Press Release
September 29, 2007

GOV'T OFFICIALS PRACTICALLY
SOLD RP FOR ZTE DEAL - ESCUDERO

Government officials who are parties to the sealing of the ZTE-NBN deal have violated the laws and practically sold the country when they approved and signed the controversial deal, opposition Senator Francis "Chiz" Escudero said.

Escudero specifically took a jab at Trade Secretary Peter Favila who entered into an onerous Memorandum of Understanding (MOU) for and in behalf of the Philippine Government and the ZTE International, which, among others, practically bound the country to award the NBN project and other deals and contracts to ZTE.

The MOU, which was signed by Favila, agreed to a "secrecy clause" prohibiting him from making public the terms and conditions of the said memorandum.

"The NBN deal was served to ZTE on a silver platter, giving them all the liberty to prepare and implement the financial and budgetary plans for the project, as well as the technical know-how without proviso for transparency."

The opposition senator cited four laws that have been violated not only by Favila but also by government officials who dipped their hands in the deal.

One, the Telecom Act and E-Commerce Law which enunciated a policy to privatize the telecom industry and for government to stay out of this industry. Section 22 of the Republic Act No. 7925 (Public Telecommunications Policy Act of the Philippines) states that "Privatization of Existing Facilities. The Department shall within three (3) years from effectivity of this Act, privatize all telecommunications facilities currently owned and/or operated by the government for public use, plus those facilities currently being planned under various bilateral funding arrangements

Two, Escudero said the Official Development Assistance Act (ODA) also called Republic Act No. 8182 was also clearly violated because the said law requires "prior expressed approval of Congress " prior to negotiation and implementation of any ODA contract. "Both chambers of the Congress were kept at bay from the NBN deal, they sneak their way in as paper trails and contradicting testimonies from our officials have shown."

Escudero also hit DOTC Secretary Leandro Mendoza and its officials for violating provisions of the Republic Act No. 9184 or the country's procurement law, which requires the following: (a)public bidding for ALL government contracts, (b)announcement or publication requirement. Both were not met when the NBN deal was engineered.

"The DOTC does not have any mandate to categorize a government undertaking as exempted from public bidding, it has to get the approval of the Government Procurement Policy Board (GPPB) before it can do so, which again, the DOTC did not. " Escudero also chided DOTC for eschewing the policy of the Procurement law when it undertook direct contracting for the NBN deal. "Direct contracting is a method of procurement of goods that do not require elaborate bidding documents. However, under the law, communication facilities are classified under infrastructure projects, therefore direct contracting is not available to DOTC for the NBN deal."

Lastly, Escudero said that Executive Order 423 or the Government Procurement Reform Act was also violated because the EO requires that the Procurement Law cover ODA contracts and which requires GPPB endorsement. "Under the same EO, if the laws and regulations are not followed, the contract is not binding on the government." This alone, Escudero said, should already quash the deal.

The clear violations of the country's existing laws, Escudero said should all be taken into consideration for the administration to totally drop the deal. "From all fronts, the NBN deal is not only illegal at the very start, it is also immoral for millions of us Filipinos who will bear paying the debts for undertakings that do not make any difference to every Filipinos."

Escudero will file on Monday resolutions canceling the NBN contract as well as reviewing all ODA contracts especially with China.

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