by Joel Roja/Asianjournal.com
MANILA – THE fact-finding investigation of the Department of Justice (DOJ) virtually turned into a venue for the Department of Transportation and Communications (DOTC) Assistant Secretary Lorenzo Formoso III to defend the government’s decision to award the US$329 million national broadband network project to China’s ZTE Corporation.
In Monday’s inquiry, Formoso reiterated that Amsterdam Holdings Inc. (AHI) which is being represented by Joey de Venecia III has no financial capability to sustain the project aside from its lack of congressional franchise to operate a telecommunications firm.
Formoso described AHI as “a shell company” with a capitalization of only P5 million when it submitted an unsolicited proposal to undertake the NBN project.
The panel headed by Justice Undersecretary Ernesto Pineda mainly focused their questioning on how the NBN contract came about and the officials involved in the transactions.
Pineda defended their investigation saying that it was not intended to further confuse the people with regard to the NBN-ZTE scandal.
He added that their investigation is totally different and more comprehensive than the investigation being conducted by the Office of the Ombudsman.
Formoso noted that supposed NBN-ZTE scam witness Rodolfo Noel Lozada Jr. was never part of the negotiations pertaining to the broadband project.
He said only himself and 15 engineering experts from the DOTC’s Commission on Information and Communication Technology (CICT) were always present when negotiating with ZTE officials regarding the NBN project.
The DOTC official said he could not recall seeing Lozada when he presented their evaluation to National Economic Development Authority (NEDA) Assistant Director Ruben Reynoso last March 2007 recommending that ZTE’s proposal is the best for the country 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 (IRR) at around 27 percent.”
Formoso noted that 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 (DTI) and China’s ZTE Corp., to cooperate in the development of various programs in the country including telecoms.
The DOJ also gave Formoso the opportunity to explain the DOTC’s side on the allegations made by NBN-ZTE scam witness Rodolfo Noel Lozada Jr. that the project was overpriced since the original proposal was US$262 million which later increased to $329 million.
The DOTC official noted that the contract price increased by $67 million since the original amount would only cover 30 percent of the country while the $329-million proposal will cover the entire country.
Formoso explained that there were softwares or applications that were included in the original the proposal of ZTE which the Philippine government does not need.
This prompted the Philippine government to ask for the exclusion of the softwares and instead asked the ZTE to increase the base stations for the project, resulting to a higher contract price.
He added that the ZTE proposal is advantageous to the government since it would entail a 20-year loan agreement at three percent annual interest only.
“The price appeared reasonable to us considering the due diligence in evaluating the three companies – Arescom, AHI and ZTE. What is equally important is the 20-year loan-term at three percent interest rate,” Formoso said.
He also denied reports that certain government officials received kickbacks from ZTE as the project was strictly government-to-government and that there were no middle-men involved in the negotiations.
Formoso defended DOTC’s recommendation for a government-to-government contract instead of the build-operate-transfer (BOT) proposal of Amsterdam Holdings Inc. (AHI), saying that “from a theoretical point of view, BOT is more expensive.”
“At the end of the day, we will still pay (for the BOT project),” Formoso said.
Formoso also stressed that the country would benefit more from a government-to-government NBN in terms of economy considering that the government is spending P3.7 billion annually for telecom services as compared to P1 billion a year in interest if the project is funded by foreign loan.
After the hearing, Pineda told reporters that 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,” Pineda added.
The panel has invited De Venecia, son of former House Speaker Jose de Venecia to appear before the panel on Thursday.
Meanwhile, the panel did not allow lawyer Heraldo Dacayo to answer questions on behalf of former National Economic Development Authority (NEDA) Romulo Neri, who recommended the approval of the NBN-ZTE contract.
Instead, the panel summoned Neri to appear before it on Friday.
The panel is tasked to study whether there were violations of the provisions of Republic Act 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 to testify on the NBN-ZTE scandal for possible perjury.