The language and manner of doing (shady) business

“TONGPATS” is the latest entry to the lexicon of Filipinos, one that will surely see print in banners in anti-government rallies in the days to come.

Testifying before the Senate blue ribbon committee yesterday, Zhong Xing Telecommunications Equipment Limited (ZTE) consultant Leo San Miguel sought to downplay his role in the controversial national broadband network (NBN) deal, repeatedly telling senators that he was merely a “technical consultant” who was unaware of multimillion-dollar kickback negotiations in the project.

San Miguel is part of the “Gang of Four,” a label given by Dante Madriaga, another former ZTE consultant, who testified before the Senate last week. He said the group includes resigned Commission on Elections Chairman Benjamin Abalos Sr., former Police Chief Supt. Quirino de la Torre, and businessman Ruben Reyes. Madriaga alleged the group received $41 million in advance payments from ZTE.

“They are putting too much importance on my role,” San Miguel complained at one point. He explained that there was a separate “Filipino group” that handled business negotiations for the deal, while his involvement was purely on the technical side. He likened his role to that of an architect, who designs a house but leaves the costing of construction materials to the builder.

Madriaga, who was hired by San Miguel as consultant with a salary of P150,000 per month, pooh-poohed San Miguel’s claims. “In his email, he even mentioned ‘tongpats,’” he said. “Tongpats” is a Filipino word derived from “patong” or padding of prices, a commission.

“It’s very unlikely that a person of Leo’s (San Miguel) caliber would be stuck in the nitty-gritty dirty work. He’d pay people like us (to do it) ” said Madriaga, speaking in English and Filipino.

San Miguel also tried to dissociate himself from the so-called “Gang of Four,” saying Abalos and Reyes were friends who often huddled with ZTE’s business associates, while he was busy with the technical details of the project.

“I find it (San Miguel’s claims) incredible,” said ZTE whistleblower Rodolfo Noel Lozada Jr. He said that in all the meetings about the deal where San Miguel, Reyes and Abalos were present, “we never discussed anything technical.” He said the meeting were mostly about how to “facilitate” the project at the level of the National Economic and Development Authority (NEDA), and the “bukol” that can be inflicted on the project.

“Bukol,” a Tagalog word that means lump, is another term that has become synonymous with the shenanigans involved in the NBN deal. Used in the spirit of the NBN scandal, it means an obvious padding, commission or kickback.

Lozada also revealed that San Miguel was present in some NEDA meetings, where only the financial side of the project could have only been the main agenda. He also recalled that meetings were held in Abalos’s small Wack Wack conference room, during which San Miguel even called transportation and communications assistant secretary Lorenzo Formoso to check on the project’s “facilitation” with NEDA.

Madriaga showed senators an email dated July 22, 2006 and its attachment allegedly from San Miguel. In it, San Miguel provided a template where Madriaga can “enter the data for the Phase 2 and 3” of the project, “the way we think the pricing of ZTE will be.”

Aside from a “consortium margin” of 20 percent for 15 of 16 items listed, the template provided a column for “tongpats margin” (commission in percentages) and “tongpats” (commission in actual amount). San Miguel claimed the two columns were inserted into the file he sent.

But whether tampered or not, the email demolished the stand he took pains to build over the course of the 12-hour hearing: that he knew nothing about the financial side of the NBN deal.

San Miguel’s involvement with ZTE lacks the standard paperwork that normally covers an above-board, high-profile corporate engagement. First, he had no contract. He admits he merely received refunds for some P3 million to P4 million expenses he incurred. He was also promised a 0.5-percent commission based on the total amount of the deal. At $329 million, that will amount to $1.6 million.

* PCIJ computation: 22,965
** (PCIJ computation: 138,247
Source: Dante Madriaga

“When I told them (ZTE) my terms, I gave them a starting point for them to complete (the contract). The first week I asked for a refund, I immediately got it. To my thinking, there was already a partial agreement to it. I didn’t bother following it up,” he explained.

San Miguel is a corporate man who began his career as research engineer with RadioWealth. He was later country manager of a computer company, a business development manager for Philippine computer company, and from there owned and operated Home Cable. When Home Cable was sold in 1997, he stayed on as consultant for a year before forming a cable distribution company.

Sans paperwork, San Miguel told the committee that he was assured by Reyes that “Pare, may konting kita rito (There’s something to gain from this).” He says he took it to mean that he would get decent pay for decent work.

“Ruben (Reyes) never told me that there’s overprice,” he swore, and that had there been talk of commissions, it would have been between Abalos, Reyes and ZTE officials.

He also lent his car to visiting ZTE officials, “to keep my clients happy” but remained he said, “a silent listener.”

At the close of the hearing, Senator Jamby Madrigal chastised San Miguel for being “calculating and snide” and for frequently “getting into the lying zone.”

A visibly upset Senator Panfilo Lacson surmised that San Miguel may have been reached “by somebody from Malacañang” in the hours before the Senate hearing. The senator said based on four conversations he had with San Miguel, he was confident the witness was going to divulge something explosive. Last week, Lacson told reporters about a “surprise witness” in yesterday’s resumption of the Senate hearing on the NBN scandal.