_Graft cases have been filed against former Philippine President and current Congresswoman Gloria Macapagal-Arroyo, her husband Jose Miguel Arroyo, and two former government officials in connection with the aborted $329-million national broadband network (NBN) deal between her administration and ZTE Corp. of China.  Prosecutors allege an agreement to accept large kickbacks in return for approving an overpriced deal with the Chinese telecommunications company.

The charges were filed with the Sandiganbayan, a special anti-graft tribunal.  The Office of the Ombudsman, which filed the case, found no probable cause to justify an indictment for the more serious offense of plunder.  Unlike plunder, violation of the anti-graft law is a bailable offense.

During Senate hearings in 2008, ZTE consultant Dante Madriaga, testified that the deal was originally priced at $130 million, but that the cost was increased to accommodate kickbacks.  Former Economic Planning Secretary Romulo Neri testified that Benjamin Abalos, the former Chairman of the Commission on Elections, offered him a bribe to approve the contract.  Jose de Venecia III, son of then House Speaker Jose de Venecia II and cofounder of Amsterdam Holdings Inc., which lost in the bidding for the NBN contract, testified that Mike Arroyo intervened to help ZTE Corp. win the deal.  De Venicia said the ex-president’s husband was promised a $70 million commission.

Arroyo's husband and former elections chief Benjamin Abalos have denied the accusations.  Former President Arroyo herself also has previously denied wrongdoing in the latest case.  Under public pressure in 2008, she canceled the deal.

A similar case had been filed against Arroyo before the Office of the Ombudsman while she was still President, but this was dropped in 2009 on the ground that she was immune from suit.  The alleged kickbacks also formed the basis for two impeachment charges filed against Arroyo while she was President, but both charges were dismissed in the House of Representatives.

The current charges in the Sandiganbayan allege violations of Republic Act 3019 section 3 (g) and (i) and Republic Act 6713 or the Code of Conduct and Ethical Standards for Public Officials and Employees.

Section 3 (g) makes unlawful the “entering, on behalf of the government, into any contract or transaction manifestly and grossly disadvantageous to the same, whether or not the public officer profited or will profit thereby.”

Section 3 (i) deems a practice corrupt when the official is “directly or indirectly becoming interested, for personal gain, or having a material interest in any transaction or act requiring the approval of a board, panel or group of which he is a member, and which exercises discretion in such approval, even if he votes against the same or does not participate in the action of the board, committee, panel or group.”  The same provision states that “interest for personal gain shall be presumed against those public officers responsible for the approval of manifestly unlawful, inequitable, or irregular transaction or acts by the board, panel or group to which they belong.”

Former President Arroyo is presently under arrest in a separate case alleging fraud during the 2007 senatorial elections in parts of the southern island of Mindanao.  Her advocates argue that the administration of her successor, President Benigno "Noynoy" Aquino, is engaged in an attempt to destroy her reputation so as to distract attention from his administration's own failures.

In the midst of dealing with the worst disaster of his Presidency, and addressing the urgent needs of families affected by the tragedy, the Philippine Daily Inquirer reports that Philippine President Benigno Aquino is also asking the right questions.

“I need to ask myself. Did the government do enough to prevent this kind of a tragedy? I don’t think I can accept that we have done everything,” Mr. Aquino told evacuees at Cagayan de Oro Central School during a visit to the disaster zone four days after Tropical Storm “Sendong” struck. “I know we could have done more.”

Areas devastated by tropical storm Sendong have been declared under a state of calamity, allowing the mobilization of national resources to augment relief and rehabilitation efforts of local governments as the death toll from floods and landslides rose to almost a thousand, with nearly 20,000 families displaced by heavy rains in Northern Mindanao at the weekend.

The President promised not only immediate assistance, but also that his administration would "fine-tune all of the systems in place so that now we can prevent this tragedy from ever happening.”  He pledged to conduct a full fact finding inquiry, to relocate people living in danger zones, and a doubling of reforestation efforts to create a natural barrier against flood.
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The aircraft business is going strong in Asia.  So is the airport business.  As millions of people throughout Asia join the global middle class, they are discovering the pleasures of travel throughout the region.  And what a region it is.  From Angkor Wat in Cambodia to the Chocolate Hills of Bohol in the Philippines, there is plenty to see in Southeast Asia.  This is creating tremendous demand for new airports and other basic infrastructure.  For a review of what is going on, and what it means for the global economy, click here.

President Aquino will be appointing a new Cabinet Secretary to address one of the top priorities for Philippine growth and development:  Tourism.  Located at the center of Asia, the region with the fastest growing middle class in the world, the Philippines is endowed with tremendous natural beauty and some of the friendliest people on earth.  The only problem is getting there.  The main airport in manila is woefully overcrowded, and getting to the provinces require true grit and determination.  Building more and more modern airports, roads, and mass transit is absolutely essential.  Everything else will follow -- tourists, development, peace and order, etc.  To read more, click here.

The Philippine Government announced that it will open bidding on five Public-Private Partnership (PPP) projects before the end of 2011. The projects include three roads and two rail projects designed to connect Metro Manila to fast-growing commercial, industrial and residential areas.  Click here to read more.....

Shell and Chevron are set to sign a $1.5 billion deal with the Philippine government to expand the output of the Malampaya natural gas project off the coast of Palawan.  The Malampaya gas field currently supplies natural gas to three power plants that supply 30% of the electricity for Luzon, where Metro Manila is located.  It also supplies natural gas used in Manila taxis.  Click here to read more.....

One year into his six-year term, Philippine President Benigno "Noynoy" Aquino has recruited a team of professionals to run the Department of Transportation and Communications, which will be the coordinating agency for a number of important infrastructure projects.  For details, click here.

The funny thing about technology is that it sometimes allows developing countries to leapfrog over stages of developments. Take cell phones.  It is still difficult and time-consuming to get a land line installed in the Philippines, but mobile phone service is much better than many places in the US.  Many places in the Philippines went from having no phones at all to everyone having a mobile phone in just a few years.

Something similar may happen with renewable energy.  In the US, we know that the coal-fired plant is dirty and will grow more expensive over time as fuel costs rise.  But we don't replace it because the operating costs are less than the capital cost of a new solar or wind generation facility.

The same calculation doesn't apply if you're in a country like the Philippines that doesn't have enough power plants.  They have to build new plants no matter what, so they might as well choose the type of plant that will move their nation towards energy independence. That is the objective of the new Philippine National Renewable Energy Program, which targets $27.6 billion in renewable energy investments between now and 2030.  For more information, click here.

Friends of the Philippines will not be surprised to learn that researchers from the California Academy of Sciences have identified 300 new species during a 42-day expedition in the Philippines.  The new species — found in rainforests, coral reefs, and the ocean floor — include “dozens of new insects and spiders, deep-sea armored corals, ornate sea pens, bizarre new sea urchins and sea stars, a shrimp-eating swell shark, and over 50 colorful new sea slugs.”

For more information on the expedition, and some interesting photos, click here.

Testimony last week before the Philippine Joint Congressional Power Commission seemed to establish that the prerequisites for declaring open access in electricity markets had been established, but both regulators and market participants predict further delays before businesses and consumers start to enjoy the benefits of competition.

Under the Electric Power Industry Reform Act of 2001 (EPIRA), open access is designed to create a competitive market for electricity generation in the Philippines by allowing businesses and consumers to choose their electricity supplier based on price and source (e.g., traditional or renewable sources).  In the first phase of implementation, open access would be made available to entities consuming more than 100 kilowatt-hours per day as soon as 70% of state-owned generating assets and 70% of independent power producer administrator (IPPA) contracts are privatized.

After a decade of waiting for the privatization of generation assets to be completed, it looked like the threshold had been met this week.  Representatives of the Energy Regulatory Commission (ERC) and the Power Sector Assets and Liabilities Management Corp. (PSALM) testified before the Philippine Congress that 79.56% of the generating assets and 76% of IPPAs have been successfully auctioned off.  This led Senator Sergio Osmena III to recommend "the declaration of open access especially with the anniversary of the EPIRA coming up."

If it were only so simple.  The ERC replied that it was still evaluating public comments.  Its Executive Director said that he hoped the ERC would be in a position to declare open access "by this year, maybe the middle of the year."

Of course, regulatory approval is just the first step.  Once open access is declared, the commercial terms, settlement rules, appointment of a settlement agent, and other logistics of operating an open market must be implemented.  Some regulators and market participants estimate that this process could add another year or two before consumers get the benefit of a law passed a decade ago.

John Howley 
Woodbridge, New Jersey