China's ZTE confident on Manila telecoms deal probe

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MANILA, Sep 23 (Reuters) Chinese telecoms equipment maker ZTE Corp <0763.HK> said it was disappointed with the Philippines' decision to suspend a 0 million telecoms deal at the centre of a political scandal but was confident of winning it back.

On Saturday, Philippine Trade Secretary Peter Favila said President Gloria Macapagal Arroyo had suspended the deal with ZTE after it triggered a kickbacks scandal that threatened to shake her government and split her allies in Congress.

The Supreme Court had already stopped the deal, under which ZTE was to build a broadband network linking state agencies, after it received two petitions alleging irregularities and overpricing.

''ZTE is utterly disappointed with the press statement of Secretary Peter Favila that the Philippine government will suspend the NBN (national broadband network) project pending investigation,'' ZTE said in a statement on Sunday.

''ZTE is confident that the investigation will eventually clear its good name and reveal that ZTE's proposal is, in fact, superior and the most cost-efficient as well as the most advantageous to ... the Filipino people,'' it added.

Cabinet members defended the deal at a Senate hearing on Thursday.

Jose de Venecia III, the head of a telecoms firm that lost out on the broadband contract, told an earlier Senate hearing that the deal with ZTE was overpriced by at least 0 million to facilitate kickbacks to senior government officials.

De Venecia also said Arroyo's husband had told him to ''back off'' from the deal, signed in April.

De Venecia is the son of House of Representatives Speaker Jose de Venecia, head of the dominant Lakas party, part of the ruling coalition along with Arroyo's smaller Kampi party.

Analysts have said a split in Arroyo's coalition could pave the way for a motion in the lower house of Congress to oust the president, who has survived two impeachment attempts, largely with the support of the elder De Venecia.

REUTERS DKS HT1525

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