‘Arroyo brought down cost of NBN-ZTE deal’

Former president and now Pampanga Rep. Gloria Macapagal Arroyo. FILE PHOTO

MANILA, Philippines—A former National Economic and Development Authority (Neda) official has testified that former President Gloria Macapagal-Arroyo was actually able to cut down the cost of the botched national broadband network (NBN) project with China’s ZTE Corp. by P3.95 billion, contrary to allegations that she had endorsed a project that was grossly disadvantageous to the government.

Fortunato Abrenilla, former legal staff director of Neda, was called to testify on Monday at the Sandiganbayan hearing on his knowledge of the NBN-ZTE deal.

In the same hearing, another main witness, businessman Joey de Venecia said he did not believe Arroyo was involved in the allegedly corrupt project.

De Venecia said it was “unacceptable” that the people who were involved in the scandal had been dropping her name.

Arroyo’s coaccused in the case are her husband, Jose Miguel “Mike” Arroyo, former Comelec Chair Benjamin Abalos and the late former Transportation Secretary Leandro Mendoza, who have all been charged with graft for their alleged involvement in the cancelled $329 million NBN-ZTE project in 2007.

On cross-examination by defense counsel Laurence Arroyo, Abrenilla cited records of the Neda board meeting on the project on March 27, 2007, showing that Arroyo, as chair of the Neda board, had ordered then Assistant Transportation Secretary Lorenzo Formoso III to configure the proposal in order to avoid an overlapping of services and coverage with the cyber education program.

In fact, Abrenilla said, the former president, who is now a Pampanga representative, asked Formoso if the four-percent annual interest rate of the loan from the Chinese company could still be reduced.

P2.4-billion savings

In a subsequent meeting of the Neda board, Abrenilla said, Formoso reported that in accordance with Arroyo’s instructions, they were able to remove all the overlaps in the system which translated to the lowering of the project cost from $379 million to $330 million.

He said the lowering of the project cost translated to savings of $49 million, or P2.4 billion based on the then prevailing peso-dollar exchange rate of P48:$1.

Abrenilla testified that the interest rate of the loan was also reduced from four percent to three percent per annum, or a savings of P1.6 billion over the 10-year repayment period.

Abrenilla also said that in two Neda board meetings which were attended by the 17 Cabinet secretaries, the governor of the Bangko Sentral ng Pilipinas and 32 other ranking government officials unanimously approved the NBN proposal, with Formoso himself endorsing the project because of its benefits, economic viability and savings for the government.

He said that before the NBN proposal was submitted to the Neda board, the project had already been approved by the Neda technical board and the investment coordination committee-Cabinet committee (ICC-CC), noting that no project reaches the Neda board without prior approval of both bodies.—Cynthia D. Balana