Dealing with the budget process problems: Leak-plugging or Re-piping?

The September 27, 2008 editorial of the Philippine Daily Inquirer entitled “Plugging the Leak” gave us an insight on some of the realities surrounding the budget process of the country. It implied that while the “power of the purse” remains with the Congress, the “power over the contents of the purse”, the way and how much should be spent where, still remains with the President.

As the editorial notes: There is no disputing the President’s complete control of the current budget process. It is one main source of her continuing hold on Malacañang; it explains in large measure her continuing political relevance despite a three-year-long crisis of legitimacy. She has learned to keep most of her political allies happy, through a judicious mix of open budgets (open to congressional insertions, that is) and tight control of fund releases.

The editorial also surmises that “[i]f the proposed 2009 budget is any indication, she has even learned to provide for her political future by padding the proposal with billions of pesos in potential election-spending funds.” This is because “the political class (not just President [Gloria] Arroyo alone) found loopholes in the law, and widened them.” An example is the provision on savings found in Article VI, Section 25 (5) of the Constitution which is being used by the President thus “[leading] us down the road, ultimately, to the wonderland of rolled-over budgets”.

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The Politics of Oil

Condor Piston Bicol is now poised to stage a massive transport strike to complement the Black Friday Protests being held against the weekly oil price hike. But will these help solve lower the costs of fuel as well as curtail the impending increase in the transportation fares?

Apart from the one or two days gas that will be conserved as a result of the strike, no other benefit will be derived from the planned demonstration. The Arroyo Government is already deaf to hear the public outcry and is already thick-faced to feel shame. Aside from the fact that the orientation of the Government is to be reactive and never pro-active, there are also some troubles that start to boil in the international community.

Well, just like in the case of the ZTE Scandal, the cause of these troubles is greed. The United States, fearing that it will lose the monopoly of nuclear power production, tries to control Iran. The Muslim Republic, however, insists that it only aims to produce nuclear energy – just like the purpose of our failed Nuclear Power Plant in Bataan. The US is unconvinced so it initiated talks with the Czech Republic and Poland for the setting-up of anti-missile outposts in their yards. The Czech Republic agreed and a few days ago, a memorandum of agreement was signed.

In response to the actions of the US, Iran demonstrated its military might by testing missiles near the sea where oil pipelines and oil-carrying cargo ships pass. If war occurs, it is expected that one-fourth of the world's supply of oil will be affected. Not only will the oil passageways be bombed but Iran will also stop producing oil considering that the country is considered as the world's third largest country in terms of oil reserves.

But this is just one side of the story. The action of the United States, particularly the setting-up of alleged anti-missile radar systems in the Czech Republic, has also sparked tensions between the country of George Bush and Russia. The Russian Government thinks the military stations are aimed at the former soviet country and not really at Iran. Russia's accusations are not baseless because the United States still considers it as the strongest rival in nuclear power and military might. Second, the US turned down the offer of former Russian President Vladimir Putin to construct the military bases near the Russian borders, Abkhazia, specifically. And, lastly, Russia benefited nothing when it offered its help immediately after the 9-11 Attack in the United States. Thus, even if there will be no US-Iran War, the US-Russian War may be inevitable. International relations analysts, in fact, are already considering the present US-Russian relations as that of “going back to the Cold War Era”.

Not only this, Russia is also among the top ten countries in terms of oil production as well as oil reserves. If US-Russian war happens – whether that may be in cold or warm blood – oil production will surely be affected. The result will always be towards the increase of prices. As of this writing the price of oil in the international market is already at US$147 per barrel and one of the causes is the boiling tensions. And this is expected to further increase in the next few days as assessments continue with regards the US-Iran and US-Russian relations. The effect? The hastening of the earlier forecast of P100 price per liter of gasoline.

Thus, the question: What is the Philippine Government doing?

The answer: Nothing. Nada. Zilch. Wala. Wara. Uda.

Worse, nobody even knows what is the status of the Philippines' claims to the Spratly Islands as earlier there were reports of a “sell-out” of the claims to China as part of the ZTE Scandal. To note, the Spratlys, particularly the Kalayaan Group which the Philippines own, promises oil reserves which can be used for the local supply thus lessening the need for imports.

In simple terms, under the present leadership, the Philippines is in a hopeless situation. The only palliative the Arroyos can offer is a 20% discount for gasoline purchased by senior citizens – a bill authored by Datu Arroyo, a non-Bicolano Congressman of the First District of Camarines Sur, which was also sponsored by the Mona Liza Senator, Lito Lapid, in the House of the Senate.

Well, the present leadership is just what the Filipinos deserve. It's the price of the P500 worth of votes sold during elections.

* * * * *

Tip: The oil price hike also has complementary effects. Automobiles running on oil fuels will be sold for low prices while the prices of pedal-powered bicycles are expected to increase.###

(This article is also published in Albay Journal as well as in Biklish.)

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Philippines: The Rice Crisis and the Politics Behind

Planting rice is never fun. So goes the Filipino folksong describing the hardships a farmer must face in producing the country's staple food. But even with the increasing prices of rice which supposedly will benefit the farmers, planting rice remains as miserable and gloomy economic activity as before. The reason: the poor attention being given by the Philippine Government to the rice industry.

With the issue of food shortage around the world, however, things changed almost instantaneously. The Philippine Government has now given special focus to the rice industry with Gloria Macapagal Arroyo immediately announcing a US$1.17 billion (PhP48.7 billion) farming budget allocation. But is the move a serious response or is it just another Rovian Tactic to shift the attention of the public from the scandals the administration is facing?


The Rice Industry: Some Realities

According to the Department of Agriculture, rice production is consistently growing in the Philippines. In 1990, production was recorded at only 6.1 million metric tons (MT) but after ten years, the figure rose to 8.1 million MT. In the span of 16 years, production almost doubled with a growth recorded at 164-percent or an annual increase of 590 thousand metric tons (MT).

The increase, however, is just superficial as the country has been left behind by its neighboring countries in terms of rice production. In 2003, for instance, while its neighboring countries like Vietnam, Indonesia and Myanmar produce between 37.1 thousand and 46.3 thousand hectograms of rice per hectare, the Philippines is only staggering to produce 34.3 thousand hectograms for the same land area. This, despite the fact that the International Rice Research Institute (IRRI) is located in the country and this, despite the claims that the Philippines has been blessed with a fertile soil and a healthy climate. The country's increase in production is just achieved by increasing the planting area – which is not a big deal if large tracts of lands are still available to be tilled. The problem, land conversion is at a fast pace that in just a span of a few years, some two million hectares of rice lands were converted to residential subdivisions. Lost rice lands are only compensated by denuding forests which, according to the National Statistics Coordination Board (NSCB) of the Philippines, is at the rate of 1.4-percent per annum.

But why the poor yield per hectare? According to an Agriculture official who do not wish to be identified, Filipino rice farmers only get $0.24 each as opposed to their Thai and Japanese counterparts who get $0.72 to $0.96, respectively. As a result, a Filipino farmer can only till a maximum of two hectares per planting season as opposed to his Asian counterpart who can till an average of five hectares. With the country's strategy of increasing production by increasing the land area, it is therefore impossible to see the supply side satisfying the demand side. For this, the Philippines had been importing rice uninterruptedly since 1995 that average importation has been recorded at 1.2 million MT. And this will continue as consumption is also on the increase.

In 1990, per capita rice consumption is only 92.53 kilos a year or barely two sacks of rice per person. By the year 2000, the figure rose to 103.16 kilos. Last year, an average Filipino consumes up to 118.70 kilos or nearly two and a half sacks of rice.
One of the factors being blamed for the increasing rice consumption is the country's population growth. According to the National Statistics Office (NSO) the population growth rate is still high at an average rate of 2.04-percent per annum. This remains uncontrolled as the government would not enact tighter policies for fear of the Catholic Church. Ironically, though, the Philippine Constitution clearly states the separation of Church and State. For this failure, an average of 4,725 daily is being added to the population that by last year, the government statistics agency was able to officially record a population of 88.6 million.

Second, the increasing consumption rate is also being blamed at the failure of the economy to trickle down to the grassroots. As Jessica Cantos of the Rice Watch Association Network and Rolando Dy of the University of Asia and the Pacific pointed out, the people's reliance on rice as the staple food should have diminished and shifted to bread and pasta if the economic growth had been distributed equitably. The problem, the Arroyo Government's claim of an increasing gross national product (GNP) does not reflect the real situation among and between income groups. Even the NSCB agrees as the statistics board noted an increase in the country's poverty incidence which was 24.4-percent in 2003 to 26.9-percent in 2006. Lately, the Arroyo Government had been boasting of a 7.3-percent GNP growth for 2007 but unofficial reports have it that poverty statistics soared again to 33-percent level this year.

Because of these, current consumption of rice is at 33,000 MT of rice daily – a figure higher than what is actually produced.


Short-Range Policies Versus Long-Term Interests

According to the Senate Committee Report No. 54 delivered by Senator Ramon Magsaysay during the 13th Congress of the Philippines, the agriculture sector in the country has not received any adequate government support since the 17th century. This is because of the bias towards the idea of industrialization when in fact agriculture is predominantly the basis of the country's economy. Agriculture is seen as "backward" while industry is seen as "modern". Thus, the income earned from the export of agricultural products were diverted for the build up of the national industry.

This policy prevailed from government to government that nobody was surprised to see the Philippines signing the Uruguay Round of the General Agreements on Tariffs and Trades. The problem, no safety nets were prepared for the agriculture sector. Thus, when the local market traditionally reserved for Filipino farmers was opened to foreign players, consumers set aside the local produce as the latter is expensive.

Consistently, this is also the logic of the agriculture policies under the Arroyo Government. For instance, while sitting president Gloria Macapagal Arroyo announced of a US$1.17 billion farming budget allocation, only a meager portion of the amount is for the technical training of the farmers and none was mentioned for research and development. The largest portion, about US$479 million, was alloted for loans to farmers. The problem with this is that rice farmers are already buried in usury and giving them more loans without the required government support is just strangling them to death. Second, the present government lacks the proper accountability and there is no assurance that amount will indeed go to the target beneficiaries. A case in point is the Grand Swine Scandal wherein the Arroyo Government, through Quedancor, made available US$ 60.1 million (PhP2.5 billion) as loans for farmers. More than half of the fund, though, vanished questionably while the remaining amount was irregularly disbursed to four companies that are not qualified under the law. According to Senator Panfilo Lacson, the money could have been used to finance the 2004 election bids of Mrs. Arroyo and the candidates in her slate – a conjecture which is being strengthened by the continuing inaction of the present administration to investigate and punish the Quedancor officials involved.

Worse, the farmers are not only denied the proper support but the sector is also being used as a milking cow to advance some interests. For instance, there is this US$17.5 million (PhP 728 million) Fertilizer Scandal which involves Agriculture Under-Secretary Jocelyn Bolante, a close friend of the sitting-president's husband, Mike Arroyo. Based on the investigation of the Senate Blue Ribbon Committee, Bolante caused the release of the fertilizer fund but channeled it for other use. In short, the money was spent without the intended beneficiaries receiving any centavo nor a droplet of the liquid fertilizer.

The same is true with the rest of the 2004 special fund for agriculture. Prior to the 2004 elections the Department of Agriculture received US$ 67.4 million (P2.806 billion) for the purchase of farm inputs and implements before the May 2004 elections. The amount has been released and spent but when the Commission on Audit conducted an investigation, it was concluded that not a single farmer was able to receive any farm input or implement during the said year. Again, there are speculations that the amount was channeled to finance the election bids of Mrs. Arroyo and her allies.

These being the case, what then can be said of the recent concern of the sitting president to rice farmers in particular and the agricultural sector in general?


Just Another Rovian Tactic

It should be noted that early this year, the Arroyo Government has been assuring the public that there is no rice shortage in the country. Even independent economic analysts have been forecasting the same as the National Food Authority (NFA) had ample stocks to last for months and that the harvest season is yet to come. But when the Lozada expose on the ZTE Scandal became out of control, the government immediately shifted its stand and started carrying the issue of food security. This, in a way, became a clear Rovian tactic aimed at killing the messages thrown at the Arroyo Administration particularly on government mismanagement and rampant corruption.

True, the issue on food security is an issue that affects not only the Philippines but also the rest of the world. Even then, it cannot be said that the Arroyo government is just responding to the fact. First, when Mrs. Arroyo took over the reins of government, she already know that the trade imbalance with regards rice and other agricultural produce is already unfavorable to the country. As a matter of fact, the Philippines is already the largest importer of rice in the world. Still, she did nothing to correct this mess by at least giving special attention to the farmers.

Second, now that the country is already being threatened by food shortage, her policy is still leaning towards food importation. This had been made clear when the NFA's thrust for this year is to buy more rice from other countries rather than directly address the issue of high costs of production. The problem, rice producing countries like Thailand has instituted ban on exports of the staple food. To make the matters worse, other rice exporting countries also decided to form a cartel to regulate rice exports and prices. Thus, to quote Palawan Representative Abraham Mitra: What’s the use of your money if no rice is available at any price overseas? It’s like looking for water in the desert. You may be willing to exchange a bar of gold for a cup of water but it’s totally worthless if there’s not a single drop around.

Third, the sincerity of the government is also lacking as until now, no member of the local rice cartel has been caught and punished. What Arroyo government had been boasting in the last few weeks is the apprehension of the “Mosquito Gang” in Isabela – a loose organization of rice traders who are known for stocking a few hundred sacks of rice. What it failed to catch are the giant rice hoarders some of whom are known to be the members of “Binondo 9” – also a loose organization of rice traders known for hoarding tons of rice.

The sincerity is also lacking as the Arroyo government failed to catch rice smugglers. To note, in addition to the regular anti-smuggling agencies, Mrs. Arroyo has also organized the Presidential Anti-Smuggling Group (PASG). With the numerous anti-smuggling agencies of the government, how come there is no catch? Whether or not this just validate the rumors that some members of the first family are also involved in rice smuggling, nobody can tell. But one sure thing is that the PASG, one of highly financed agencies to eradicate smuggling, has concentrated its efforts mainly on curbing the smuggling of luxury cars rather than eliminating the smuggling of basic commodities. For this reason, rice smuggling continuous. If reports are to be believed, smuggled rice consists of 15-percent to 21-percent of the total rice imports of the country – a raison d'être of the Organization of Rice Exporting Countries. And this hurts more the local producers as their price becomes more and more uncompetitive due to the influx of smuggled rice.

Lastly, and the clearest evidence why the Arroyo Government is just warding off the issues on mismanagement and corruption, is her US$120 million (P5 billion) aid for the poor program. This she announced a few days ago with the idea of doling out a maximum of US$33 (PhP1,400) per poor family per month as an additional money to buy food for the table. In short, instead of addressing the root cause of the food security issue, Mrs. Arroyo will be issuing a placebo to show that she is a working president and thereby ward off the claims that are haunting her administration.

Will there be a way out of this mess?

At this point in time, one thing is certain: Properly addressing the problems on the local rice industry in the Philippines as well as responding to the threats of food security looks bleak. The primary reason for this is the fact that the Arroyo Government is fighting different battles on several fronts – the accusations being hurled against her with regards government mismanagement and corruption, her diving popularity ratings, and the issues of food security. But if she can win the the battle for her integrity, only then can she unite the nation to address the issue of food security.###



CREDITS:

All photos are courtesy of Global Giving

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The Queen in Check: Has GMA still a way out?

Political forecasters predict that Philippine President Gloria Macapagal Arroyo will not anymore last in power. Despite the absence of the "show of force in EDSA" last February 25 and the solid stand of the Catholic Bishops on her ouster, analysts see that the direction is already towards the Arroyo demise. But will these predictions hold? And if so, has Mrs. Arroyo still a way out?

Speaking in celebration of the First People Power in the Philippines, President Gloria Arroyo stated that the world will not forgive another EDSA uprising. Defying her words, political and independent forces blew the horn signaling the start of another series of protests three days thereafter.

Indeed, the lacking sight at EDSA on February 25 was seen in Makati under the guise of an inter-faith prayer rally. Ousted President Joseph Estrada even shared the stage with one of the key figures that caused his ouster -- former President Cory Aquino -- while Leftists and anti-imperialists brushed elbows with business leaders and capitalists just to air the call for Mrs. Arroyo to resign and give way in the search for truth. Similarly, religious leaders of various denominations also joined hands for the same cause while politicians hungry of media mileage agreed not to steal a moment to keep the people intact and united.

Second, Vice President Noli De Castro, after years of silence, is now talking of his readiness to succeed Mrs. Arroyo in case she resigns or get ousted. And his lips now sings his support for the search for truth. These, along with the mistakes of Mrs. Arroyo and her camp to control the reins of their statements are no doubt pointing to one thing -- the end of the Arroyo Administration.

But, if the end is near, will there still be a way out?

The answer, of course, is on the affirmative. And this can be done by just balancing properly all interests. The only question is: Is Mrs. Arroyo willing to make some sacrifices?

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Framing the Arroyo demise

After the Gloriagate scandal in 2005, another series of demonstrations is pounding the administration of Philippine president Gloria Macapagal Arroyo. This time, the root is the ZTE Scandal or the National Broadband Network Project of the Philippine Government. But will the Arroyo Administration crumble this time to give way to another government?

One way to answer this is by using the Joseph Estrada ouster in 2001 as a frame for the possible Arroyo demise. During that time, there were two envelopes at stake one of which was opened while the second was left undisclosed. For this frame we have Rodolfo Jun Lozada to represent "first envelope" and Romulo Neri, the "second envelope". Both are privy to the deals behind the ZTE-national broadband project. Lozada has disclosed what he knew while Neri remains evasive with the case he filed in Court. The burden now lies at the Supreme Court which can cause the opening or continuing closure of the second envelope.

If this is the frame, the best option for Malacanang is to urge Neri to withdraw the case he filed and started talking before the Senate. This is because Filipinos hate suspense and the more Neri is mum on the issue, the more restlessness will occur. The problem, however, is if Neri doesn't know how to lie. But at least, this will mitigate the restlessness being caused by the suspense. And this will further soften the stand of the Catholic Church whose bishops are calling for a moral reformation.

Another way to describe the imbroglio is by viewing the Administration officials, particularly the members of the Cabinet, as mercenaries with Arroyo as the employer. In the very first place, these people work at the mercy of the President and not out of the love for the country. Besides, according to Palace insiders, the Arroyos do not know how to cultivate loyalty. They always think that loyalty can be bought with money. Hence, if these "mercenaries" will see the Administration as a sinking ship, or if they see higher profit elsewhere compared to what they currently receive, they will most likely climb fences and leave Arroyo. Lozada, for instance, tried hard to keep his mouth shut. The problem, the wells went dry in Hongkong so he had to return to the Philippines and eventually spill the beans.

If this frame is to be followed, the best option for the Arroyos is to continually pour the money "the way things used to be in 2005," to quote a source. The problem, wells don't run full 'til eternity. Bleeding more money from corruption will just make matters worst for the ZTE Scandal, along with the others, had taught the people to be more vigilant.

Arroyo and her consultants, however, are reading the events in another frame. They look at the problem as a machination of the opposition and treat it as a minor wound. Thus, the solutions like the three-billion peso anti-corruption fund, the idea of catching the small corrupt officials, and the like. If said frame will not be abandoned, there is no reason to oppose the idea of the first family as rats packing before the 2010.###

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TIME TO GO: A CALL TO OUR COLLEAGUES IN GOVERNMENT

(A STATEMENT OF FORMER GOVERNMENT OFFICIALS)

We are former government officials who have held high positions in the current and previous administrations. Having participated in the highest level of governance up close and personal, we now feel compelled to speak up for our demoralized public servants and arrest the decline of our institutions of governance. In the past, many of us kept quiet, going on about our daily chores, attending to business as usual.

However, over the last few days, we, together with the rest of the country, have seen one man - Jun Lozada - finally decide that he can no longer be part of the massive graft and corruption that permeates this government. His testimony exposed that the corruption in the project he dealt with - the NBN ZTE project - is standard in what he called "dysfunctional government procurement processes."

Clearly, what Jun Lozada knew so terrified the powers-that-be that they unwittingly exposed what Jun called "the dark side of the state" - state-sponsored
terrorism that had been rearing its ugly head in the various disappearances and extra-judicial killings in the past six years - and which almost took him as a victim in a botched kidnapping that the administration has been trying, with little success, to cover up.

In a sense, all Jun Lozada did was to confirm what we already know: Our country is sliding into moral decadence. He also confirmed the systematic destruction of our democratic institutions and the systemic nature of our problems. We have seen this in the wanton disregard of checks-and-balances; abuse of the powers of the President; the cooptation through patronage and outright bribery of the other branches of government; politically sponsored corruption, facilitated, not thwarted, by bureaucratic procedures; the naked use of power and authority through the PNP, PSG, NAIA, among others, to strangle the truth; and the deployment of cabinet, sub-cabinet officials, and the military to obstruct justice and cover up illegal orders and acts.

In the past, for too many times that we were confronted with threats to our democracy and to our moral values, our response was: "What can we do about it? What is our choice? Who will lead us?"

These questions persist but, today, we can no longer stay silent. We can no longer ignore the reality of a government gone wild, wreaking havoc on our rights and institutions in a climate of impunity. We can no longer console ourselves in the strength of the peso, narrowing deficits, and an expanding economy. Even these ephemeral gains have not translated into a better life for the majority of our people, especially the poor.

The future of our country is at stake. Our democratic institutions are under attack. What we stand to lose is the moral fabric of our society.

We call on all government officials - Cabinet Secretaries, Undersecretaries, Heads of Agencies - who know about these anomalous transactions to join the heroic stand of Jun Lozada to come forward and speak out. We call on all those who know about the extrajudicial killings and disappearances to go public and tell the truth. We call on all those who can no longer endure this wrongful governance, with its structures of evil and unmoderated greed: IT IS TIME TO CUT CLEAN! IT IS TIME TO GO! .

Tama na! Sobra na! Panahon na!


Signed by:
1. Florencio Abad (Former Secretary, Department of Education)
2. Tomas Africa, (Former Administrator, National Statistics Office)
3. Rafael Alunan (Former Secretary, Department of Tourism)
4. Tomas Apacible (Former Commissioner, Bureau of Customs)
5. Senen Bacani (Former Secretary, Department of Agriculture)
6. Angelito Banayo (Former Secretary, Political Affairs)
7. Romeo Bernardo (Former Undersecretary, Department of Finance)
8. Gerardo Bulatao (Former Undersecretary, Department of Agrarian Reform)
9. Clifford Burkley (Former Undersecretary, Department of Social Welfare and
Development)
10. Ramon Cardenas (Former Head, Presidential Management Staff)
11. Jose Cuisia (Former Governor, Bangko Sentral ng Pilipinas)
12. Sostenes Campillo (Former Undersecretary, Department of Tourism)
13. Karina Constantino-David (Former Chair, Civil Service Commission)
14. Elfren Cruz (Former Head, Presidential Management Staff)
15. Isagani Cruz (Former Undersecretary, Department of Education)
16. Teresita Quintos Deles (Former Presidential Adviser on the Peace Process)
17. Benjamin Diokno (Former Secretary, Department of Budget and Management)
18. Quintin Doromal Sr. (Former Commissioner, Philippine Commission on Good Governance)
19. Franklin Drilon (Former Executive Secretary)
20. Narcisa Escaler (Former Ambassador to the United Nations)
21. Jesus Estanislao (Former Secretary, Department of Finance)
22. Fulgencio Factoran Jr. (Former Secretary, Department of Environment and Natural
Resources)
23. Victoria Garchitorena (Former Head, Presidential Management Staff)
24. Ernesto Garilao (Former Secretary, Department of Agrarian Reform)
25. Peter Garrucho (Former Executive Secretary)
26. Jose Luis Gascon (Former Undersecretary, Department of Education)
27. Marietta Goco (Former Chair, Presidential Commission to Fight Poverty)
28. Jose Antonio Gonzalez (Former Minister, Ministry of Tourism)
29. Milwilda Guevarra (Former Undersecretary, Department of Finance)
30. Cielito Habito (Former Secretary-General, National Economic Development Authority)
31. Edilberto de Jesus Jr. (Former Secretary, Department of Education)
32. Philip Ella Juico (Former Secretary, Department of Agrarian Reform)
33. Antonio La Viña (Former Undersecretary, Department of Environment and Natural
Resources)
34. Bienvenido Laguesma (Former Secretary, Department of Labor and Employment)
35. Lina Laigo (Former Secretary, Department of Social Welfare and Development)
36. Ernest Leung (Former Secretary, Department of Finance)
37. Josefina Lichauco (Former Secretary, Department of Transportation and
Communications)
38. Narzalina Lim (Former Secretary, Department of Tourism)
39. Juan Miguel Luz (Former Undersecretary, Department of Education)
40. Felipe Medalla (Former Secretary-General, National Economic Development Authority)
41. Jose Molano Jr. (Former Executive Director, Commission on Filipinos Overseas)
42. Vitaliano Nañagas (Former Chair, Development Bank of the Philippines)
43. Imelda Nicolas (Former Lead Convenor, National Anti-Poverty Commission)
44. Roberto de Ocampo (Former Secretary, Department of Finance)
45. Oscar Orbos (Former Executive Secretary)
46. Ernesto Ordoñez (Former Secretary, Presidential Flagship Programs and Projects)
47. Victor Ordoñez (Former Undersecretary, Department of Education)
48. Cayetano Paderanga (Former Secretary-General, National Economic Development
Authority)
49. Jose Pardo (Former Secretary, Department of Trade and Industry)
50. Vicente Paterno (Former Minister, Ministry of Trade and Industry)
51. Felicito Payumo (Former Chairman, Subic Bay Metropolitan Authority)
52. Pete Prado (Former Secretary, Department of Transportation and Communication)
53. Cesar Purisima (Former Secretary, Department of Finance)
54. Victor Ramos (Former Secretary, Department of Environment and Natural Resources)
55. Amina Rasul (Former Chair, National Youth Commission)
56. Alberto Romualdez Jr. (Former Secretary, Department of Health)
57. Albert del Rosario (Former Ambassador to the United States of America)
58. Francisco del Rosario (Former Chair, Development Bank of the Philippines)
59. Ramon del Rosario (Former Secretary, Department of Finance)
60. Melito Salazar (Former Member of the Monetary Board, Bangko Sentral ng Pilipinas)
61. Leticia Ramos-Shahani (Former Undersecretary, Department of Foreign Affairs)
62. Cesar Sarino (Former Secretary, Department of Interior and Local Government)
63. Juan Santos (Former Secretary, Department of Trade and Industry)
64. Corazon Juliano-Soliman (Former Secretary, Department of Social Welfare and
Development)
65. Hector Soliman (Former Undersecretary, Department of Agrarian Reform)
66. Mario Taguiwalo (Former Undersecretary, Department of Health)
67. Jaime Galvez Tan (Former Secretary, Department of Health)
68. Wigberto Tañada (Former Commissioner, Bureau of Customs)
69. Rene Villa (Former Secretary, Department of Agrarian Reform)
70. Veronica Villavicencio (Former Lead Convenor, National Anti-Poverty Commission)
71. Deogracias Vistan (Former President, Land Bank of the Philippines)

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‘Halika tawagan natin si FG’

(A Transcript of Rodolfo "Jun Lozada's" exposé on the ZTE Broadband Controversy.)

I’d like to start by thanking a lot of people who expressed their sincere sympathy for the family. I’d like to thank them first, so many of them. And in Tagalog, nagpapasalamat po ako sa lahat ng nagpahayag ng pag-aalala sa akin at sa sampu ng aking pamilya.


Ako po’y nagtawag sa pagpupulong na ito upang mabigayan ng liwanag. Madami kasing mga katanungan ang bayan ukol sa proyekto ng NBN-ZTE na ito.

At upang huwag na sanang mapilitan pa yung iba, marami nang mabubuting taong napilitan pang magsinungaling dahil sa akin. Hindi naman sila kasama rito, napipilitan pa silang magsinungaling. Ayokong maging dahilan na magkasala sa Diyos at sa bayan kahit sinoman. Ayoko ho iyon.

Mabigat po sa aking damdamin ito at isipan, ang aking gagawin. Ngunit kailangan kong gawin ito para sa kaunawaan, para maliwanag na ang isipan ng bayang ito na lubhang makaka-apekto doon sa kinabukasan nila.

Ang aking ilalahad na mga salaysay ngayon tungkol sa ZTE-NBN ay yung mga bagay na ako’y may personal na ginampanan, the things that I’m involved with. And I’m going to say this with malice to no one.

Wala ho akong malisya kahit kanino man. Ang sasabihin ko ay kung ano lang ginawa namin, at kung ano ang nangyari.

Introduced to Abalos

To my recollection of events, I’ll start off the first time I was introduced to this project by Secretary Neri, monitored action to Chairman Ben Abalos. I guess if it was not late September, early October I was introduced by Secretary Neri to Chairman Ben Abalos in Wack-Wack together with his entourage sina Ruben Reyes…and the ZTE president Yu Yong and Fan Yang. We had lunch in Wack-Wack wherein we talked about the NBN-ZTE.

I remember that the Secretary told Chairman Abalos to course his project proposal to the proper channel. NEDA received the first copy sometime in October…prepared by…All questions were referred back to Asec Formoso.

When the Secretary gave me a copy for me to review, the first three that really caught my attention, when I was reviewing the financial cost, the financial projection were based on… September 20, 2006 issue wherein they were quoting how much government was spending for telecom expenses…

…So, I told the Abalos group, through their guy Leo San Miguel, that they should revise their proposal. They should fix it and try to avoid the education part of it, because there’s already a cyber-education project.

Abalos wanted $130 million

Sometime in November, that was the time that I also met Joey de Venecia, to see the presentation on a similar project but on a BOT basis. And at that time, the Secretary asked me if the project was appropriate for NBN.

Until we presented the project proposal for the NBN. And the Secretary asked If I think it was appropriate and I said yes, so he encouraged Joey to push through the project development further.

And when the Secretary asked me if there was a synergy between the two projects I said, yes. But both of them were pitching for the same project. The Secretary told me to reconcile the two proponents. And at that point, it was really a good project.

At that point, when the Secretary told me to reconcile the two proponents, I immediately went to work and proposed one tool for the two proponents wherein both of them can achieve both of their objectives. Joey’s objective was to do a BOT with government, which was completely above board, and then Chairman Abalos’s objective was to do a loan, a project on a loan basis.

So the project structure that I proposed was that Joey becomes the lead contracting party to the government, it’s on a BOT basis anyway. And that Abalos, to achieve his objective of supplying, becomes supplier to Joey’s project.

I thought at that point it was already a win-win situation for everyone involved. The government gets its NBN project, Joey gets his BOT project, and then Abalos gets his supply comes up.

So, at one point I got them already to do their own thing. It’s finished. But I guess the trouble started when Chairman Abalos wanted to protect his $130-million… how shall I put this…commission on the project. So dapat daw proteksyonan ‘yong $130 million, (before) we agree that Joey become the main proponent.

'Bubukol po ito'

At that point, I just felt that…it might be a little too big, in the vernacular sabi ko bubukol po ito, sabi ko siguro kalahati pupuwede. But nonetheless I relayed the information to Joey, because it’s going to be Joey’s project anyway.

And Joey’s reaction was really like ballistic, parang he was worried, saan n’ya kukunin itong $130 million na ‘to, because the project cost is $262 million, and Abalos wanted $130 million na komisyon. So sabi ko sa kanila, hindi ko problema ‘yan, that’s your problem.

So at that point, I don’t know if the listener can realize how much money all of these are na pinag-uusapan…$130 million…At that point, I was telling them na problema n’yo na ito basta you make sure you’ll get this thing together because we don’t want another Atong Ang or Chavit Singson scandal to rock this country. I also made it very clear...na basta maayos lang.

ZTE's advances to Abalos

Sometime in December, the ZTE rep, si Yu Yong at saka si Fan Yang, who get quite close to me, along the progress of the work, were already getting frantic and talking to me about developments in the project, because they’d already gave enough advances daw to Chairman Abalos. So, sabi ko sa kanila, the project is moving along, they should not be alarmed.

So, it was also at this point because of Joey’s hesitance to agree on the $130-million commission, that Chairman Abalos started considering doing the project on his own, deretso na siya.

Ang sabi ko ho sa kanya na hindi ho puwedeng de-deretcho kayo, kasi ang kabilin-bilinan ni Secretray Neri, na yun din ata ang utos ng Presidente, na this project can only be done through a BOT basis, hindi puwedeng utang.

'Tawagan natin si FG'

So I was standing firm on that, na hindi talaga pupuwede. At that point, that was the time that Chairman Abalos said, halika, tawagan natin si FG. So, sabi niya, nung tinawagan niya, pare nandito yung taga NEDA sa tabi ko, hindi raw puwedeng i-utang yung project ko.

I cannot hear the voice from the other end, pero sabi n’ya, kung ganyan kayong kausap, and the Chairman continues, kung ganyan kayong kausap, ang hirap n’yo palang kausap, kalimutan n’yo na lang ang usapan natin.

I don’t know what that meant. But the following day, totoo nga, a letter from the Chinese ambassador came addressed to the government, and… with Mike, stating that this is already December.

'Moderate their greed'

You can check this with the records. I’m just doing this through my own recollection. But if you can check sometime December, a letter addressed to Mike yata, came in from the Chinese ambassador saying that there is now money available for a loan, for the NBN project, independent of the cyber-education project.

Kasi yung cyber-education yun ang napag-agree-han na ilo-loan na. Ngayon there’s another loan na naman na puwede na rin yung NBN i-loan, it was sometime early December.

So, I told the Secretary about it, Secretary Neri. And his instruction to me was very clear, sabi n'ya, Jun, you moderate their greed. I was naive to accept that order. I do not know what moderating greed means, but I followed Secretary Neri.

'Pare, okay na kami sa NEDA'

And due to the insistence naman nitong mga taga ZTE that the project gets going, Chairman Abalos invited us sometime on the third week of December, I’m pretty sure of the timing, over dinner in Makati Shang-rila. He asked to invite Joey as well, kasi si FG will be there with us.

Actually the First Gentlemen did not say much, except that Chairman Abalos told him na pare okay na kami nina Joey, ok na kami sa NEDA. (and the FG answered) Ah, ganon, mabuti naman, okay na , okay na.

So, I’m just narrating to you with no malice intended. Whatever that means, kayo na po ang bahalang umano.

And on their trip to China, I did not join them anymore, and I guess Joey can speak omn what happened in China.

Like the North Rail

Sometime in early January naman, Secretray Neri again invited us for lunch with Abalos in Edsa, in Makati-Shangrila in a Chinese restaurant together with Yu Yong and Fan Yang, the ZTE, and the Chinese commercial councilor. At that point, the Chairman again was making the impression that the project is already a go. May be there was parallel trust…because…(but) it was not yet a go.

So there was some negative reaction from the ZTE person, and the Secretary noticed some awkward moments there, and then he immediately ask a leave, and said that he had to go, and asked me to stay behind.

Chairman Abalos and the ZTE guy were in curious exchange of words, because the ZTE people were like demanding from Chairman Abalos that he promised that the ZTE deal will be done on a loan project under the North Rail. I don’t know why they speak about the North Rail. I don’t know why they speak about the North Rail. They keep on mentioning ala North Rail terms loan agreement.

'Alam mo bang…?'

So, that was last meeting I had with the Chairman. And on January 18, I remember the date very well. This is the only date that I can remember because this was the date I said bye to the project.

I was then in Dumaguete in Negros, together with Henry Teves, when Chairman Abalos called me up, to some like early evening, and asked me questions like, “Alam ba ni Neri yung ginagawa mo, (I said) Opo. Alam ba ni Neri yung ginawa mo. Opo. Alam mo bang malapit ako sa military. Opo. Alam mong malapit ako sa intelligence. Opo. Alam mo namang malapit ako…

And then he started cursing. Mura siya nang mura in Tagalog, lahat-lahat. At ang sabi niya, nandito sa akin yung CD lahat ng phone conversations ninyo nina Joey, mga hayop kayo, tina-traydor n’yo ko.

I don’t know what gave him that impression..but the fact, that they said I know the week 17 in ISAPF can do that, which Chairman Abalos and Ruben Reyes are …close to, I was not surprised.

So, I just took with a grain, and then Chairman Abalos ended up…his words with, “Huwag kang magpapakita sa aking hayop ka sa Wack –Wack o sa Mandaluyong at ipapapatay kita."

That’s when all my troubles started. So, I quit the project. I told the Secretary that I don;lt think this project is worth risking my life for. All I did was trying to help the Secretary understand it.

So on February 2007, the executive order was issued. So this is now my personal participation ended and where it ended for the project concept.

From $262M to $329M

In February 2007, an EO was issued by the Office of the President, transferring the telos, the implementing agency to DOTC. And on April, the project… the NBN was approved…at $329 million.

When I quit the project, the project cost was $262 million. So it was approved. I don’t know what happened then. I’m not imputing anything now. But when it was approved, it was already approved at $329 million. And the day after it was approved, the President together with PagCor officials, went to China to witness the signing of the agreement.

This project for me is one transactional example of a dysfunctional government procurement, a systemic dysfunction on how we procure projects. There are other more that have escaped scrutiny, but ganun din ang sistema. And I have agonized over this decision...

Ang dasal ko lang sana maintindihan n’yo yung dusang dinananas ng pamilya ko ngayon. Ang dasal ko lang sana matutunan na natin after nito na ang salitang Pilpino ay hindi lang tumutkoy sa isang pamilya. Ang salitang Pilipino ay tumutukoy sa isang bansa, ang bansang Pilipino. And sometimes, it’s worth taking a risk for this country.

source: http://www.gmanews.tv/story/79634/Transcript-of-Lozadas-expos%E9-Halika-tawagan-natin-si-FG

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