CANCELLATION ZTE CONTRACT RAISES QUESTIONS
By
Senator Aquilino Pimentel
Privilege Statement of Sen. Nene Pimentel at the Senate
October 3, 2007
The President has reportedly cancelled the ZTE contract.
Several implications may be deduced from the act of cancellation.
One, the president may have finally realized that the deal is shot through with corruption that it cannot be justified even if St. Peter would suddenly materialize to push for it on the floor of the Senate at this very moment;
Two, the president may have wanted to deflect the continuing public dissatisfaction at her overall incompetent handling of the presidential office;
Three, the president may have wanted to put a closure to the investigation that the Senate is now conducting to prevent the miasma of the mess from engulfing other high government officials aside from Comelec Chair Benjamin Abalos.
Conceivably, there may be other reasons why the president scuttled the ZTE contract. But for the moment, let me just put on record a rather interesting piece on corruption in the country.
Corruption index
In this connection, I’d like to cite Transparency International's latest take on corruption. According to William Pesek of Bloomberg News, “It's sober reading and speaks volumes about why many Filipinos, and Asians in general, aren't benefiting much from the region's boom.”
While I fault Transparency International for its cock-eyed view of corruption in third world countries – it does not, for instance, identify the corrupters of the corrupt officials of third world countries – this latest analysis of Pesek bears noticing.
The Philippines, he says, is a case in point.
In 2005, the country was 117th in the corruption perception index of Transparency International. If you think that’s a good place to be in, think again because the index is ranked according to the most clean country going down to the most corrupt.
In 2006, the country inched lower to 121st.
Today, 2007, the country is now 131st in the corruption perception index.
That slot, according to Pesek, puts us in the same league as Burundi, Honduras and Yemen. And just in case, you missed the point, that is not a complimentary spot to be in as far as the corruption index is concerned.
Pesek also says that:
President Gloria Arroyo would no doubt dispute these findings. Her message these days is of revival and fiscal sobriety. With the economy growing 7.5 percent and the budget in surplus for a third consecutive month in August, Arroyo argues that things are looking up in her nation of 91 million people.
Spin
De Venecia's case helps explain why such optimism is more spin than reality.
In provocative Senate hearings in Manila last week, De Venecia explained how the president's husband, Jose Miguel Arroyo, told him to "back off" in favor of a rival working with ZTE, the biggest publicly traded telephone-equipment maker in China.
A former official, Romulo Neri, says he was offered a 200 million peso, or $4.4 million, bribe by Benjamin Abalos, the chairman of the Commission on Elections, when they discussed the deal. That allegation, denied by Abalos, thickened the plot because President Arroyo is still under suspicion for allegedly conspiring with commission officials to rig the 2004 election.
The ZTE scandal is dominating the Philippines, lowering Arroyo's already dismal approval ratings and sparking coup rumors. All this is a bit too familiar; Arroyo herself became president after Joseph Estrada was ousted in 2001 amid popular demonstrations backed by the military.
Scandals galore
President Arroyo's economic-revival story isn't getting across partly because scandals are drowning her out. Yet the bigger reason is a justified sense of skepticism that even if the economy is improving, most Filipinos will not enjoy it.
Corruption is a key reason why, and a lack of progress in combating it remains a major blight on Asia's restructuring efforts following the 1997 crisis.
Cambodia, China, India, Indonesia, Laos, Macao, Myanmar, South Korea, Sri Lanka, Thailand and Vietnam also lost ground in 2007, according to Transparency International. The strong correlation between corruption and poverty means the benefits of growth are concentrated among the politically connected and bypass many who most need it.
Success elsewhere
There were pockets of success that shouldn't go unnoticed by investors. Pakistan rose to 138th place in 2007 versus 142nd in 2006 and 144th in 2005. A slight improvement was seen in Hong Kong, Malaysia and Singapore, while Japan, Mongolia and Taiwan held steady over the last 12 months.
“Yet the broader trend in Asia is discouraging. The Philippines, for example, hasn't been able to bring the Marcos family to justice 21 years after Ferdinand Marcos was ousted from the presidency. Indonesia has had no more luck taking former President Suharto to task.”
“Lawyers for both dictators earlier this month rejected a United Nations report that they embezzled as much as $45 billion. Suharto allegedly stole as much as $35 billion, averaging 1.3 percent a year of Indonesia's gross domestic product during his 32-year reign. Marcos allegedly took as much as $10 billion over two decades, or an annual average of 4.5 percent of GDP.”
“Asia doesn't have a monopoly on shady dealings. Anyone making that argument can be quickly defused by the mention of names like Enron or Parmalat. Yet even with its high growth rates and buoyant stock markets, Asia is home to roughly two-thirds of the world's poor.”
Divide widening
“Making matters worse are signs that the region's rich-poor divide is widening. In a report last month, the Asian Development Bank concluded that the rich in Asia are growing wealthier much faster than the poor are climbing out of poverty.”
“The buzz in Asia is how well things are progressing 10 years after the financial crisis in the region. In 15 of 21 countries the ADB studied, income inequality has increased.”
"The rise in inequality we see in Asia today constitutes a clear and present danger to the sustained growth of Asian countries," said Ifzal Ali, the chief economist at the ADB.
“As history has shown in Asia, growing inequality could lead to social conflicts from street demonstrations to violence. The pro-democracy protesters mounting the biggest challenge to the military regime in Myanmar since 1988 are a case in point.”
“Inequality also matters because multinational companies are relying on the emerging middle class in Asia to buy their goods and services. If the phenomenon holds back Asian economies, the fallout will be felt by corporate executives a world away.”
“Disparity is the ugly underbelly of prosperity in Asia, and something to which governments and investors need to pay more attention.”
That is the end of Pesek’s analysis why our people are hungry, deprived of basic services that the government owes them and are therefore perennially upset over the state of things in the country.
Not enough
Gloria’s abrogation of the ZTE contract is good. But it is not enough.
In fact, it raises more questions than it answers.
There is no closure on questionable deals until the questions are answered and the truth is out.
For the moment, the Blue Ribbon Committee and the two other committees that the Senate has authorized to dig deeper into the issue of the ZTE contact must pursue their mandate.
Otherwise, we will be remiss in the discharge of our oversight functions as Senators.
Thank you.