Inquiry

Arroyo Orders Inquiry Into Philippine Kickbacks Row

Philippine President Gloria Macapagal Arroyo ordered an inquiry on Thursday into allegations of government kickbacks in a deal with China's ZTE Corp, in which her husband's name has figured.

The move comes a day before the Senate resumes its own inquiry into the $330 million deal and hears testimony from a senior government official who disappeared for over 24 hours after arriving on a flight from Hong Kong.

"The president has directed the Department of Justice to conduct preliminary investigation against those who may be liable for violation of procurement laws as well as anti-graft laws in connection with the ZTE project," Arroyo's chief spokesman Ignacio Bunye said in a statement.

Arroyo has survived three attempts to impeach her in the past three years on charges of cheating in elections and corruption. On Tuesday, her supporters in the House of Representatives unseated Speaker Joe de Venecia, apparently to punish him for his son appearing as a witness in the Senate inquiry on the ZTE deal.

Arroyo cancelled the deal, in which ZTE was to provide a broadband network linking Philippine government offices, in October, when reports of kickbacks surfaced.

The case was sent to the Ombudsman, but there have been no reports on whether investigations were launched.

Philippine officials said on Thursday that the witness summoned by the Senate, Philippine Forest Corp chief Rodolfo Lozada, was not abducted but was taken by police for his own safety.

"There was no kidnapping. There was no abduction," Lito Atienza, the Philippines' environment secretary, said at a hastily arranged news conference in the presidential palace.

"What I did was call General Razon (national police chief) and I told him Lozada needs security upon his return."

Police admitted they had picked him up at the airport, although his family alleged that he had been abducted and petitioned the Supreme Court for his release.

Newspapers splashed details of the incident and accused the government of trying to block his testimony.

HAGGARD

Lozada, haggard and in tears, dramatically resurfaced in the early hours of Thursday morning at a news conference held at a Catholic high school in Manila, but was not clear where he had been since he was taken by police at the airport and how he was freed.

He backed up allegations, previously aired by other witnesses in the Senate inquiry, implicating the former election commission chief, Benjamin Abalos, in a multi-million dollar kickbacks scandal.

The name of Mike Arroyo, the president's husband and a golfing buddy of Abalos, has also cropped up in the inquiry.

Mike Arroyo and Abalos have denied any wrongdoing but Abalos was forced to resign as head of the election commission.

Lozada, surrounded by nuns and priests in his 2:30 a.m. (1830 GMT) press conference, said the police who picked him up from the airport drove him to a province south of Manila.

"I guess there was some miscommunication because I did not know I was to be taken," he said. "I was not prepared for that."

Lozada, who was hired to assess the technical aspects of the ZTE deal, said he was resigning as head of the Philippine Forest Corp. He said he had received death threats after being called by the Senate to testify.

Senators said they would let Lozada rest and resume their public hearings into the kickbacks scandal on Friday when he was ready to testify. The public hearings had ended in October after the deal was cancelled.

"It was clear he was abducted. So our investigation is now two-fold. One will focus on the deal, the other on his abduction," said Senator Alan Peter Cayetano, chairman of the upper house's anti-graft committee.

(Published by Times Online, February 7, 2008)