MANILA, Philippines--LAST WEEK'S Senate hearings on the NBN-ZTE scandal must have given NEDA and its staff reason to both feel good and feel bad. The NEDA is of course the National Economic and Development Authority, that agency of the government tasked to coordinate overall socio-economic development planning.

No authority?
A big part of the Neda's "clout" lies its role in the evaluation and approval of projects funded by official development assistance (ODA), in the form of foreign grants and concessional loans, such as the now-infamous ZTE broadband deal for a National Broadband Network (NBN).

At some points in the hearings, NEDA seemed reduced to a mere staff agency with very little, if any, authority--notwithstanding that the "A" in its name precisely stands for that. At other points, the crucial and pre-eminent role played by the agency within the national government in shaping the nation's future was affirmed by the legislators grilling NEDA's former leader, now Commission on Higher Education Chairman Romulo Neri. Ironically, it was the latter who sometimes came across as implying that NEDA is virtually powerless, incurring at one point the ire of a senator who pointed out that NEDA was vested with great powers and independence by the Constitution itself.

A nosy agency
The NEDA is actually two things. It is the NEDA Board, chaired by the President and composed of most members of the Cabinet plus the Bangko Sentral governor, which meets once a month in lieu of the regular Cabinet meeting. It is also the NEDA Secretariat--the agency housed in Pasig City formerly headed by Neri, along with its regional offices all around the country, which provides technical secretariat support to the NEDA Board. The Neda's legal charter describes it as the highest policy-making body in the country. Thus, it cannot be as weak as it seemed to have been implied in some parts of last week's hearings.

It is the NEDA Secretariat's job to ensure that all decisions of the NEDA Board are implemented. To do this effectively, it must have the authority for oversight--that is precisely the reason for the agency's name--and as I often describe it, NEDA must necessarily "poke its nose into everybody else's business." That is why the NEDA and its director general can be so unpopular, and would rather be bypassed by Cabinet colleagues, local executives and legislators if they can.

Projects vs contracts
This is particularly so in the context of Neda's role in the evaluation and approval of ODA projects by the Investment Coordination Committee (ICC), prior to elevation to the full NEDA Board. ICC, while chaired by the secretary of finance, relies on the full complement of the NEDA staff, including its regional offices, for its technical secretariat support. ODA-funded projects must thus undergo NEDA scrutiny.

On this, Neri repeatedly asserts that it is the projects' substance (he used the word "concept," which is too weak a word)--not the specific contracts--that the ICC and NEDA Board approve. But he is not completely right to insist that in the case of the NBN project, the DOTC "could do whatever it liked" in deciding how to implement it. Section 9 of the ODA Law (R.A. 8182) states: "All concerned implementing and oversight agencies shall submit to the NEDA all information and reports as may be required by it to review draft contracts (emphasis mine)."

From BOT to loan
It is now widely known, with official transcripts freely circulating, that the ICC and the NEDA Board approved the NBN project late last year on the condition (explicitly stated by the President as the NEDA Board Chair) that it would be implemented at no cost to the government, i.e., on a build-operate-transfer (BOT) basis with no government guarantees. Neri testified that he had in fact conveyed this to ZTE officials in a lunch meeting arranged by the Chinese Embassy where Comelec Chairman Benjamin Abalos was also present. And yet, just a few months later, the President was "blessing" the signing of the contract for the project that was to be financed with a loan from the Chinese government--in complete contravention of the NEDA Board decision.

The NEDA, through Neri, did have the responsibility to, at the very least, call the DOTC's attention that by pursuing the ZTE deal, the latter was violating the NEDA Board decision. The DOTC may be free to determine which supplier or contractor to implement a project, but it certainly was not free to just change it from a BOT project to an ODA loan-funded one on its own.

Clear violation?
There is more. The DOTC may have forgotten that Section 4 of the ODA Law states: "ODA shall not be availed of or utilized directly or indirectly for ... telephone programs contracted as of Jan. 1, 1996, except basic telephone programs and projects for rural areas not adequately serviced and/or currently developed by private enterprises shall be entitled to ODA loan availments." NBN is very much a telecommunications project.

The law further states: "The NEDA shall ensure that the ODA obtained shall be for previously identified national priority projects which are urgent or necessary. ODA shall not be accepted or utilized solely because of its availability, convenience or accessibility." The project arguably does not satisfy the first description of being urgent or necessary (as testified to by UP Professors Raul Fabella and Emmanuel De Dios), while the ZTE deal smells very much like the second, with the additional stink of a supplier-driven, graft-ridden transaction to boot.

Seems to me a clear violation of the law, if ever I saw one.

Comments welcome at chabito@ateneo.edu.

Previous columns:
Jobs: the continuing struggle – 9/24/07
Competing creditors – 9/17/07
Those ubiquitous Chinese loans – 9/10/07
Extraordinary growth – 9/03/07
A high-yield public investment – 8/27/07