June 27, 2005

Arroyo admits lapse but denies rigging election

By John O'Callaghan

MANILA (Reuters) - President Gloria Macapagal Arroyoadmitted on Monday she talked to a Philippine electionofficial, as detailed in recordings that have prompted callsfor her to quit, but insisted she did not influence the votecount.

The opposition, which also accuses members of Arroyo'sfamily of taking kickbacks from illegal gambling syndicates,has seized on the recordings of conversations as proof shecheated her way to a fresh term in May 2004.

Before her televised speech to the nation, analysts hadsaid they wanted Arroyo to offer clarity to investors worriedabout the impact of political volatility on her fiscal reformsto raise revenues and cut chronic budget deficits.

There is no law to stop candidates from talking to electionofficials in one of Asia's most vibrant but unruly democracies.

But Arroyo's admission of a "lapse in judgment" and appealfor forgiveness were unlikely to deflect the opposition fromseeking her resignation.

"The political tension will remain," said Jose Vistan,analyst at AB Capital Securities in Manila. "This will not begood for the financial markets."

Arroyo said that, anxious to protect her votes, she hadcalled many people, including an official from the commissionon elections. She did not name the official but the oppositionhas said it was election commissioner Virgilio Garcillano.

"My intent was not to influence the outcome of the electionand it did not," she said, breaking three weeks of silence overthe recordings. "I am sorry. I also regret taking so long tospeak before you on this matter."

The recordings appear to show Arroyo pressing the electionofficial for a bigger winning margin. The final tally gave hervictory by about 3 percent of the vote, roughly in line withsurveys before the election.


"I don't think it's necessarily an end in itself," saidGuillermo Luz, executive director of the Makati Business Cluband secretary-general of election watchdog NAMFREL. "But it's ahuge step forward and people need to settle down."

None of the allegations of election cheating or gamblingkickbacks has been proven against Arroyo or her family.

Her spokesman had previously said the recordings weredoctored and the government has warned the accusations are partof a plot to undermine and oust Arroyo.

With oil prices soaring above $60 a barrel, Filipinos areanxious over the rising cost of living and an expanded nationalsales tax due to take effect on July 1.

There have been relatively small protests in recent weeksagainst Arroyo, whose ratings are the lowest of any Philippineleader since the overthrow of dictator Ferdinand Marcos in1986.

But analysts have seen no signs yet of the volcanic publicanger beneath the "people power" revolts that toppled Marcosand then Joseph Estrada as president in 2001.

The peso, which hit a 5-month low of 55.94 to the dollarlast week on perceptions of rising political risk, ended localtrade at 55.51 on Monday before Arroyo's speech, stronger thanFriday's close at 55.65.

The main stock index ended 0.84 percent higher on Monday.

A lawyer for Marcos, Oliver Lozano, filed an impeachmentcomplaint against Arroyo on Monday, saying conversations withthe election official were immoral and contrary to theconstitution.

The complaint can be taken up by the lower house ofCongress with the backing of just one law-maker but a motion toimpeach Arroyo would require support of one-third of the 235members.

($1 = 55.51) (With reporting by Dolly Aglay and MannyMogato)