Romulo Neri, scapegoat

Michael Alan Hamlin

Posted on June 9, 2010

About three years ago I sat with Romulo Neri over lunch following his appointment as chairman of the Commission on Higher Education (CHEd). The appointment was perceived by Mr. Neri’s friends as a slap in the face. While CHEd has an important mandate, Mr. Neri had previously been director-general of the National Economic Development Authority (NEDA), a powerful agency of the Philippine government that is responsible for economic strategy.

Mr. Neri’s friends-and pundits and other observers-believed that the long-serving former NEDA chief had been shunted aside for stonewalling an allegedly overpriced $329 million National Broadband Network (NBN) contract with China supplier ZTE, a firm with close ties to China’s military complex. The project was meant to link Philippine government agencies in a high-speed network at the time when broadband was just being introduced by private-sector telecom providers, and access fees were among the highest in the world.

The NEDA board-chaired by the Philippine president-had approved the project in early 2007 on Mr. Neri’s recommendation. Mr. Neri told me he endorsed the project because he believed it would enhance government productivity, linking remote villages and towns, but also because he thought it would pressure private-sector telecom providers to improve their services and lower prices.

NEDA itself does not choose suppliers or negotiate contracts. Its role is to approve or disapprove projects on the basis of their perceived contribution to economic development. The Department of Transportation & Communication negotiated with prospective suppliers for the NBN. Mr. Neri himself talked with ZTE executives only once, over lunch at the invitation of officials of the Chinese Embassy. Mr. Neri he says he was not advised that ZTE officials would attend the lunch. Another surprise guest was present: former Commission on Elections chairman Benjamin Abalos.

Mr. Neri talked with Mr. Abalos only once afterwards, over a round of golf. He did meet with officials of the Export-Import Bank of China (China Eximbank)-perhaps three times-to discuss a total loan program for China-sponsored development assistance. Those talks did not involve project-specific discussions. At the time, China Eximbank was offering up to $2 billion in annual development assistance to the Philippines, according to Mr. Neri, an offer that since then has been withdrawn.

A week or so after our lunch conversation, Mr. Neri testified before the Senate-revealing an alleged P200 million bribe offer by Mr. Abalos in return for support of ZTE as the NBN supplier. Mr. Neri also said he informed his boss, President Gloria Macapagal-Arroyo, of the bribe attempt. He clarified that the now outgoing president told him not to accept the bribe. When pressed to reveal whether Ms. Arroyo had given any other instructions to him, Mr. Neri invoked “Executive Privilege” and declined to say more.

Opposition senators were enraged. Mr. Neri’s refusal to testify appeared to provide credence to the suspicion that Ms. Arroyo had at a minimum followed up the project with Mr. Neri, or at worst instructed him outright to support the project. Their suspicions were fueled by at least one alleged unannounced meeting between the president and ZTE officials in China and her decision to leave the bedside of her then gravely ill husband to sign the NBN-ZTE agreement in April 2007 in Hainan, China. A variety of other individuals have similarly sought to implicate her husband, first gentleman Mike Arroyo, in the deal.

Messrs. Neri and Abalos are being prosecuted by the Ombudsman for their roles in the scandal. Ms. Arroyo eventually cancelled the agreement, and she cannot be prosecuted until she steps down. The Ombudsman says there is no actionable evidence against her husband. Mr. Neri appears to be taking the heat because he has annoyed players on both sides of this drama-high-ranking administration officials and their allies, opposition senators, other suppliers competing for the ill-fated project, other politicians, and political activists.

The idea that Mr. Neri, who was appointed president of the Social Security System in July 2008, is being prosecuted for collusion with Mr. Abalos, whom he testified against under oath, is patently absurd as well as absurdly ironic. The Ombudsman argues that Mr. Neri continued to meet with Mr. Abalos and ZTE officials, yet records clearly show that is not the case.

Despite everything he’s been through-unknown gunmen pumped 261 bullets into his Santa Mesa home in October, perhaps as a warning to maintain his silence-Mr. Neri remains level-headed if disappointed. He says he regrets ever getting involved in government, although multiple administrations have relied on him for unvarnished economic perspective, and the economy prospered under his watch.

Which just goes to show, no good deed goes unpunished. Especially in government.

(Disclosure: Mr. Neri and I were colleagues at the Asian Institute of Management before he entered government and remain friends.)

(Michael Alan Hamlin is the managing director of TeamAsia and a Manila-based author. His latest book is High Visibility: Transforming Your Personal and Professional Brand . Write him at mahamlin@teamasia.com and follow him on Twitter, Facebook and LinkedIn.). Copyright © 2010 Michael Alan Hamlin. All Rights Reserved.)

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