Yearender: DOTC rocked by scandal of the year

The year 2007 could go down in the history of the Department of Transportation and Communications (DOTC) as the most unpleasant with the eruption of the national broadband network scandal.

The ruckus over the deal forged by DOTC Secretary Leandro Mendoza with the Chinese telecommunications firm ZTE Corp. for the latter to build a national broadband backbone spanning the whole length of the country had led to a political fallout between President Arroyo and one of her staunchest political allies, Speaker Jose de Venecia, Jr.

It even caused the resignation of Commission on Elections chairman Benjamin Abalos.

While Mendoza was able to hold on to his top post, the $329-million DOTC-ZTE deal was ordered cancelled by the President shortly after her husband, First Gentleman Jose Miguel “Mike” Arroyo, was also implicated in the mess.

Mendoza, for his part, downplayed the damage wrought by the NBN controversy on the DOTC’s credibility as a government department entrusted to implement multi-billion transportation infrastructure projects.

“Not really. We in the DOTC believe that we did no wrong on ZTE,” Mendoza told The STAR when asked about the effects of the NBN scandal.

“As a matter of fact, we did our homework. What happened was that there were many side issues that came into the picture. But whether it was necessary and whether the price was right, I think the Senate has not really determined if there was overpricing or not,” Mendoza said.

“We submitted our due diligence, we did some comparison with suppliers from the US –Cisco (US IT giant), suppliers from Canada, suppliers from Europe, and the contract that we have signed is still the lowest,” Mendoza said.

The former Philippine National Police (PNP) director general claimed that 2007 could even be a banner year if trust and credibility was to be made as yardstick for government departments.

Mendoza claimed there were a lot of foreign investors that had showed interest in investing in transportation infrastructure projects, even after the NBN brouhaha.

“Well, if we’re going to look into that, then 2007 is a banner year for the DOTC. There are so many investors going to us. And these are investors with funds,” Mendoza said.

“The credibility is there,” Mendoza stressed.

STAR in the thick of it

The ZTE controversy erupted when Philippine Star columnist Jarius Bondoc, in his widely-read column Gotcha last June 22, exposed that the “supply contract” signed by Mendoza with ZTE president Yu Yong in Boao, China last April 21 was declared “stolen” by DOTC Assistant Secretary Lorenzo Formoso during a forum.

The contract signing, which was witnessed by no less than the President herself, was then already being criticized by business groups who questioned the necessity of the billion-peso project and the DOTC’s silence on the details of the agreement.

In a speech at the Ateneo Professional Schools-sponsored forum in Makati, Formoso said the two “sovereign copies” of the contract were stolen from the hotel room of a commercial attaché in Hainan, China after Philippine and Chinese officials signed it.

In a subsequent update on the contract papers, DOTC said the theft occurred at the hotel room of Emmanuel Nino Wee Ang, the Philippines’ commercial attaché, at the Meritus Mandarin Hotel in Hakou, province of Hainan, China.

The DOTC later downplayed the theft of the case, saying they have reconstituted the contract.

The controversy raged further when Bondoc, in a subsequent column last August, named Abalos as the powerful government official who intensely lobbied for ZTE Corp. to bag the deal, claiming that the poll chairman had received bribes in cash and sexual favors to push for the Chinese group.

Bondoc’s series of articles on NBN contract irregularities led to a Senate investigation on the contract and the resignation of Abalos.

In the Senate hearings, the son and namesake of Speaker de Venecia, Jose “Joey” III, surfaced to testify about Abalos’ aggressive lobbying and the official’s efforts to dissuade him from pursuing the unsolicited offer of his company Amsterdam Holdings, Inc (AHI) to establish a broadband network for the country at no expense to the government under a build-operate-transfer scheme.

In the course of his Senate testimony, the younger de Venecia said the President’s husband had “advised” him to “back off” from the project in one of his meetings with Abalos at the Wack Wack Golf and Country Club in Mandaluyong.

Former NEDA chief Romulo Neri, for his part, also exploded a bombshell when he testified that Abalos offered him a bribe of P200 million to endorse the ZTE-NBN project.

Mendoza said the DOTC has totally abandoned the deal with ZTE Corporation.        

“Nothing. It has been cancelled already,” Mendoza said.

The DOTC’s recourse was to bid out the project to interested local telecommunications companies.

Mendoza pointed out that there were still many interested foreign institutions willing to fund the project such as the World Bank, the International Monetary Fund, the Korean Export and Import Bank, the Chinese Export and Import Bank, Japan and even the European Investment Bank.

Missing NAIA III

Another red mark for the DOTC was its failure to open the controversial Ninoy Aquino International Airport (NAIA) Terminal III this year.

Mendoza, in an interview last week, admitted that the DOTC was refraining from setting timetables for the opening of NAIA-3 with all kinds of problems cropping up.

The collapse of a 100-square-meter portion of the ceiling at the arrival lobby came a few days before a scheduled soft opening of the facility by the Manila International Airport Authority (MIAA).

Mendoza said they were already looking for another contractor who can undertake the retrofit and complete the unfinished construction work.

“We’re not talking of timetables here anymore,” he said.

Mendoza said that what remained paramount was the issue of airport safety for passengers who will use NAIA-3 once the government opens it.

Mendoza also pointed out that they finally succeeded in opening the new P8.6-billion Iloilo International Airport last June 13.

The airport was originally scheduled to open last April but suffered delays in its completion.            

The said airport, which straddles the towns of Sta. Barbara and Cabatuan, was built by two Japanese construction firms Taisei and Shimizu Joint Venture and was funded by a special yen loan package of the Japan Bank for International Cooperation (JBIC).

The airport, built on a 188-hectare area, was designed to meet the demand for a larger terminal brought about by the increasing number of passengers and cargo traffic in Iloilo.

The new airport reportedly boasts of state-of-the-art facilities, including landing and navigation systems, a modern terminal and control tower buildings, a runway 2.5 km long and 45 meters wide, a passenger terminal with 12,000 sq. m of space and a 1,281 sq. m-cargo terminal.

Mendoza said they are also set to open the new Bacolod International Airport in Silay City, Negros Occidental on Jan. 17.

The Bacolod-Silay International Airport was originally scheduled to open for commercial operations last July but, like the new Iloilo airport, suffered delays in construction.

The airport is being constructed on a 182-hectare tract of land in Silay City with an asphalt runway, a passenger loading and general aviation aprons, a spacious passenger terminal building, an air control tower and operations center, a cargo terminal building, three passenger boarding bridges, and modern baggage conveyors.

The new airport will provide a more effective and efficient air transportation system in the regional growth area of Negros Occidental.

From an initial project cost estimate of P4.24 billion, the project cost has swelled to around P6.2 billion.

Again like the new Iloilo airport, the Bacolod airport was funded by a loan from JBI.

Mendoza said the DOTC was also able to finish a number of seaports through the Philippine Ports Authority (PPA).

“Insofar as project implementation is concerned, insofar as delivery of services is concerned, we don’t have any problem,” Mendoza said of the DOTC.