Worsening stink
The Chinese company that bagged the contract to build the $329 million national broadband network (NBN) for the Philippine government says it has nothing to hide. “There was complete transparency in the proposal, evaluation and approval of ZTE’s application for the Philippines’ NBN contract,” the company said in a statement issued earlier this week.Transparency, however, is the last word that comes to the mind of anyone who has followed the controversy as it has slowly unfolded since the contract was signed in April this year. Up to now, Filipino taxpayers know little about the NBN contract beyond the fact that they will be paying close to P1 billion a year for over 20 years for a project that may not be necessary and which the government is ill-equipped to operate and maintain, according to two economics professor from the University of the Philippines.
Everything that the Filipino people know so far is either what ZTE’s competitors have revealed or what the media have extracted bit by bit from government officials. At one point, Cabinet officials even tried to mislead the public by denying that a contract had already been concluded and claiming that what was signed in Boao, China, last April was either a memorandum of agreement or a memorandum of understanding. More is probably known about the negotiations and how top officials, like Comelec Chair Benjamin Abalos, allegedly helped broker the deal and tried to hush up ZTE’s unhappy competitors for the project, or got bribe offers amounting to hundreds of millions of pesos.
But a contract does exist and it was signed and sealed in the presence of President Gloria Macapagal-Arroyo in China. And what it says and what it does not say probably explain why the Arroyo administration wanted to keep it under wraps.
One interesting item in the contract, for example, gives the two parties plenty -- even unlimited -- elbow room to adjust the price. It says: “The Priced Bill of Quantities shall be revised in accordance with the actual requirement to be determined and approved by the purchaser and the contractor during the detailed engineering stage.” In other words, the $329 million contract price, which is already too much, according to ZTE’s rivals, can still go higher. Could this be the reason the government signed a $400-million loan, so that it will have an extra $71 million to cover what is called a “change order”? This is a ploy often used to jack up the price so that greedy officials can get more from an already graft-ridden project.
What is even more unusual is that the contract does not say exactly what the government will be getting for $329 million. The scope of work is left undefined. The contract merely says that ZTE “shall prepare and complete the detailed engineering services, the plans, specifications and designs” for the government’s approval. If there are no plans, no specification and no designs, what is the government committing to pay $329 million for?
Only an idiot would pay for a car without knowing what kind of engine he is getting or how many passengers it can take, but that is not much different from what the administration is doing in regard to the NBN project. The only difference is that it is not the signatory, Transportation and Communication Secretary Leandro Mendoza, or the witness, President Arroyo, who will be stuck with the bill, but the Filipino people. And the administration would not even want them to know what they will be paying for. It wants the people to take on blind faith that the project is necessary and the terms of the contract are the best anyone can get. Thus, it has gone ahead and signed the contract without opening the project to public bidding. And the excuse it is giving is that this is a government-to-government transaction.
That is true of the loan agreement signed last week in Manila. It is not the case with the supply agreement with ZTE, unless that company has declared its independence from China.
A growing number of lawmakers have been calling for the abrogation of the contract, and the investigation of everyone involved in it. The business community has voiced a similar demand. Now that the onerous details of this funny contract are becoming known, there is even more reason to trash it. The stink is just too much for anyone to ignore
