MANILA, Philippines – Defense Secretary Delfin Lorenzana agreed to defer approval of a deal allowing China-backed Dito Telecommunity to set up equipment in military facilities, until after the Senate examines the details of the agreement.

At a Senate hearing on Monday, September 30, on the 2020 budget of the Department of National Defense, opposition senators Franklin Drilon and Francis Pangilinan requested that Lorenzana provide them a copy of the memorandum of agreement (MOA) between Dito, formerly Mislatel, and the Armed Forces of the Philippines (AFP), which the defense chief said he would do so “within this week.”

“Out of courtesy perhaps for a co-equal, the executive and legislative branches, maybe we can defer approval of this until such time that we’ve been able to raise additional questions,” Pangilinan pressed the defense chief, looking at the forthcoming plenary round of budget debates as a chance to discuss the terms of the agreement. (READ: Hontiveros wants Senate probe into AFP deal with China-backed telco)

“Yes, sir,” said Lorenzana, who has yet to “carefully scrutinize” the deal himself, nearly 3 weeks since it was signed by then-AFP chief General Benjamin Madrigal Jr and Dito chief administrative officer Adel Tamano on September 11.

Madrigal retired from the military service on September 24 and has been replaced by Lieutenant General Noel Clement, who represented the AFP in Monday’s Senate hearing.

Pangilinan “found it odd” that the deal was signed before Lorenzana could look into it, but the defense chief insisted it followed the defense establishment’s standard procedure.

Lorenzana will have the final say on the deal anyway, and he could decide to reject it, he assured the Senate panel.

A fair assessment?

Questions on the deal’s security implications took up much of the hearing as senators pointed out Dito’s direct link to the Chinese government, and how the arrangement would leave the military vulnerable to spying by Beijing, which requires all companies to provide it intelligence.

Dito is 40% owned by China Telecom (Chinatel), which in turn is owned and controlled by the Chinese government.

Lorenzana argued that the AFP has similar arrangements with Globe Telecom and Smart Communications, and Dito’s equipment will be placed on installations already occupied by the two other telcos – 130 communication towers all over the country.

“Yes, they will be located only in areas where Globe and Smart have located, but that means, Mr Secretary, that the Chinese government will have 130 listening posts inside our camps. Is that a fair assessment? Is that fear founded?” Drilon, the Senate minority leader, asked Lorenzana.

“I’m not sure if it is [a] fair [assessment]…because the way it was presented to me was that Chinatel is only a minority investor in Mislatel. Mislatel is still a Filipino company,” Lorenzana replied.

Although Chinatel’s 40% equity in Dito or Mislatel is a minority stake, Drilon said it still affords the Chinese entity significant influence over the telco’s day-to-day operations.

Globe and Smart do not present the same threat despite their own foreign equities because only Dito presents a conflict of interest with a foreign government.

“I guess that’s the cause of concern, and you cannot blame the public for having that kind of a concern, given our relationship with China and the Spratly and the West Philippine Sea issues. The concern that the Chinese government is present alone inside our military camps is something that should be addressed, Mr Secretary,” Drilon told Lorenzana.

Why the franchise then?

Lorenzana tried to turn the tables on Drilon, pointing out legislative approval of Dito’s franchise to operate.

“Now if there are questions about the ownership, why did Congress approve it?” said the defense chief.

Drilon, who had dissented against that approval, said it is the deal’s security implications, not its legality, that is under question.

“The 40% is valid. The concern is, ang dami namang papaglagyan dito ng mga towers na ‘yan, bakit doon pa sa loob ng kampo? ‘Yun po ang tanong ng mga tao na kinakabahan (with so many places where those towers could be placed, why put it inside camps? That’s the question of people who feel wary) because of the present-day situation in the West Philippine Sea and the incursions that you yourself have been very consistent in exposing,” he said.

Drilon then added that Lorenzana himself flagged the security threat from Philippine offshore gaming operators employing Chinese workers near military camps. How come the defense chief seems unperturbed by looming Chinese presence within the same camps?

“I don’t see any Chinese going there to man the towers,” Lorenzana said.

“Yes, because they stay in Beijing. The Chinese will just stay there and listen,” Drilon replied.

“How will they listen if it’s just a transmitter?” Lorenzana asked, at which point Drilon dropped the argument.

Third-party review

In any case, the military may still back out of the deal, Senator Panfilo Lacson, chairman of the Senate committee on national defense and security, verified with Lorenzana.

“I will act according to the national interest,” said the defense chief, who will examine the MOA and then decide whether or not to approve it “in a week’s time.”

Pangilinan then asked the security officials in the hearing whether there was a written report of the “stringent risk analysis” they supposedly ran before the AFP signed the deal.

The defense and military officials were unable to produce any report, so Pangilinan asked them to include their risk analysis when they submit a copy of the agreement to the Senate.

The opposition senator then added that assurances of security from Dito do not suffice, and he suggested subjecting the arrangement to a third-party review.

Questioning the process by which the AFP agreed to let Dito build facilities in military camps and installations, Pangilinan emphasized that the deal has yet to be sealed.

“I hope there was no attempt at forcing the hand of Secretary Lorenzana to approve [the deal] on the premise [that] it had already been reported in the media and publicly announced as a done deal. It looked like it was a done deal, at least perception-wise.” – Rappler.com