ZTE Chinese Telecom Aledged to Corrupt Governments

Private Philippine clients are said to be unhappy with ZTE products. Despite a stock market listing that raised its assets, ZTE is said to be under Beijing’s "command-capitalism", that is, under orders to grab big chunks of the world market for Chinese products by any means fair or foul.


China’s ZTE Corp., from which the Philippines will buy overpriced but needless telecom apparatus, had paid off other governments for similar lucrative deals. In recent months it left a trail of corruption across America, Asia and Africa.

The purchase by the Dept. of Transport and Communication of $330-million worth of unessential broadband gadgets — $200 million costlier than normal — closely follows ZTE’s shady dealings in Mexico City.

There Mayor Marcelo Ebrard came under fire last month for commissioning ZTE to set up wireless broadband "hotspots" linking schools, government offices and the city’s thousands of surveillance cameras.

Critics lamented that the city is reeling from water and electricity shortage, and denounced payolas to push for a non-priority telecom deal. The situation is akin to the Philippines, where people lack water, homes and education. Up to two months ago, the fusing of all government landline, cellular and Internet needs under a single network was not even a priority. ZTE rushed in Feb. an unsolicited supply bid to DOTC, which sprinted it to the Cabinet, which endorsed it posthaste.

Last Saturday in China DOTC Sec. Leandro Mendoza signed a supply contract with ZTE boss Hou Weigui, witnessed by President Arroyo. DOTC insiders, saying big money changed hands, aver that a Comelec bigwig and a powerful official’s spouse peddled the deal.

The insiders reveal that ZTE first quoted $300 million for its gear. But faced with an earlier superior proposal from Filipino firm Amsterdam Holdings Inc. to build the broadband network at no cost to government, ZTE cut its price to $262 million. Even at that figure it was overpriced, insiders add; $130 million was for payolas. Another competitor, Arescom of the US, also had made an earlier bid similar to ZTE’s, but for only $135 million. The $330 million, or P16 billion, for the unnecessary infrastructure could be better used for water, housing and schooling.

ZTE is notorious in telecom circles for bribery to bag contracts. It was recently blacklisted in Ecuador and Ethiopia for overpricing, and in Indonesia for price dumping. Private Philippine clients are said to be unhappy with ZTE products. Despite a stock market listing that raised its assets, ZTE is said to be under Beijing’s "command-capitalism", that is, under orders to grab big chunks of the world market for Chinese products by any means fair or foul.

Wary of state-subsidized Chinese firms that operate ZTE-style, the US government has been pressuring Beijing to adopt accepted accounting norms that would flush out payolas to client-governments. US Cabinet men flew to China in January to convince their counterparts to crack down on bribing firms. In Europe a full-scale investigation is underway on Siemens’ phony multimillion-dollar consultancy payments, a disguise for payoffs to foreign officials. Telecom sources anticipate ZTE’s international practices to dwarf the Siemens scandal.

A Cabinet member who was exposed to ZTE’s tactics said he has "never seen a group to push as aggressively for a project as these people are." Sources said that a certain Yu, ZTE head of overseas operations, and Ms. Fan Yan, of finance, gamely accepted the overprice demands of Philippine officials.


The recent blackouts in Luzon were a result of miscalculation. The National Power Corp. had anticipated demand during the summer months to hit peak capacity of 6,400 megawatts. But air-conditioning, refrigerating and electric fanning to beat the sweltering heat raised actual use to 6,630 megawatts. With 230-megawatt undersupply, power simply conked out. Hundreds of millions of pesos in manufacturing and services sales were lost.

By coincidence, lying idle but in working condition are four power barges in Manila Bay with a combined capacity of 243 megawatts. Owned by Duracom and East Asia Power Corp., the diesel generators can fill up the shortage, and then some. But there’s a catch. The barges are tied up in a lawsuit. Creditors are contesting corporate rehabilitation, and this prevents Duracom and East Asia from directly connecting to MERALCO transmission lines in Navotas. What a mess.

In the Philippines, extracting bio-diesel from animal fat is a Grade 6 pupil’s experiment that was even shabbily treated at a national science fair. In America, it’s big business. Conoco Phillips alone, an oil processing and marketing giant, will plunk in $100 million dollars to make the alternative fuel. It is tying up with Tyson Foods, the world’s largest meat producer, to extract diesel for cars using beef, pork and poultry fat.

The Rest @ ABS-CBN News