LAGUNA STATE POLYTECHNIC UNIVERSITY

San Pablo City Campus

Del Remedio, San Pablo City
College of Engineering

NBN-ZTE Deal Corruption Scandal

Case Study

Group Members Signature

Alvarez, Jhonriel Harvey
Boaloy, Bryan
Dan, Sanny
Ignacio, Daniel
Pacoma, Andrea Aiah
Villareal, Bianca Marie V.

December 2018
 NBN–ZTE DEAL CORRUPTION SCANDAL

1. Parties

Claimant: Teofisto Guingona, Jr., Fr. Jose Dizon, Fr. Jose Dizon, Ana Theresia
Hontiveros-Baraquel,

Defendant: Benjamin Abalos

2. Court

Supreme Court

3. Date of Hearing

July 14, 2008

4. Legal Councils

Alan Peter Cayetano, Rodolfo Biazon, Mar Roxas

5. Burden of Proof

Jose "Joey" de Venecia III, son of House Speaker Jose de Venecia, Jr.,
testified on September 10 that he was with Abalos in China and that he heard
Abalos "demand money" from ZTE officials. The younger de Venecia was
president of Amsterdam Holdings, the company that lost its bid to ZTE for the NBN
project.
On September 11, the Supreme Court of the Philippines promulgated a
temporary restraining order (TRO) on the $329-million national broadband
network (NBN) contract between the Philippine government and China's ZTE
based on separate certiorari suits filed by Iloilo Vice-Governor and former
Representative Rolex Suplico and Joey de Venecia III. Under political pressure
from the opposition group, the court gave ZTE fifteen days to comment on the
injunction. Suplico, a former opposition congressman, alleged that the
agreement was sealed without public bidding and violated the Telecoms Policy
Act, which required privatization of all telecommunications facilities.
Congressman Padilla sued DOTC and ZTE officials of violating the Anti-Graft and
Corrupt Practices Act, the Telecommunications Policy Act, the Build-Operate-
Transfer (BOT) Act and the Government Procurement Act at the Office of the
Ombudsman. AHI also petitioned the Court to direct the DOTC to provide copies
of the contract, since it should have won the same. The younger de Venecia
testified on September 18 that Mike Arroyo, President Gloria Macapagal-Arroyo's
husband, personally told him to "back off" from pursuing the NBN project.
On the September 20 Senate hearing, Cabinet officials attended the
hearing except for former National Economic and Development Authority (NEDA)
Chairman (now Commission on Higher Education Chairman) Romulo Neri, who
was sick. On September 22, 2007, president Arroyo suspended the broadband
contract with ZTE after the bribery scandal sparked major problems in her
government.
Neri and Abalos finally faced each other on the September 26 Senate
hearing; Neri testified that Abalos told him "Sec, may 200 ka dito (You have 200M
pesos in this deal)" while playing golf at Wack Wack Golf Club; they had been
discussing the ZTE deal at that time. Abalos denied making the apparent bribe
attempt. Neri later invoked executive privilege in response to some Senators'
questions. He later shunned succeeding Senate hearings still citing executive
privilege.
On September 27, 2007, ZTE petitioned the Supreme Court to lift the TRO
alleging, in its urgent omnibus motion, inter alia, that the injunction cost the
company millions.
Abalos announced his resignation as COMELEC chairman on October 1;
Resurreccion Borra succeeded him as COMELEC chairman. President Arroyo on
her October 2 trip to China, said to Chinese President Hu Jintao her "difficult
decision" to cancel ZTE Corp's contract for the NBN project.
The NBN-ZTE deal was one of the biggest corruption scandals to hit the
administration of former President Gloria Macapagal-Arroyo. Whistleblowers Jun
Lozada and businessman Joey de Venecia linked Mrs Arroyo’s husband Mike to
the deal.

6. Verdict

President Arroyo decided to cancel the National Broadband Network

project on October 2, 2007 in a meeting with Chinese President Hu Jintao. On July
14, 2008, the Supreme Court dismissed all three petitions questioning the
constitutionality of the national broadband deal, saying the petitions became
moot when President Arroyo decided to cancel the project.
7. Appeal

Appeal was not made.

8. Punishment

The case was cancelled and dismissed.