NBN WITNESS: US$65-M OVERPRICE ACCEPT...

NBN Witness: US$65-M Overprice Acceptable Written by Lala Rimando

Friday, 08 February 2008

IT expert Rodolfo Noel Lozada Jr., who had attended meetings where the alleged overprice in the government’s national broadband network (NBN) contract was structured, on Friday told a Senate hearing that the project with the Chinese firm could have pushed through if a government official agreed to limit kickbacks to only US$65 million. He said that then Commission on Elections chair Benjamin Abalos insisted on a commission of $130 million. The original contract price was $132 million, but the one eventually approved by the National Economic and Development Authority (NEDA) involved $329 million. Lozada didn’t say what accounted for the difference of $67 million. In the course of his testimony before the blue ribbon committee, Lozada indicated that in the government’s contracts with Chinese companies, commissions that ranged from $65 million to $70 million have so far been “the norm.” A personal consultant of former NEDA chief Romulo Neri, Lozada said his role was to check the financial viability and technical details of the government’s contract with China’s ZTE Corporation. In a January 2007 lunch meeting, however, Neri, who had to leave early, also tasked him to “moderate the greed,” apparently referring to how much Abalos was asking for. He had to minimize the commissions to an “acceptable level.” In that meeting, Abalos reportedly told ZTE officials that the project and the loan that would finance it were pushing through. Lozada said Neri was uncomfortable with the discussions because he preferred it as a Build-Operate-Transfer project since it was the arrangement preferred by President Arroyo. Opposition Senator Panfilo Lacson asked what Lozada thought was Neri’s standards of greed: “How do you quantify a modified greed versus excessive greed?” Lozada said that if Abalos agreed to an overprice of only $65 million, the project could have pushed through without much fanfare. The $65 million, he said, was only equivalent to 35 percent of the project cost, and would be therefore easier on the finances of the proponents. Lozada said this was the case with the Southrail project, which he also helped NEDA to analyze. The Southrail was another government undertaking with China that became controversial for its overprice and technical inferiority, and from which ousted Speaker Jose de Venecia Jr. reportedly benefited. It became the subject of an earlier Senate investigation. He said the overprice in the Southrail project was “only $70 million,” or equivalent to 22 percent of the project cost. Lacson said this $70-million overprice would be equivalent to about P3.5 billion because the exchange rate at the time the project was approved was about P50 to a dollar. Lozada said his work as president of Philippine Forest Corporation, a government corporation created only in 2006, required him to go to upland communities, where poverty is very apparent. He says this made it difficult for him to reconcile the million-dollar kickbacks on government projects. "I don’t feel it (kickback) is right. I hope it just gets reduced,” he said. Two administration senators, however, questioned Lozada’s “morality.” Senator Juan Ponce Enrile asked why, if Lozada was really upright and knew early on how unreasonable the overprice that taxpayers would be made to bear, he didn’t immediately disengage from the project. The witness said that when it comes to morality, his “framework” is that there is a “permissible zone” and a “forbidden zone.” The $65-million overprice fell within the permissible zone. Senator Miriam Defensor Santiago, on the other hand, raised issues of conflict of interest against Lozada. She said that as Philippine Forest Corporation president, Lozada has entered into business transactions with enterprises that he owns or is affiliated with. Santiago said Gabriel Multimedia, a company where Lozada is a signatory, bagged projects from Philippine Forest, such as an education series on jathropa and a team-building event. Santiago also asked Lozada about the importation of 35 goats worth P700,000 from Australia that were supposedly used to check if they could eat jathropa leaves. Lozada admitted that these projects did not go through any bidding, as required of government purchases. But, he said, these involved amounts that are small compared to Abalos’s $130-million commission. “I have done things that have me lose respect for myself,” he admitted. “I don’t want to lose my soul.” Copyright © Public Trust Media Group, Inc. Source: http://www.newsbreak.com.ph/index.php?option=com_content&task=view&id=4157&Itemid=88889051