(Associated Press via NewsEdge) China's leading telecommunications company warned that a brewing corruption scandal linking it to an allegedly overpriced deal and kickbacks in the Philippines could affect economic cooperation between the two countries.
ZTE issued a statement denying allegations by witnesses testifying in a Philippine Senate anti-corruption hearing that a former elections chief and President Gloria Macapagal Arroyo's husband were promised huge commissions to clear a national broadband contract with the Chinese company.
Both men have denied the accusations, and the deal was scrapped last year. But the scandal and nationally televised hearings have continued, threatening Arroyo's administration with fresh opposition protests and coup rumors.
ZTE spokesman Howard Xue said the company 'cannot allow itself to be dragged into any political circus' and ruled out an appearance at the Senate hearing.
'ZTE has neither done anything wrong, nor has it bribed anyone to get this project,' he said.
Arroyo said she took the issue 'very seriously' and canceled the project 'as soon as I could, after proper consultation with the government of China.'
Last year, a Filipino businessman who lost to ZTE the bid for the project to link online all government offices told senators the $330 million ZTE proposal was overpriced by $130 million to accommodate kickbacks demanded by ex-elections commissioner Benjamin Abalos and the president's husband, Jose Miguel 'Mike' Arroyo.
Former Socioeconomic Planning Secretary Romulo Neri testified that Abalos offered him a bribe to approve the ZTE proposal, which he refused. Neri stopped short of linking Arroyo or her husband to the scandal.
Last week, Neri's former consultant, Rodolfo Lozada Jr., surfaced in the Senate after claiming he was held for two days by government agents to prevent him from speaking.
He said he discussed the deal with ZTE officials but failed to 'moderate the greed' of brokers like Abalos, who last year quit as the elections chief. He also claimed Abalos threatened to kill him if he did not secure a kickback for him.
ZTE denied any connection with Lozada. It said the 'political noise' was saddening because ZTE has a clean and proven record of 20 years in international telecommunications.
© 2008 The Associated Press
© 2008 Dialog, a Thomson business. All rights reserved