former President Corazon Aquino and Lozada attended a mass of several thousand people and later held a press conference to release a manifesto signed by 60 former cabinet officials calling for current cabinet members to resign.

Opposition figures say they will return to the streets on February 25 in Makati for an “indignation rally” marking the anniversary of the original 1986 people power revolt that drove the late President Ferdinand Marcos from office. It’s not likely to happen again, as most analysts are betting that Arroyo will ride out this crisis just as she has so many others since she was installed in office by a popular uprising in 2001 against the last crook in power, President Joseph Estrada.

Nonetheless, it is unusual even in the Philippines where scandals are reported regularly in the country’s raucous press, to have one laid out this clearly, and to involve so many top figures. As has been widely reported, the current scandal revolves around a contract awarded to the Chinese telecoms company ZTE last year to construct a broadband network. A flock of high-ranking officials have been named, with Abalos, the one-time election commissioner, accused of attempting to extort a third of the project’s cost for a “commission.”

Last year Joey De Venecia III, the son of the Speaker of the House, said he believed that Arroyo's husband was the “coach" who packaged the entire contract between the Philippine government and ZTE. De Venecia also bid on the project and his father was recently driven from his post in apparent retaliation over the scandal.

The deal was suspended last September when two lawsuits challenged its legality. Senate investigations were opened, but they were stalled after Lozada left for Hong Kong. He later claimed to have been abducted for nearly two days on his return.

The chief executive of the state-owned Philippine Forest Corp. and an IT expert, Lozada was brought in to evaluate the broadband bids. When he reemerged, mysteriously un-kidnapped, Lozada testified that Abalos and the first gentleman were involved in receiving a "commission" from ZTE in exchange for being awarded the NBN contract in closed bidding.

Although the Senate has announced investigations to see whether someone in fact abducted Lozada, in testimony he downplayed the event, claiming that there was a "misunderstanding." Lozada testified that the broadband project should have only cost roughly $132 million, but that Abalos, as a major negotiator with ZTE officials, demanded a "commission" of $130 million and threatened Lozada when told that the commission was too high.

Long-time activist Lidy Nakpil of the Philippines Freedom from Debt Coalition said that the issue was not simply the commission, but the financing of the deal itself. She said the Philippines has a long history of financing large projects through loans from foreign development banks and she worried that the country was becoming indebted to China in a new round of such deals.

China has recently eclipsed the US as the Philippines’ major trading partner and now plays a major role in such loans. The North Luzon Railway project was funded through a $400 million loan from China's Exim Bank to the Department of Finance, and Abalos, as well as ZTE, pushed for the NBN contract to be financed in a similar manner.

In both cases, the Chinese government had exclusive rights to choose the contractors with no public bidding. ZTE has also offered preferential loans channeled through the Chinese Exim Bank in Africa, often quite successfully.

ZTE has issued a statement saying that it has "done nothing wrong nor did it bribe anyone to get this project."

Well-known business and community figure Teresita Ang See, the founder of Kaisa Para Sa Kaunlaran, a Filipino-Chinese cultural organization, said, “It is unfortunate that China is involved in this because we believe China can help the Philippines in a big way. China can relate and understand the problems of the developing world."

Other protestors also said they do not believe China is the issue, that the rot starts at home. "It is our government that is the problem, not China", said activist Vim Santos.

The involvement of Joey de Venecia in the scandal has tantalized the chattering classes. His company, Amsterdam Holdings Inc., was the primary rival to ZTE in the broadband deal, but AHI has no track record in the telecommunications industry. De Venecia filed one of the two lawsuits last year that led to a temporary restraining order being issued by the Supreme Court against the ZTE deal. The other lawsuit came from a provincial vice-governor who argued that the deal violated numerous government laws.

Joey de Venecia has moved into the protest spotlight recently, appearing at last week’s rally and at mass with Aquino. At the rally, he told the crowd that the money spent on the ZTE commission should have been spent on housing and other social concerns, and shouted “Back off, First Gentleman!” referring to Arroyo's husband.

After de Venecia’s father, a political survivor whose career dates back to the Marcos era, vouched for his son’s claims, Arroyo engineered his ouster as Speaker of the House. As speaker, de Venecia has served as Arroyo’s legislative spear carrier and protected her from numerous attempts at impeachment. He could become a dangerous enemy unless there is some other deal inside a deal that has yet to be revealed.

Still, though the affair dominates the media and involves lots of high-level players, there seems little likelihood that Arroyo will be swept away by the unseemly goings on, anymore than she was by earlier election scandals or the many serious human rights abuses that have plagued her government. Even during the rally on Friday, many protesters said that it would not reach a tipping point.

"We don't expect it to snowball and remove GMA [President Gloria Arroyo] from power", said activist Vim Santos.

"A people’s uprising is the only alternative to elections, but people are even more cynical about that," Nakpil said.