Press Release
June 26, 2007

PALACE, DOTC ASKED TO EXPLAIN WHY TELECOM PROJECT WAS AWARDED TO CHINESE FIRM DESPITE ITS TAINTED RECORD

Senate Minority Leader Aquilino "Nene" Q. Pimentel, Jr. (PDP-Laban) today sought an explanation from Malacañang and the Department of Transportation and Communications (DOTC) on why the government entered into the $330 million contract with the Chinese telecommunications firm ZTE Corporation for the setting up of a National Broadband Network (NBN) in the face of the irregularities that have tainted the deal.

Pimentel cited allegations that the telecommunications contract was awarded without undergoing proper bidding procedures and despite the offers of other companies to undertake the project at much lower cost.

He also said that the ZTE Corp. has gained notoriety in other countries for business malpractices and anomalies for which it has been sued and blacklisted.

"I made a research on the Chinese telecommunications company that bagged the National Broadband Network contract. I discovered that it was involved in questionable deals in other countries where it set up business," the minority leader said.

Pimentel said the ZTE Corp. was accused of bad practice of bribing public officials in host countries in exchange for juicy contracts. He said the telecommunication firm was also charged with falsifying its bid papers to make it appear that it is China's biggest telecom supplier although it is only the third.

In other cases, ZTE was accused of violating corporate laws and unfair competition.

The countries where ZTE Corp. found itself embroiled in dubious deals include Mexico, Liberia, Ecuador, Ethiopia, Indonesia, Libya and Burma.

Pimentel asked DOTC officials whether they conducted a thorough background check of the ZTE Corp. before the contract was awarded and signed by Secretary Leandro Mendoza in Boao, Hainan on April 22 during President Gloria Macapagal-Arroyo's brief visit to China.

The offer of one American company to undertake the NBN project for half the Chinese cost was disregarded by DOTC.

This prompted United States Ambassador Kristie Kenney to urge the Arroyo administration to reconsider its bias in favor of China and review proposals coming from other companies, including those from the US.

Pimentel also said it appears that ZTE Corp. will not invest its own money in the NBN project but the Philippine government will have to borrow from a Chinese bank to be paid to the telecommunications firm.

He also expressed outrage over the reports that the DOTC-ZTE contract and supporting documents were stolen in China hours after they were signed even as he deplored the lack of transparency over the deal.

Because of the irregularities surrounding the telecommunications deal, Pimentel noted that this is being questioned in the business community, giving the Arroyo administration another blackeye and undermining efforts to attract foreign investors.

Saying the controversy over the $330 million deal with ZTE Corp. will not die down until corrective steps are made, Pimentel has asked for a Senate inquiry into the transaction.

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