Arroyo ally resigns over Philippine bribery scandal

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MANILA, Oct 1 (Reuters) A corruption scandal dogging Philippine President Gloria Macapagal Arroyo claimed its first casualty today, when one of her allies resigned following claims he offered bribes to secure a contract for a Chinese firm.

The move by Benjamin Abalos, who stepped down as head of the election commission (Comelec), was widely interpreted as an attempt to protect Arroyo. He had faced impeachment, a process which could have brought more details of the scandal to light and potentially damaged the president.

''Abalos saved the queen,'' said Teodoro Casino, an opposition member of the house of representatives.

But to clear his name, Abalos could still implicate others after a humiliating appearance at a senate inquiry last week.

During the hearings, Romulo Neri, the former head of an economic planning agency, said Abalos had offered him 4.4 million dollars during a round of golf to approve a 330 million dollars telecoms deal with Chinese firm ZTE Corp <0763.HK>.

Abalos, who worked as a janitor and golf caddie to pay for law school, denies the allegations and vowed to fight them.

''The fight's not over yet,'' he told supporters, who shouted ''no, no'' when he announced the resignation. ''I will prove them wrong. I will clear my family's name and restore my dignity.'' The bribery scandal has been an irritant for Arroyo since July, but she has not been directly implicated.

Neri told the inquiry that Arroyo had told him not to accept the bribe. But he refused to divulge other conversations with the president, provoking speculation that Arroyo was lining Abalos up as a ''sacrificial lamb'' to limit the fall-out from the scandal.

ARROYO ''MASTERSTROKE'' Had Abalos stayed on, the impeachment trial would not have allowed government officials to invoke executive privilege and withhold information as they had during the senate inquiry.

''Arroyo escaped another potential crisis by sacrificing Abalos,'' said Earl Parreno, analyst at the Institute for Political and Electoral Reforms. ''It was a masterstroke to calm turbulent waters.'' But the resignation could embolden the opposition to further pursue Arroyo over the scandal, Parreno said.

The case risked getting messy for Arroyo if the speaker of the house of representatives and an important coalition partner, Jose de Venecia Jr, broke ranks over the scandal.

The alleged shenanigans came to light when the speaker's son, Jose ''Joey'' de Venecia III, cried foul when his bid to supply a broadband network to the government was rejected in April.

But the elder de Venecia appeared to draw a line under the scandal. ''Thank God the impeachment case is now moot and academic and will now be behind us,'' he said in a statement.

Joey de Venecia told the senate inquiry last week that Abalos had offered him million to withdraw his bid for the contract.

Abalos, who is filing libel suits against his accusers, denied brokering the deal with ZTE Corp, but has said that he travelled to China to play golf with company executives.

REUTERS SKB AS1616

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