Ex-ZTE consultant new NBN witness
By Tony Bergonia
Philippine Daily Inquirer
First Posted 00:06:00 03/09/2008
Re-posts to insert Philippine Daily Inquirer apology for erroneous article.
(The Philippine Daily Inquirer apologizes for its banner story on March 9, which erroneously reported that Eduardo Mañalac, former president of Philippine National Oil Co., would testify on the alleged kickbacks in the $329-million National Broadband Network (NBN) deal with ZTE Corp. In his press conference on March 10, Mañalac said he would testify at the Senate, if invited, on the agreement signed by the Philippines with China and Vietnam to search for oil in the Spratlys—not on the alleged kickbacks in the NBN-ZTE deal. The Inquirer newspaper also erred in reporting, among other things, that Mañalac would testify in Tuesday’s Senate hearing. Leo San Miguel, ZTE consultant, was Sen. Panfilo Lacson’s “surprise witness” at the Senate hearing Tuesday. The following is a revised version of the story.-Ed)
MANILA, Philippines—A former consultant of the Chinese firm ZTE Corp. is the “surprise” witness who will testify on the purported million-dollar kickbacks in the $329-million National Broadband Network deal, according to highly placed sources.
Leo San Miguel is to testify at the Senate on Tuesday on how at least $41 million in alleged under-the-table commissions were funneled from the Chinese firm to the so-called “Greedy Group plus plus” that was packaging the NBN-ZTE deal, said the sources who asked not to be named for security reasons.
But his value as a witness in the now scuttled NBN-ZTE deal, according to the sources, is based on his knowledge of how ZTE officials purportedly paid off the “Greedy Group” to allow China’s second-biggest telecommunications firm to bag the NBN project.
The sources said Sen. Panfilo Lacson would present the surprise witness at the resumption on Tuesday of the Senate’s inquiry into the NBN-ZTE deal.
Lacson could not be reached for comment.
Go-between
The sources said San Miguel had an extensive network and deep connections in the Chinese government and was a trusted go-between for Chinese projects in the Philippines.
He is “a familiar face in China,” the sources said.
The projects that came his way as a go-between included the NBN-ZTE deal that, according to three witnesses who had earlier testified at the Senate, was put together for the purpose of generating at least $70 million in kickbacks for each of the members of the “Greedy Group.”
This group, according to witness Dante Madriaga, included President Macapagal-Arroyo, her husband Jose Miguel Arroyo, former Commission on Elections Chair Benjamin Abalos Sr., San Miguel, former Chief Supt. Quirino “Torch” de la Torre and businessman Ruben Reyes.
The Senate had sent out subpoenas for San Miguel, De la Torre and Reyes, but they could not be found. San Miguel’s son received the subpoena last Thursday.
A subpoena had also been sent out for Jimmy Paz, Abalos’ former chief of staff at the Comelec who was supposedly present at some of the secret meetings on the NBN-ZTE deal. He also could not be found.
Filling in the blanks
San Miguel’s testimony at the Senate is expected to fill in the blanks in the earlier testimonies of Madriaga, engineer Rodolfo Lozada Jr. and businessman Jose “Joey” de Venecia III, the sources said.
While the previous three witnesses had corroborated one another’s testimony on how the “Greedy Group” had packaged the NBN-ZTE deal purportedly to accommodate the kickbacks, no witness has come out to reveal knowledge of payoffs from ZTE.
The sources said San Miguel’s knowledge of how the payoffs were prepared and delivered by ZTE could complete the picture.
The most detailed testimony yet on the alleged payoffs was made by Madriaga, who said he was under contract from ZTE as a consultant on the NBN project.
Madriaga testified that advance kickbacks amounting to at least $46 million were delivered by ZTE to the “Greedy Group” four times in the course of the under-the-table negotiations.
When, how much
This was how Madriaga recounted the purported advance payoffs in a blog that he later repeated in his Senate testimony:
The first payoff of $1 million was made in China in August 2006, when the “Greedy Group” was just starting to put the NBN-ZTE deal together.
It was given to Ruben Reyes, the purported conduit of the illegal funds.
The second payoff of $5 million was made by ZTE in December 2006, again in China, after talks failed to convince De Venecia III, who was pushing his own broadband network proposal, to abandon his project.
The money was again received by Reyes.
On Feb. 12, 2007, Ms Arroyo issued an executive order moving the Telephone Office, which would handle the NBN project, to the jurisdiction of the Department of Transportation and Communications.
In March 2007, the “Greedy Group” obtained clearance from ZTE officials at a meeting in Wack Wack, Mandaluyong City, for a third payoff of $10 million. Again, the conduit of the funds was Reyes.
An agreement to release the fourth advance payoff was reached by ZTE officials and the “Greedy Group” at the Makati Shangri-La hotel in April 2007, about a month before the May elections.
But although ZTE agreed to advance $30 million, ZTE executive Fan Yang said the money would be released on one condition—that Ms Arroyo be present at the signing of the NBN-ZTE supply contract.
The “Greedy Group” agreed and the $30 million was given to Reyes.
Arroyo in China
On April 21, 2007, as her husband was recuperating from high-risk heart surgery at the St. Luke’s Medical Center, Ms Arroyo flew to China to attend the Boao Forum.
On her way back to Manila hours later, she witnessed the signing of the NBN-ZTE deal at the VIP room of the Haikou Meilan International Airport in Hainan between Transportation and Communications Secretary Leandro Mendoza and Yu Yong, ZTE Corp. vice president and ZTE International president.
Prior to the signing, Ms Arroyo had a one-on-one meeting with ZTE chair Hou Weigui at the Haikou Meilan airport.
Madriaga said in his testimony that the First Couple were the biggest recipients of the kickbacks.
Corroborative but hearsay
But Palace officials and those involved in the NBN-ZTE deal insist that while the testimonies of Madriaga, Lozada and De Venecia III jibed, these were hearsay unsupported by hard evidence.
San Miguel’s testimony is expected to connect the releasing and receiving ends of the purported payoffs, according to the sources.
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