ZTE officials advanced US$41M to GMA, cronies, says new witness

ABS CBN News Online 2/26/08
By Carmela Fonbuena

A new witness testified before the Senate February 26 that President Arroyo and her agents received US$41 million in advance from officials of the National Broadband Network (NBN) supplier, Chinese telecommunications company ZTE Corp.

Dante Madriaga, an electrical engineer, claimed that he was the local consultant and liaison officer of ZTE from May 2006 to March 2007, which was the period when the deal was approved by the National Economic and Development Authority (NEDA).

He said he was involved in the preparation and design of the broadband deal with supplier company, ZTE Corp.. He sat down in several meetings between Arroyo's agent, former Commission on Elections Chairman Benjamin Abalos' group, and the ZTE officials.

He said he knew "from the very beginning" that the First Couple was involved in the broadband deal and that they were "protected."

Fan Yan, a ZTE official, allegedly informed him of the $41 million advances, Madriaga said. Fan supposedly got worried about the delayed approval of the deal.

Based on Madriaga's account, the total amount was advanced in three separated occasions from August 2006 to April 2007. Most of the money, $30 million, was advanced in April 2007 "to help admin[istration] candidates for the [2007] elections."

The amount, the biggest among the three advances, was supposedly given on condition that President Arroyo agrees to attend the signing of the deal, which happened April 21, 2007.

"We will not give out anymore money if we do not see the President in the signing," Yan supposedly told him.

"That is the only reason why [President Arroyo] went to Baoa, China," Madriaga said.

The other advances--$1 million for representation allowance, plus $10 million "success fee"--were made in August 2006 and March 2007 respectively, after the deal was approved.

The First Couple allegedly got $5 million out of this "success fee," Madriaga said.

He also said that the original cost of the broadband deal project was only $50 million. But since each group of brokers, one Filipino and the ZTE group, had a kickback of $40 million each, it bloated the deal's cost to $130 million first, and then, later to $239 million.

All Over: Ruben Reyes

Aside from Abalos and the First Couple, Madriaga also dragged the name of Ruben Reyes—who received the advances from ZTE—of being involved in the controversial broadband deal.

Madriaga said it was Reyes who supposedly recruited two other players with major roles in the broadband deal—Gen. Quirino De La Torre and Leo San Miguel.

Madriaga was employed by San Miguel, whom he described as his compadre. Abalos, Reyes, De La Torre and San Miguel were referred to by Madriaga as the "behind-the-scenes influence peddlers."

Reyes, who is described by Madriaga as Abalos' golfing buddy, may be a more influential person that he thinks.

Based on Newsbreak's investigation in 2005, Reyes is a wealthy businessman known in the military circles as a patron and power broker, a go-to guy for officers who need connections to Malacanang for their promotions.

Reyes is also said to be a good friend of the President's younger brother, Diosdado Macapagal Jr., an adopted member of PMA class 1972.

Newsbreak's investigation in 2005 discovered that Reyes appeared to have initiated the wire-tapping of former Comelec Commissioner Virgilio Garcillano during the elections.

(Read Newsbreak's "In The Shadows: The story behind the wiretapped conversations of Virgilio Garcillano and President Arroyo" and other stories.)

Uninvited Witness

Although Madriaga was rumored to be the new witness on the broadband deal investigation, Senator Alan Cayetano earlier denied that he would testify in the Senate today.

But Madriaga appeared in the Senate hearing today. It turned out he approached Senator Panfilo Lacson, who earlier warned that Madriaga may not be a credible witness because he was charging P5 million to P10 million for his testimony.

Madriaga said he came forward because he wanted "to clear my name."

He denied soliciting money in exchange for his testimony. It was a certain Archie Antonio who supposedly brokered for Madriaga to testify in the Senate.

Lacson, who said that he only learned belatedly that Madriaga could attend today's hearing, backed Madriaga's credibility.

"I can vouch for his credibility as a witness," he said.

Madriaga was also involved in several government projects like Telepono ng Barangay. "

"I have been packaging projects for more than 10 years," he said.

Intruder: Joey De Venecia

Madriaga's testimony was more explosive than the account that he supposedly wrote and circulated early in February.

In that account, businessman Ricky Razon, former Chief-of-Staff Mike Defensor were also linked to the NBN deal.

In the letter, Madriaga verified a meeting in Makati Shangri-La that Rodolfo Noel "Jun" Lozada spoke about in an earlier Senate hearing.

The meeting, according to Madriaga, was attended by the four Filipino "influence peddlers" and ZTE officials Stephen Lai, Yu Yong, and Fan Yan. Of the four, Lozada only named Abalos and Reyes.

There was supposedly another meeting two days later, where they were joined by Defensor.

Based on Madriaga's account, Abalos' group and ZTE had long been planning the broadband project. But in October 2006, Jose "Joey" De Venecia III suddenly made a bid for the project.

Madriaga had the impression that Joey was backed by his father, then Speaker Jose De Venecia. He also felt that NEDA director-general Romulo Neri was not keen on approving the deal with ZTE.

The ZTE officials supposedly got "furious" that Abalos and his group were not able to "take care of the situation."

The group eventually decided to bribe Neri with $4million or P200 million, the amount that Neri said Abalos offered him.

This was when the First Gentleman told Joey De Venecia to back off, Madriaga said.

It was also the time, on March 8, that businessman Ricky Razon entered the picture. He convinced President Arroyo to approve the deal with ZTE. The budget eventually ballooned to $329 million.

Upon learning that the deal with ZTE was approved, Joey was supposedly "furious" and threatened to expose the dealings, which he did in September 2007.