MANILA, Philippines -- President Gloria Macapagal-Arroyo and her husband were part of the “Greedy Group plus plus” that demanded huge kickbacks which jacked up the cost of the National Broadband Network (NBN) project from $130 million to $329 million, a new witness in the Senate investigation of the scrapped NBN deal with China’s ZTE Corp. said Tuesday.

“From the very beginning I knew that they (First Couple) were part of it. My boss (Leo San Miguel, a former owner of Home Cable) said that ‘we are protected, nothing will block us,”’ Dante Madriaga, a former ZTE consultant, said at the Senate hearing.

Madriaga identified the other members of the Greedy Group as San Miguel, retired police official Quirino “Torch” de la Torre, Ruben Reyes and former Commission on Elections (Comelec) Chair Benjamin Abalos Sr. He called them the “Gang of Four.”

Asked by Sen. Jinggoy Estrada who was the greediest of the group, Madriaga said: “Since I am in the Senate, the First Couple is involved here.”

Malacañang Tuesday night dismissed Madriaga’s testimony as “hearsay.”

Anthony Golez, deputy presidential spokesperson, said Madriaga’s claims were “no different” from the allegations made by another Senate witness, former NBN consultant Rodolfo Noel Lozada Jr.

“These ‘allegations by installment’ unless proven through the process dictated by our laws would only remain as allegations. We also find it difficult to believe a mere technician-consultant of a company would know so much about the President or her family,” Golez said.

The new Senate witness said ZTE had advanced $41 million to the Filipino group in three installments:

• $1 million in August 2006 (for representation).

• $10 million in March 2007 as success fee after the National Economic and Development Authority (NEDA) approved the project.

• $30 million “in aid of elections” or support for administration candidates in the May 2007 national elections.

Filipino and Chinese groups

Madriaga said the Filipino group had a Chinese counterpart, referring to ZTE, which had wanted to get as much profit from the project.

The Filipino group even disputed the 50-50 split with ZTE because it felt that the Chinese company was earning more considering that it was the manufacturer of some of the equipment to be used for the project, according to Madriaga.

ZTE initially offered to undertake the broadband project, which sought to digitally link government offices nationwide, for $130 million.

American firm

The cost was based on the original proposal of the American firm Arescom, Madriaga’s former employer.

At $130 million, Madriaga said the actual project cost was only $50 million, with ZTE and Filipino group getting $40 million each.

“It (the actual project cost) is small. ZTE wanted to overprice it only by $25 million, but ZTE had to give in to what the Filipinos wanted,” he said.

Arescom offered to undertake the project with a wider coverage.

To match Arescom’s specifications, Madriaga said ZTE raised the project cost to $189 million, with $109 million in kickbacks split evenly between the Chinese firm and the Filipino group.

The project cost was raised a third time to $269 million to increase the coverage with the kickbacks rising to $140 million ($70 million each for ZTE and the Filipino group).

$170 million in kickbacks

The project cost was jacked up a final time to $329 million ostensibly to ensure full nationwide coverage.

The final cost raised the kickbacks to a whopping $170 million, with $30 million meant to boost the campaign funds of administration candidates in the May 2007 elections.

Madriaga claimed he did not get any money because he had no participation in the transactions. “I only wanted them to pay me,” he said.

“The kickbacks would grow exponentially at $329 million,” said Madriaga, a communications engineer who used to package projects for the Department of Transportation and Communications.

He said the release of the advances did not go smoothly.

At one point, Fan Yang, ZTE executive director, got irritated because the Filipino group could not control Jose “Joey” de Venecia III, head of Amsterdam Holdings Inc. (AHI) that proposed to undertake the NBN project on a build-operate-transfer scheme.

“ZTE asked: What kind of support are you giving when you can’t handle one person?” said Madriaga, who said he met with Fan 15 to 20 times.

Madriaga said the “Greedy Group” had also asked for $5 million for De Venecia. The AHI head walked out of a meeting in China so the payoff did not push through.

“If Joey and the group would agree, they would give the $5 million to Joey,” he said.

President’s husband cursing

Madriaga said he was at the Wack-Wack Golf and Country Club in Mandaluyong City during the “back off” confrontation between De Venecia and the President’s husband, Jose Miguel Arroyo.

“I was not inside the private room” but “I heard First Gentleman cursing when he stormed out,” he said.

“P... i... bata to mahirap pakiusapan ([Curse] It’s difficult to make a request to this kid),” he quoted the President’s husband as saying. “I heard it personally when he left. He was wearing a barong Tagalog.”

Lozada also linked the President’s husband to the deal.

Madriaga said the meeting took place on Dec. 4 or 5, 2006.

“That was the time when the First Gentleman was confined in the hospital,” Golez countered. “(This) destroys the credibility of Madriaga instantaneously,” he said.

“(I)t is the height of absurdity for Madriaga to allege before the Senate that the First Gentleman was off and running playing golf on Dec. 5, 2006, right on the very day of his discharge from St. Luke’s,” Arroyo’s lawyer Ruy Rondain said in a statement.

Madriaga said he met Abalos three or four times with Reyes, Dela Torre, San Miguel and the Chinese. He said that in one meeting, he saw Abalos with former Presidential Chief of Staff Michael Defensor.

President must witness signing

Madriaga said Fan was afraid of being fired if nothing came of the project.

“But Fan Yang said ZTE will not give out the money ($30 million) until we see your President in the contract signing. That is the only reason why the President went to Boao,” Madriaga said.

Ms Arroyo flew to China to witness the signing of the deal on April 21, 2007, leaving her husband who was then recuperating from open-heart surgery at St. Luke’s Medical Center in Quezon City.

The $329-million NBN contract was signed by Communications Secretary Leandro Mendoza and ZTE vice president Yu Yong.

Two weeks after the signing, Fan expressed the hope that it would all go smoothly, according to Madriaga.

“She was replaced recently because ZTE was cleaning house,” he said.

An Arescom official, Steven Lai, first offered the NBN project to ZTE, which then contacted a daughter of Abalos, according to Madriaga. (Abalos’ daughter has a business in China.)

Then Comelec Chair Abalos and his neighbor, Reyes, got in touch with his buddies De la Torre and San Miguel.

Madriaga said it was Reyes who got the $1 million and $10 million through the Hong Kong account of his Cayman Islands firm, the designated clearinghouse for the Filipino group.

“I am not privy to the cash disbursement. There are no “bayong bayong (native bag) ” of cash delivered here,” he said.

Only Abalos and Reyes got a piece of the first payoff of $1 million. Both got the lion’s share of the kickbacks, while De la Torre and San Miguel had to divide the balance, according to the witness.

$5 million to First Couple

Madriaga also claimed that half of the $10 million went to the First Couple, while the rest was divided among the other members of the Greedy Group and several Cabinet secretaries.

Madriaga said the entire $30 million was for the elections.

He said he was 110 percent sure that he would stand by his testimony. “If I turn around, my children will kill me,” he said.

Madriaga said his source of information about the payoffs were Fan and San Miguel.

Short hair, bumpers

Asked to described Fan, Madriaga compared her to Sen. Loren Legarda, “not as beautiful but with bigger bumpers,” drawing laughter from the audience.

“She looks typical Chinese, in her mid-30s, 5 feet 3, 5 feet 2, with short hair. A little heavier than Senator Legarda,” he said.

He said he was ZTE consultant and partly liaison officer from May 2006 to March 2006, reporting directly to San Miguel.

Madriaga said he had long wanted to testify in the Senate but was afraid for his life, especially for his seven children.

Sen. Panfilo Lacson moved to summon the Gang of Four, specifically Reyes and San Miguel.

De la Torre (a classmate of Lacson) has a terminal disease, San Miguel is still in the country, and Reyes left for the United States in October last year, according to Madriaga.

“If I know 80 percent, Leo San Miguel can give you 100 percent,” he said.

Sen. Aquilino Pimentel Jr. said he would invoke the extradition treaty to force the witnesses who fled to the US to come back.

Contrary to the government’s claim, the NBN contract was not lost as claimed by Telecommunication Assistant Secretary Lorenzo Formoso III at a business forum in Makati (on June 21,2007), according to Madriaga.

Madriaga said it was San Miguel who told Formoso to tell the businessmen demanding a copy that the contract was lost.

“It’s impossible for it to be lost [because there are soft copies]. The telecom group (Globe, Smart and Digitel) were the ones asking and they know the pricing,” he said.

Flaw is in pricing

Madriaga said the flaw in the contract was the pricing, and not technical or legal aspects.

“The scope of work was straight to the point, and telecoms people know how much the services and the equipment are,” he said.

The President acknowledged last Saturday that she was told the night before the deal was signed that it was attended by anomalies.

She canceled the deal on Oct. 2, 2007, five months after it was signed in China.

Testifying without a lawyer, Madriaga refused to authenticate the documents he submitted to the Senate, including a newspaper column which he said could be used by the senators as a guide.