The Purported High-Level Corruption attending the National Broadband Network (NBN) project was known to President Macapagal-Arroyo, but with relations between the Philippines and China at stake, she did not stop the signing of the deal with ZTE Corp. on April 21, 2007.

The President herself, speaking mostly in Filipino, made the disclosure Saturday in an interview with radio commentator Joe Taruc over dzRH. "Someone told me about it the night before the signing of the supply contract. That was one of many signings [in China]. But how can you cancel it the night before, considering that you are dealing with another country?" she said.

But she did not say who had told her about the purported corruption in the $329-million NBN-ZTE deal in which her husband and certain high officials have been implicated.

According to Ms Arroyo, she addressed the "anomalies" in the project by canceling it.
"That was long canceled. Soon after I was informed about it, I already [planned] steps how to cancel it," she said.

The President said that like other Filipinos, she was outraged by corruption: "Ang taumbayan galit sa katiwalian. Ganoon din ako, galit din ako sa katiwalian.

"Kaya itong proyektong ito, oras na may pag-uusap na anomalya, ay agad-agad kong kinansela. Agad-agad na gumawa ako ng hakbang para kanselahin (So in this project, soon after talk circulated that it was anomalous, I immediately canceled it. I promptly took steps to cancel it)," she said.

But Ms Arroyo canceled the project only on Sept. 22, 2007, days after the Supreme Court ordered that its implementation be temporarily stopped and about five months after her visit to Hainan, China, on April 21.

In that 12-hour visit -- made as her husband Jose Miguel Arroyo recuperated from high-risk heart surgery at St. Luke's Medical Center -- she attended the Boao Forum for Asia and, later, witnessed the signing of the NBN and Cyber Education supply contracts by Transportation and Communications Secretary Leandro Mendoza and ZTE Corp. vice president Yu Yong.

The signing was held at Haikou International Airport, shortly before Ms Arroyo boarded her plane to return to Manila.

It was during a visit to Shanghai on Oct. 2, 2007, that Ms Arroyo personally informed Chinese President Hu Jintao of her decision to cancel the NBN-ZTE contract:

"Pero sa unang pagkakataon, kinausap ko kaagad iyong pangulo ng China para sabihin sa kanya na kailangang kanselahin iyong proyekto. Sa una nagulat, sa pangalawa, naintindihan niya, at magkaibigan pa rin kami kahit kanselado na ang proyekto (The first chance I got I spoke to the President of China and told him that the contract had to be canceled. He was initially surprised, but later he understood, and we remain friends despite the canceled project)."

Romulo Neri, now chair of the Commission on Higher Education (CHEd), was the director general of the National Economic and Development Authority (Neda) when the NBN project was approved.

He was transferred from Neda to the CHEd in August 2007.

In his testimony on Sept. 26 at the Senate joint inquiry into the NBN-ZTE deal, Neri said he told the President that then Commission on Elections Chair Benjamin Abalos Sr. offered him P200 million in exchange for approving the deal with ZTE. Abalos vehemently denied the charge.

Neri refused to talk about the rest of the conversation with the President, invoking executive privilege.

Neri in his testimony at the Senate did not specify when he informed Ms Arroyo of the alleged bribe offer made by Abalos.

Despite summonses, Neri continues to refuse to testify again at the Senate inquiry, and has asked the Supreme Court to rule on the matter.

During a visit to New Delhi on Oct. 5, 2007, Ms Arroyo told reporters that she would invoke executive privilege to prevent Cabinet members from talking about privileged communications, including previous discussions on the NBN-ZTE deal.
"It's a matter of discipline," she said.

Ms Arroyo also admitted for the first time that Neri had informed her of Abalos' purported bribery attempt.

"Ya, I can confirm that," she said, adding without elaborating that she had told Neri to reject the offer.

Some senators on Saturday said the President's claim that she learned of the irregularities in the NBN project only on the eve of the contract-signing confirmed that she was part of the corrupt deal.

"What Gloria Macapagal-Arroyo did or didn't do after she learned something was wrong with the NBN deal on the eve of the April signing is the smoking gun that links her to the scandal," said Senate Minority Leader Aquilino Pimentel Jr.

According to Sen. Panfilo Lacson, Ms Arroyo "still thinks she can fool us all the time."

"Fact is, she learned about the overprice the moment her husband told her how big it was," Lacson said.

The senator said he believed it was the huge kickback involved in the deal that prompted Ms Arroyo to ditch her previous instruction to undertake the NBN project as a build-operate-transfer agreement and agree to a sovereign loan package instead.
"To leave a critically ill husband just to stand witness to the signing of the NBN supply contract in China tells us a lot," Lacson said.

Senate Majority Leader Francis Pangilinan said the President's "admission" had made matters worse for her. "She has painted herself into a corner," he said

Pangilinan said he was finding it "difficult" to believe Ms Arroyo's claim, and took her to task for not ordering an investigation and postponing the contract-signing in the meantime.

He also pointed out that five months passed before the President canceled the contract, after the Senate exposed the purported bribery and overprice and the issue became a major scandal.

"Assuming for the sake of argument that the President is telling the truth … her subsequent act of proceeding with the approval of the contract proves that, at the very least, she tolerated and condoned criminal activities," Pangilinan said, adding:
"At worst, she was a party to it. Either way it appears she failed to act appropriately and may have betrayed the public trust by this failure."