Jose Miguel “Mike” Arroyo, who was seen as a backroom operator during his wife’s troubled nine-year presidency, is accused of accepting money to push through a $330 million government contract with Chinese telecommunication company ZTE Corp. to set up a nationwide broadband network in 2007. The contract was originally priced at $130 million.
His wife approved the deal, but later backtracked under public pressure and a congressional investigation that found the contract vastly overpriced.
Arroyo has denied wrongdoing and says the graft charges are flawed because the former president canceled the deal. He posted bail at the anti-graft court Tuesday hours after it ordered his arrest.
His wife, who left office in 2010, faces the same charges as her husband, and more. She has pleaded innocent to electoral fraud charges, but is in detention at a military hospital as she awaits trial.
A former elections chief, Benjamin Abalos, and ex-Transportation Secretary Leandro Mendoza were also charged over the ZTE contract and ordered arrested Tuesday. They previously testified in a Senate hearing and denied receiving millions of dollars in kickbacks.
Mendoza posted bail, while Abalos is under arrest on the same poll fraud charge as the former president.
Former Economic Planning Secretary Romulo Neri had testified that Abalos offered him a bribe to approve the ZTE contract. Jose de Venecia III, a losing bidder with connections to the Arroyos’ inner circle, testified that the ex-president’s husband was promised a $70 million commission.
Arroyo had prevented top officials, including Neri, from continuing to testify in the congressional probe. Under her successor, President Benigno Aquino III, the Philippines’ ombudsman investigated and filed charges at the anti-graft court, which issued the arrest warrants. If convicted, they face a maximum sentence of 10 years in prison.
The issue was never properly investigated because Arroyo had barred top officials, including Neri, from disclosing further details that might have implicated her.
Aquino blames his predecessor for corruption and says he wants to clean up the government, starting with the prosecution of the Arroyos and their allies. The former first couple accuse Aquino of pursuing a political vendetta.
The ZTE case has tested the Philippines’ relations with China, which Arroyo aggressively pursued. Aquino appears more lukewarm to Beijing amid a resurgence in territorial tensions over disputed islands in the South China Sea.
When the scandal broke, ZTE denied paying any kickbacks and there were concerns that the contract’s cancelation would adversely affect China’s investments in the Philippines. Aquino’s administration has also put on hold another flagship China’s investment, a railway project in the northern Philippines, on suspicion it was overpriced because of kickbacks.
