MANILA – Allies of President Gloria Arroyo forced the government to approve a telecommunications contract that would have led to $130 million in kickbacks, a Senate hearing was told yesterday.

Rodolfo Lozada, an electronics engineer brought in to assess the national broadband deal, told the inquiry he was told to reduce the kickbacks to Arroyo's allies and to "moderate their greed."

The 329-million dollar contract which was won by Chinese firm ZTE has since been scrapped amid allegations of bribery and corruption involving senior government officials and the president's husband, lawyer Jose Miguel Arroyo.

Lozada, often wiping tears from his eyes, told the inquiry how he feared for his life.

The fallout from the scandal has cost former Arroyo ally Jose de Venecia his seat as speaker of the House of Representatives and seen the resignation of the chairman of the election commission, Benjamin Abalos, who brokered the deal.

Lozada said Abalos, a close friend of the president's husband, demanded the contract be awarded to the Chinese.

"The trouble started when Abalos came to me to sell the ZTE proposal in September 2006," Lozada said under oath.

He said Abalos had told him "You have to protect our 130 (million dollars)."

"I warned him that would stick out but we might be able to get 65 (million dollars)," Lozada said.

Abalos also offered about $5 million to Economic Planning Secretary Romulo Neri, who eventually approved the contract, Lozada alleged.

He said Neri told him to force Arroyo's allies to "moderate their greed."

Lozada said he later met Abalos, de Venecia's son Joey de Venecia, ZTE officials, a commercial counselor from the Chinese embassy in Manila , and the president's husband to discuss the project.

De Venecia's son, who lost out to the Chinese last year, had previously told the Senate about bribes and kickbacks and the roles of Abalos and Arroyo's husband in the deal.

The president's husband denied the allegations Friday.

Arroyo spokesman Ignacio Bunye on Thursday said the senate inquiry was nothing more than "grandstanding."

Lozada said that when it initially appeared that the Chinese proposal would lose out Abalos called him and said: "Don't ever show your face at Wack Wack (a central Manila golf course) or I will have you killed."

The witness told the senate he asked to be taken off the project evaluation team after that. "This is not worth risking my life for," he said.

An official from the Chinese embassy expressed concern over the allegations, saying that they "painted an unfair picture about how we transact business."*AFP

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