RPT-Arroyo moves to contain Philippine telecoms scandal
19 Sep 2007 09:05:52 GMT Source: Reuters
(Repeats to additional subscribers) By Raju Gopalakrishnan MANILA, Sept 19 (Reuters) - Philippine President Gloria Macapagal Arroyo fought on Wednesday to contain the fallout from a kickbacks scandal, allowing three cabinet members to testify at a senate inquiry into a telecoms deal with a Chinese firm. Allegations at the inquiry that the contract was over-priced by at least $130 million and that Arroyo's husband and the country's top elections official were involved were carried live on radio and television on Tuesday. Arroyo had previously prevented members of the cabinet from testifying at the opposition-controlled senate. "The president would like to tell everybody that there's really nothing wrong and the administration is willing to reveal all that it knows about the contract," Executive Secretary Eduardo Ermita told reporters, explaining the change of heart. Communications Secretary Leandro Mendoza, Trade Secretary Peter Favila and former Economic Planning Secretary Romulo Neri, who is still in the cabinet, will appear at the inquiry on Thursday, he said. Analysts said the scandal could widen unless Arroyo did some quick damage control. She has survived two attempts in the House of Representatives to impeach her, but this time the attack appears to be from within her administration rather than the opposition, they said. The contract with China's ZTE Corp <0763.HK> to supply a broadband network linking Philippine government agencies was signed in April, shortly before congressional elections. On Tuesday, local businessman Jose de Venecia III, head of a firm that lost out on the contract, told the senate that he was offered $10 million to withdraw from the deal by Benjamin Abalos, the head of the Commission on Elections. He said the deal was over-priced by at least $130 million to facilitate kickbacks to government officials. At another meeting, de Venecia said Arroyo's husband, Mike, told him to "back off". De Venecia is the son of Joe de Venecia, the speaker of the House of Representatives, and an ally of Arroyo. SPLIT "The source of this controversy comes from a faction of the administration," said Mario Taguiwalo, president of the National Institute for Policy Studies. "If this continues or intensifies, it talks about a division within the administration that will make the remaining years of the president quite difficult." Both attempts to impeach Arroyo failed because of her overwhelming majority in the House of Representatives, but that could change if there is a split in the administration, analysts said. "She can be impeached if she mishandles Speaker de Venecia," said political commentator and columnist Nelson Navarro. "Obviously the son is not doing this without any relationship to the father's political moves." What would help Arroyo would be the lack of alternatives to her and the apathy of the middle class, which has been in the vanguard of the two previous people power movements, said L. Scott Harrison, managing director of risk analysts Pacific Strategies and Assessments Ltd. "If there was a knight in shining armour that could come on the scene and replace her, then the public might be more amenable to a people power solution or an impeachment proceeding but they recognise that if they get rid of her, who are they going to get?" he said.
