Arroyo suspends telecoms deal with Chinese firm

MANILA Sat Sep 22, 2007 1:00pm IST

Philippine President Gloria Macapagal Arroyo seen at the Cuneta astrodome in Pasay city, suburban Manila in this September 14, 2007 file photo. Arroyo has suspended a $330 million telecommunications deal with a Chinese firm after it triggered a kickbacks scandal that could rattle her government. REUTERS/Romeo Ranoco

Philippine President Gloria Macapagal Arroyo seen at the Cuneta astrodome in Pasay city, suburban Manila in this September 14, 2007 file photo. Arroyo has suspended a $330 million telecommunications deal with a Chinese firm after it triggered a kickbacks scandal that could rattle her government.

Credit: Reuters/Romeo Ranoco

Related Topics

MANILA (Reuters) - Philippine President Gloria Macapagal Arroyo has suspended a $330 million telecommunications deal with a Chinese firm after it triggered a kickbacks scandal that could rattle her government.

"I think this is the best thing to do now," Trade Secretary Peter Favila told reporters on Saturday. "Those were her instructions. We were just implementing her orders.

Favila said Arroyo made her decision after discussions with some cabinet members but he declined to give further details.

"Whatever reasons behind that, that's an executive privilege."

The suspension of the agreement with China's ZTE Corp to build a broadband network linking state agencies comes two days after Arroyo's cabinet defended the contract at a senate inquiry into allegations of kickbacks in the project.

The Supreme Court had earlier stopped the implementation of the deal after it received two separate petitions to scrap the project.

Political analysts have said the scandal could affect the stability of Arroyo's government because her husband was named in the senate inquiry and because it could lead to a split with a major coalition partner in Congress.

Favila said he had not been in contact with ZTE officials, but he had informed China's commerce ministry of the suspension.

"Minister Bo Xilai said his government understands and respects the decision of President Arroyo and will continue to support her and her programmes," presidential spokesman, Ignacio Bunye, said in a statement on Saturday.

On Tuesday, Jose de Venecia III, the head of a company that lost out on the contract, told the senate it was over-priced by at least $130 million to allow kickbacks to senior government officials.

He also said Arroyo's husband had told him to "back off" from the deal, signed in April during the president's visit to China's southern province of Hainan.

De Venecia is the son of House of Representatives Speaker Jose de Venecia, head of the dominant Lakas party, which forms the ruling coalition along with Arroyo's smaller Kampi party.

Analysts have said a split between Arroyo and de Venecia could open the way for an impeachment motion in the lower house of Congress against the president, who has failed to shake allegations she cheated in the 2004 elections.

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

ISLAMIC STATE

REUTERS SHOWCASE

Modi's U.S. Visit

Modi's U.S. Visit

Modi to observe strict fast during maiden trip to U.S.  Full Article 

Scholar Sentenced

Scholar Sentenced

China court sentences Uighur scholar to life in prison for separatism.  Full Article 

Hamas Men Killed

Hamas Men Killed

Israeli troops kill Hamas men blamed for slaying teens - army.  Full Article 

Afghan Doubts

Afghan Doubts

Doubts cloud sense of relief as new Afghan government takes shape  Full Article 

Ebola Outbreak

Ebola Outbreak

Ebola could strike 20,000 in six weeks, "rumble on for years" - study.  Full Article 

White House Intruder

White House Intruder

White House intruder had 800 rounds of ammunition in car -prosecutor  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage