1

CHAPTER 1

INTRODUCTION

With the essence of time, the Information and Communication

Technology era, different advancements throughout the world have been made.

There has been a growing demand for telecommunications and Internet

services. Everyone wants to experience unlimited capacity to cross borders in

just a few clicks.

Telecommunication infrastructure refers to the backbone of the

communication system upon which different broadcasting and telecom services

are operated. This industry touches many technology-related business sectors

as it encompasses not only the traditional areas of local and long-distance

telephone service, but also advanced technology-based services including

wireless communications, the Internet, fiber optics and satellites.

In the Philippines, the telecommunication industry has grown rapidly.

The infrastructure component of the industry plays a significant role in the

economic progress of the country. In dealing with different business

transactions either locally or internationally, it offers convenient and efficient

way. In few years, the industry has evolved from an inefficient public utility to a

sector with an improved competition, providing consumers lower cost of

communicating at home or abroad. Mobile phones have outnumbered landline

phones in the Philippines. The Philippines, called the text message capital of

the world, is the world leader in Short Messaging Service (SMS) with almost

one billion daily messages.

 2

ZTE Corporation is a leading integrated telecommunications equipment

manufacturer in the world market and a provider of global communication and

information solutions, with shares listed on the main board of the Shenzhen

Stock Exchange and the main board of the Hong Kong Stock Exchange.

The Group is dedicated to the design, development, production,

distribution and installation of a broad range of advanced ICT-related systems,

equipment and terminals, including carriers’ networks, government and

corporate business and consumer business.

The Group is one of the major telecommunications equipment suppliers

in China’s telecommunications market and has also succeeded in gaining

access to the international telecommunications market with respect to each of

its major product segments. The Group has achieved a leading market position

for its various telecommunications products in China with longstanding

business ties with China’s major telecommunications service providers, such

as China Mobile, China Telecom and China Unicom, and is recognized as a

“benchmark enterprise in smart city services.” With respect to the global

telecommunications market, the Group has provided innovative technology and

product solutions to telecommunications service providers and government and

corporate network clients in more than 160 countries and regions, making

contributions to facilitate communication services via multiple means,

including voice, data, multi-media, wireless broadband and cable broadband,

for users all over the world.

 3

On June 5, 2006, Memorandum of Understanding on the establishment

of Philippines-China Economic Partnership executed between the governments

of the Philippines and China. NEDA Secretary Romulo L. Neri and DTI

Secretary Peter B. Favila represent the Philippines and Commerce Minister Bo

Xilai represents the People's Republic of China. Transportation and

Communications Secretary Leandro Mendoza and ZTE Corporation Vice

President Yu Yong enter into a US$ 329.5 million contract on April 2007 for a

national broadband network (NBN) that will improve government

communications capabilities.

In August 2007, Nueva Vizcaya Representative Carlos Padilla discloses in

a privilege speech that COMELEC Chairman Benjamin Abalos met with ZTE

officials in China weeks before April 2007, apparently to broker for the NBN

project: "Apparently, Chairman Abalos' unofficial trips to China courtesy of ZTE

Corporation and his golf games with the officers of ZTE Corporation can hardly

be characterized as just friendly and totally inoffensive. Padilla notes that there

were two other private entities which signified their intention to build the NBN

for the government. The project cost in these private companies' proposals were

cheaper than ZTE's.

Sen. Aquilino Pimentel Jr. files resolution calling for a Senate

investigation into the circumstances leading to the approval of the broadband

contract with ZTE Corporation on September 5, 2007. In an affidavit, Jose De

Venecia III claims that he was with Abalos in China when the latter met with

ZTE officials. He claimed he heard Abalos demand for money from the ZTE
 4

officials. De Venecia III is a majority shareholder of Amsterdam Holdings, Inc.

AHI submitted an unsolicited proposal to DOTC on the NBN project.

On September 11, 2007, the Supreme Court en banc issues temporary

restraining order against the implementation of the controversial NBN contract

between the Philippines and Chinese firm Zhong Xing Telecommunications

(ZTE) Corporation. DOTC Leandro Mendoza attends the hearing, but former

NEDA Director General Romulo Neri fails to show up.

President Arroyo officially announces the suspension of the NBN and

CyberEd projects on September 25, 2007. Neri and Abalos face off at the

Senate hearing on September 26, 2007 wherein Neri testifies that Abalos told

him, "May 200 ka dito" while playing golf at Wack Wack Golf Club.

In a meeting in Shanghai, China, on October 2, 2007 President Arroyo

informs Chinese President Hu Jintao of her "difficult decision" to cancel ZTE

Corp.'s contract for the NBN project. On October 9, 2007, Akbayan files

criminal complaint against Abalos before the Office of the Ombudsman. Neri

and Philippine Forest Corporation President Rodolfo Noel Lozada fail to attend

the Senate hearing January 30, 2008. Lozada leaves the country, apparently

heading for London. Slighted by their non-appearance, the Senate issued

warrants for their arrest.

Lozada, in a press conference, recounts how, in his attempt to avoid

testifying at the Senate, ended up being taken from the airport against his will.

On February 8, 2008, Lozada testifies at the Senate. In August 2009, the Office

of the Ombudsman clears President Gloria Macapagal Arroyo and husband

 5

Jose Miguel Arroyo in the graft case related to the failed $329-million NBN deal

with China’s Zhong Xing Telecommunications (ZTE) Corporation, but

recommends the filing of charges against former Commission on Elections chief

Benjamin Abalos Sr. and former socio-economic planning secretary Romulo

Neri.
 6

CHAPTER 2

STATEMENT OF THE PROBLEM

According to Republic Act 9184, otherwise known as the Government

Procurement Reform Act, the procurement of goods, infrastructure projects,

and consulting services by the government should be competitive and

transparent, and therefore should undergo a process of competitive bidding.

The study presented divulges as to why the Philippine Government awarded a

construction contract to Zhong Xing Telecommunication Equipment Company,

Limited (ZTE) without undergoing competitive bidding that would benefit the

public in terms of costs and expenditures. It also presents how the contract

came to be overpriced and how corruption by specific government officials

affected the pricing of the contract and selection process.

The National Broadband Network (NBN) scandal involves allegations of

corruption in the awarding of US$ 329.5 million to a Chinese

telecommunications company called Zhong Xing Telecommunication

Equipment Company, Limited (ZTE). The deal was for the improvement of the

Philippine government communications capabilities by making it more efficient

and less expensive.

The sequence of events started on September 2006, when ZTE submitted

an unsolicited proposal to construct a National Broadband Network to the

Philippine Commission on Information and Communications Technology

(CICT). The proposal stipulates that the project will be funded by a

government-to-government loan and that upon completion; the project will be

 7

turned over to the Department of Transportation and Communications (DOTC)

for its operation and maintenance. The contract was signed on April 21, 2007

by Transportation and Communications Secretary Leandro Mendoza and ZTE

Vice President Yu Yong for US$ 329.5 million. It was witnessed by then

President Gloria Macapagal-Arroyo.

Allegations of corruption in the signing of the deal started to surface on

August 29, 2007. Nueva Vizcaya Representative Carlos Padilla filed a criminal

complaint against then DOTC secretary Leandro Mendoza and several others

who signed the deal with ZTE without public bidding. Padilla claimed that then

COMELEC Chairman Benjamin Abalos Sr. has had a hand in the completion of

the deal. Padilla also claimed that Abalos was seen playing golf with ZTE

officials and that he received a kickback for brokering the deal. Abalos denied

Padilla’s accusations the following day.

On September 5, 2007, Senator Aquilino Pimentel, Jr. filed a resolution

asking the Senate Blue-Ribbon to investigate the NBN-ZTE deal. The first

whistleblower of the NBN-ZTE scandal was Jose de Venecia III, the son of

House Speaker Jose de Venecia Jr. and the majority shareholder of Amsterdam

Holdings, Inc, a losing bidder in the NBN project. He claimed that he was with

former COMELEC Chairman Benjamin Abalos Sr. in China where Abalos

demanded money from ZTE officials and offered de Venecia US$ 10 million if de

Venecia backed out of the NBN project. A Temporary Restraining Order (TRO)

on the NBN-ZTE deal was issued by the Philippine Supreme Court on

September 11, 2007. Congressman Padilla sued DOTC and ZTE officials for
 8

violating the Anti-Graft and Corrupt Practices Act, Telecommunications Policy

Act, Build-Operate-Transfer Act, and the Government Procurement Act at the

Office of the Ombudsman.

The first Senate Blue-Ribbon Committee hearing on the NBN-ZTE deal

was held on September 18, 2007. During the hearing, Jose de Venecia III

testified that former First Gentleman Jose Miguel “Mike” Arroyo was involved in

pushing for the overpriced NBN project. He claimed that while he was in China,

including Abalos, Mike Arroyo taunted him to withdraw from the deal. The

project was overpriced by as much as US$ 130 million after Abalos asked for

several kickbacks. The NBN-ZTE deal was suspended on September 22, 2007.

Transportation Secretary Leandro Mendoza clears First Gentleman Mike Arroyo

and COMELEC Chairman Benjamin Abalos Sr. during the second hearing.

On the third Senate hearing, Romulo Neri, former socioeconomic

planning secretary and director general of the National Economic and

Development Authority (NEDA), testified that Abalos offered him US$ 5 million

to approve the ZTE contract. In a private executive session at the Senate, Neri

invokes executive privilege, therefore declining to answer further questions.

Abalos was also present in the same hearing and denied Neri’s accusations. On

September 27, 2007, Iloilo Vice Governor Rolex Suplico filed an impeachment

complaint against Abalos for culpable violation of the Constitution, betrayal of

public trust, graft and corruption, and bribery. Abalos resigned on October 1,

2007.
 9

Jose de Venecia III submitted a financial analysis by industry experts to

the Senate Blue-Ribbon Committee. The analysis showed that the contract was

overpriced by almost US$ 197 million. The project would have only cost the

government US$ 132 million if it was contracted with leading local

telecommunications companies (e.g. PLDT, Smart Communications, and Globe

Telecoms). However, the analysis was criticized by DOTC Assistant Secretary

Lorenzo Formoso III, claiming that it was partial since it was presented by de

Venecia who was part of the company who lost in the bidding.

Information Technology (IT) expert and Philippine Forest Corporation

President Rodolfo Noel “Jun” Lozada Jr. allegedly knows how the ZTE contract

was overpriced, and was invited to testify in the Senate, but flew to Hongkong

hours before the hearing. The Senate ordered his and Romulo Neri’s arrest.

Jun Lozada arrived at the Ninoy Aquino International Airport on February 5,

2008. He was taken into police custody by the Manila International Airport

Authority and by the members of the Police Security and Protection Office

(PSPO)

Jun Lozada Jr. appeared before the Senate Blue-Ribbon Committee on

February 8, 2008 where he detailed his departure for Hong Kong and his

disappearance upon his return. He explained that he was initially consulted by

Romulo Neri to assess the NBN-ZTE deal and was asked to moderate the

kickbacks for President Arroyo’s allies. Upon his return, men whom were

unknown to him approached him and hauled him into a vehicle. He was taken

to different locations, until he met with a lawyer named Antonio Bautista and
 10

police officer Paul Mascarinñas. He was told to sign an antedated affidavit by

the two fellows. Lozada also claimed that former presidential chief of staff Mike

Defensor told him to hold a press conference to deny that he was kidnapped

and to state that he was not involved in the issue. On February 11, 2008

during a senate hearing, Lozada stressed that he was taken against his will

upon his return from Hong Kong, while NAIA, PNP, and PSPO officials deny his

claims. On the same hearing, Lozada returned an envelope containing P50, 000

to former presidential chief of staff Mike Defensor. Defensor denied that he

offered money to Lozada to deny that he was abducted; however, he admitted

that he did advised Lozada hold a press conference to say that he was not

abducted.

Senate President Manuel Villar and Senator Allan Peter Cayetano went to

NAIA to trace Lozada and his escort’s way out of the airport. Security records

showed members of the Presidential Security Group in restricted areas of the

airport, the members were also in the vehicle that transported Lozada from the

airport. This investigation seemed to confirm that there was indeed an

abduction.

On February 18, 2008, the Office of the Ombudsman and the

Department of Justice started their separate probes of the NBN-ZTE deal. On

the same day in a senate hearing, Jun Lozada Jr. shared a conversation

between him and former Socioeconomic and Planning Secretary Romulo Neri in

which the latter stated that President Arroyo was “evil” and that she was at the

center of the NBN-ZTE scandal. Lozada said that Neri considered resigning
 11

after Arroyo ordered him to endorse the US$ 329.5 million NBN project despite

claims of bribery. Lozada turned over an envelope containing P500, 000 hush

money from Malacañang Deputy Executive Secretary Manuel Gaite.

Jun Lozada Jr. filed a case of kidnapping and attempted murder at

Department of Justice against police and government officials behind his

alleged abduction. Meanwhile in an interview, then President Arroyo admitted

having been warned of irregularities and possible corruption in the NBN-ZTE

deal on the eve of signing. This is a breakthrough because it was the first time

that the President revealed that she was aware of possible corruption before

the contract was signed. Deputy Executive Secretary Manuel Gaite eventually

provided a testimony where he said that the P500, 000 that Lozada returned to

him in the previous hearing was not a hush money but rather a loan that

Lozada personally asked.

On February 28, 2008, Dante Madriaga, a former ZTE consultant, said

that President Arroyo and her husband were part of the group that demanded

several huge kickbacks so that the NBN project would be given to ZTE. Their

demands increased the project cost from US$ 130 million to US$ 329.5 million.

Madriaga then identified the members of the group which includes the resigned

COMELEC Chairman Abalos Sr., his boss Leo San Miguel, bagman Ruben

Reyes, retired General Quirino Dela Torre, and President Arroyo together with

her husband.

On March 5, 2008, President Arroyo revoked Executive Order 464 which

prohibits government officials from testifying in congressional inquiries without

 12

the President's authorization. On March 11, 2008, Cable TV executive Leo San

Miguel appeared before the Senate Blue-Ribbon Committee. He was identified

before as being a member of the group that demanded kickbacks from the

NBN-ZTE deal. However, he claimed that he does not have any "direct

knowledge" of the kickbacks included in the deal. He said that his knowledge is

only limited to technical matters and that he did not even coordinate with any

government agencies. The hearing left the Committee frustrated with Senator

Panfilo Lacson accusing the Malacañang Palace of getting to Leo San Miguel

through Attorney Marcelino Agana IV of the Presidential Legislative Liaison

Office (PLLO). This caused San Miguel to withhold important details according

to Lacson. Lacson later revealed that a Senate sergeant-at-arms heard that San

Miguel had a conversation with Attorney Agana through the telephone,

assuring Agana that he would deny accusations and limit information coming

from him when asked by the Committee.

On March 25, 2008, a crippling blow to the investigation was dealt when

the Supreme Court ruled that the Senate is not allowed to force Romulo Nero to

answer questions regarding the President's involvement in the NBN-ZTE deal.

This upholds Nero's invocation of Executive Privilege when he appeared in the

Senate hearing on September 26, 2007. Two days later, the Senate indefinitely

puts on hold its investigation on the NBN-ZTE deal.

A new witness surfaced on May 14, 2008. Iloilo Vico Governor Rolex

Suplico stated according to the unidentified witness that President Arroyo

made an undisclosed trip to China where she met with ZTE officials. The trip
 13

was five months before the ZTE contract was signed. The witness confirmed

that resigned COMELEC Chairman Abalos Sr. and Mike Arroyo were present in

the meeting. These were all evidenced with pictures according to the witness.

At this point, the NBN-ZTE deal was already cancelled.

The Supreme Court upholds Romulo Neri's executive privilege on

September 4, 2008. The Supreme Court that the Senate abused its discretion

in citing Neri in contempt when he refused to answer questions regarding his

conversations with President Arroyo about the NBN-ZTE deal. To many, this

ruling was considered the final blow on the Senate Blue-Ribbon Committee's

investigation.

On March 14, 2012, the Arroyos were indicted for the NBN-ZTE graft.

The Sandiganbayan Anti-Graft court ordered the arrest of former President

Gloria Macapagal-Arroyo and her husband, Mike Arroyo, as well as two former

government officials.
 14

Chapter 3

DISCUSSION OF THE OBJECTIVES

This case study aims to present as objectively as possible what really

happened regarding the whole Philippine National Broadband Network Scandal

or the ZTE-NBN mess detail by detail using the limited resources the

researches have. The researchers worked towards the presentation of a

timeline of the events that took place with detailed explanation of the incidents

as well. This study also aims to discuss the laws, rules, regulations and ethical

norms and standards violated by the different persons involved in the case.

Furthermore, the analysis of this case would also like to confer about the

controversial corruption allegations regarding the administration that handled

the ZTE-NBN case and its current standing and effect on the economy at large

especially in the matters affecting privately-owned businesses and potential

investors in the country. The review of the case also aims to reflect how

certified public accountants working in the public sector can help in

eradicating the issue of graft, corruption and bribery and help expose such

unethical conduct using their analytical skills, problem-solving abilities and

critical thinking. The study also provides recommendations regarding the

transparency of the government, policies relating to corruption and bribery in

the workplace and rules and procedures for whistleblowing and protection of

whistleblowers.

Lastly, this study aims to help business students be aware of the

corruption that could or is still happening not only in the government but also
 15

in their future workplace as they are now aspiring to be future professionals.

This study also strives to help future accountants be cognizant of the role they

will take on as they work for the public sector and hopefully, inspire them to

uphold their integrity and values in difficult situations and have courage to

take action to bring justice in the limelight.

 16

Chapter 4

FINDINGS AND DISCUSSIONS

This study examines the Philippine National Broadband Network

controversy that erupted around 2006-2008 under the Arroyo Administration.

This explores the events that took place during that time which illustrated

various forms of corruption, non-compliance acts and unethical behavior from

government officials. This part of the study reviews the violated laws, rules,

regulations, and ethical norms and standards by the various key persons

involved.

The whole scandal largely involves the current president of the country

during that year, her husband and her well-known alliances. This is an

example of a weak control environment. The control environment is a

component of a strong internal control system which pertains to the attitudes,

awareness and actions of management and those charged with governance

concerning an entity’s internal control and its importance. It includes the

governance and management functions and sets the tone of an organization,

influencing the control consciousness of its people. It is the foundation for

effective internal control, providing discipline and structure. This is not only

limited to private organizations but is applicable to the government as well. If

the highest leader in the hierarchy is involved in questionable and unethical

acts, it defeats its very purpose of being an example to its constituents. It is

very likely that other forms of corruptions are also occurring in the lower levels

of the organization and are also being disregarded unless exposed through
 17

whistleblowing or other forms of debunking. Due to the poor governance of the

Arroyo administration during that time, several laws were violated. They are

presented below.

VIOLATED LAWS AND REGULATIONS

A. ELECTION BAN

According to the Omnibus Election Code of the Philippines,

the election period shall commence ninety (90) days before the day

of election and shall end thirty (30) days thereafter. During this

period of time, there are certain restrictions imposed by the law

such as the prohibition against release, disbursement or

expenditure of public funds and the prohibition against the

construction of public works, delivery of materials for public works

and issuance of treasury warrants and similar devices to ensure

the fair and objective dealings of the election. These provisions bar

government agencies and officials to enter/sign contracts to

pursue building of any public utilities or infrastructures. However,

on April 2007, the Office of the President announced that President

Arroyo stood as a witness in China to the signing of five economic

and trade agreements. One of which is the National Broadband

Network deal with ZTE. The aforementioned provision was violated

because there was an upcoming senatorial and local election to be

held on May of the same year.

B. ABSENCE OF PUBLIC BIDDING

 18

Republic Act 9184 also known as the “Government

Procurement Reform Act” is a declared policy of the state that aims

to promote ideals of good governance to all of its branches,

departments, agencies, subdivisions and instrumentalities

including government-owned and/or -controlled corporations and

local government units. This act shall apply to all procurement of

the national government of its infrastructure projects, goods and

consulting services regardless of the source of funds whether local

or foreign. It provides the basic procedures and requirements to be

followed for the acquisition process of the government. It promotes

competitive bidding to extend equal opportunity to private

contracting parties who are eligible and qualified to participate in

public bidding and also fosters a system of accountability for

public officials who are involved directly or indirectly in the

procurement process wherein, when warranted by circumstances,

be investigated and held liable for their actions in relation thereto.

With the case on hand, a complaint was filed by the then-Nueva

Vizcaya representative Carlos Padilla against PTC Secretary

Leandro Mendoza that the NBN deal was sealed without public

bidding. This was backed up when a financial analysis held on

January the following year concluded that the local internet

providers can offer the same service at price much lower than that

of the ZTE contract. This means that the local private companies
 19

were not given the chance to pitch in their proposals since the deal

was locked without any public bidding.

C. TURNAROUND FROM PUBLIC TELECOMMUNICATIONS POLICY ACT

OF THE PHILIPPINES

Republic Act 7925 Section 4 (e) states that “Public

telecommunications services shall be provided by private

enterprises. The private sector shall be the engine of rapid and

efficient growth in the telecommunications industry.” With the case

at par, the ZTE-NBN deal calls for a government-to-government

loan to fund the project. According to the ZTE proposal, upon

completion of the national broadband network, the project is to be

turned over to the Department of Transportation and

Communications for its operation and maintenance. Such

provision of the contract is a clear and direct violation of the

regulating laws affecting the project because a government agency

such as DOTC will now be the party responsible to provide public

telecommunication services. According to the financial analysis of

the project, leading telecom companies in the Philippines can

provide such service for only $132B which is more than half of

what the ZTE-NBN deal entails.

D. REPUBLIC ACT NO. 3019

The Anti-Graft and Corrupt Practices Act is a policy of the

Philippine Government, in line with the principle that a public

 20

office is a public trust, to repress certain acts of public officers and

private persons alike which constitute graft or corrupt practices, or

which may lead thereto. According to Sec. 3, the act of persuading,

inducing or influencing another public officer to perform acts

constituting a violation of rules and regulations duly promulgated

by competent authority or an offense in connection with the official

duties of the latter or allowing himself to be persuaded, induced or

influenced to commit such violation or offense is considered to be

one of the corrupt practices of a public official. In the case at hand,

it is to be noticed that several instances illustrate such act. For

example, when Romulo Neri, the former socioeconomic planning

secretary and director general of the National Economic and

Development Authority, was offered $5M by COMELEC Chairman

Abalos Sr. to approve the ZTE-NBN deal. Another corrupt practice

mentioned in RA. 3019 is the act of directly or indirectly receiving

or requesting any gift, present, share, percentage or benefit for

himself or for any other person, in connection with any contract or

transaction between the government and any other part, wherein

the public officer in his official capacity has to intervene under the

law. Such act also applies to when the public officer, in any

manner or capacity, has secured or will secure or obtain, any

government permit or license, in consideration for the help given or

to be given. Again, with the ZTE-NBN mess, the prohibited acts of

 21

corruption were performed by certain government officials such as

when Benjamin Abalos and the President of the Philippines herself,

Gloria Macapagal Arroyo, when they jacked up the price of the

contract to receive a huge amount of kickbacks. It is to be noted

that the figures to be received by these two public officials was so

blatantly increased for their own enrichment alone which portrays

a direct violation of the law and also the betrayal of public trust.

ETHICAL ISSUES

A. BRIBERY

Bribery is defined as the offering, giving, receiving or

soliciting any item of value to influence the actions of an official or

other person in charge of a public or legal duty. In the case at bar,

the project price was increased to the extent that certain key

persons who are needed to the approval of the project was grossly

enriched or benefited monetarily. It is considered unethical

because it impairs the independence and objectivity of a certain

individual hence prohibits him/her in making decisions with

proper judgment.

B. WHISTLEBLOWING
 22

Whistleblowing is the term used when a worker passes on

information concerning a wrongdoing. The wrongdoing will

typically, although not necessarily, be something they have

witnessed at work. With ZTE-NBN case, it was revealed to the

public because of the persons who spoke about it to the media and

the persons who filed complaints regarding the issue. They can be

considered as whistleblowers because they are employed by the

government. An example of which from the case was Jun Lozada

who allegedly knows how the project was overpriced and later on

disclosed how the Arroyo alliances kept him quiet regarding the

issue. He was abducted by the police force as he arrived in the

airport and was asked to sign false documents and statements.

Policies regarding the protection of whistleblowers should be

updated and appropriately executed to give workers the confidence

to speak of the wrongdoings of their employers.

 23

CHAPTER 5

RECOMMENDATIONS

Accepting a bribe means favoring the giver and will do something in

return that is against the rules. If we were the one who is bribe in exchange for

the approval of the ZTE contact regarding National Broadband Network, we will

not accept it since, as we all know, bribing and accepting a bribe is unethical.

Accepting a bribe violates the Republic Act 3019, otherwise known as the

Anti-Graft and Corrupt Practices Act, Article XI of the Constitution on the

Accountability of Public Officers and Republic Act 1379, also known as Code of

Conduct and Ethical Standards for Public Officials and Employees which

makes bribery not just unethical but illegal.

Although the mentioned laws that were violated are not effectively

executed in the Philippines because corruption is still one of the biggest

problems of the country, it will not justify the act of accepting the bribe for the

approval of the ZTE contract.

Most importantly, as a public officer who took an oath to serve everyone

without discrimination on any count, we will reject the bribe without even a

need to think since it is our duty to serve the public equally.

RECOMMENDATION

 The implemented laws in the Philippines must be properly executed.

Public officials are not afraid to violate the laws or commit

fraud because they know that only few are punished by doing so.

Furthermore, it is difficult to provide evidence that will serve as a

 24

proof that a certain public official commits fraud especially if he

has a high position in the Philippine government because it is easy

for him to collude with those officials under him.

 There must be additional protection for whistleblowers.

Workers are often the first in line to witness any

wrongdoings done in an organization. However, a worker might not

be comfortable in disclosing any information because he/she might

be afraid of the possible consequences such as fear of reprisals and

that no action will be taken if they do “blow the whistle”. Those

who are charged with governance should create a safe,

transparent, open and supportive culture wherein the workers

would feel secure if they ever get in such a situation.

 25

CHAPTER 6

CURRENT RULING

The Sandiganbayan rules that the evidence presented by the prosecution

did not sufficiently prove that the former President Gloria Macapagal Arroyo

benefitted from the alleged overpriced deal with the ZTE Corporation.

The Sandiganbayan’s 4th Division was unanimous in deciding that the

prosecution failed to establish that the contract with ZTE Corporation was

grossly disadvantageous to the government. They also said that there was not

enough proof to claim that Arroyo was motivated by personal gain when she

approved the deal.

According to anti-graft court, there was also no enough evidence to prove

that there was conspiracy to commit fraud. Furthermore, the court said that

the charges against the accused are fatally defective because when the charges

were filed in 2011, the contract had already been cancelled by Arroyo

government owing to allegations of corruption.

The court also dismissed the case against the former First Gentleman

Jose Miguel Arroyo, and former Commission on Election chair Benjamin Abalos

who were charged with graft with former President Arroyo.

 26

APPENDICES

 https://res-

www.zte.com.cn/mediares/zte/Investor/20180326/E1.pdf?fbclid=IwAR3BUIncl

4hUIFKsSe8Bbni_1sNjw3bs8NTc8nJ2V5uPQyl_7LZ0TfFVTks

 http://boi.gov.ph/wp-content/uploads/2018/02/Telecommunications-

Infrastructure-January-

2018.pdf?fbclid=IwAR3xuzXqQbIxbUySIGH2U7iJVNOXMReKg70Ygi2eWTJb_k3

e23_93bYpOQc

 https://www.gmanetwork.com/news/news/content/171031/looking-back-the-

nbn-zte-

controversy/story/?fbclid=IwAR3_JBmqHZRaIGqAa3P4FKhjww8wNgjOCawZde

HMuwE-KOvZz18bT91hpL0

 https://newsinfo.inquirer.net/959499/what-went-before-nbn-zte-

deal?fbclid=IwAR0M7USYrVjPIQAzd4PJn-

tmxZ9oAZFtKDz8hGNi8XyETp4_cKZnjB4qPUI

 http://www.chrispforr.net/phils/nbn/nbn.htm?fbclid=IwAR3Okidek7NFRyGaL

czdN5Im6zBakvLB61L2-ONmg3phu7JpbBoZbkIfg0Y

 http://pcij.org/blog/2007/09/11/the-case-of-the-missing-zte-broadband-

contract?fbclid=IwAR2J9nV2bGG84-Nj790G2NeCDL1Niorq5O96mhjc-

4njZ3IzzoQo7-yTqO4

February 10, 2019

 file:///C:/Users/Krizianhor%20A.%20Atenta/Downloads/Philippines%20Code

%20of%20Conduct%20and%20Ethical%20Standards%20for%20Public%20Offic

ials%201989.pdf
 27

 http://www.chanrobles.com/electioncodeofthephilippines.htm#.XGhJOuhKjIU

 https://www.lawphil.net/statutes/repacts/ra2003/ra_9184_2003.html

 https://lawphil.net/statutes/repacts/ra1995/ra_7925_1995.html

 https://aer.ph/pdf/papers/NBNSupplyContract_review.pdf

 https://www.lawphil.net/statutes/repacts/ra1960/ra_3019_1960.html

February 16, 2019

 https://en.wikipedia.org/wiki/Bribery

 https://assets.publishing.service.gov.uk/government/uploads/system/uploads

/attachment_data/file/415175/bis-15-200-whistleblowing-guidance-for-

employers-and-code-of-practice.pdf