MANILA, Philippines -- Deputy executive secretary Manuel Gaite on Tuesday admitted giving P500,000 to Rodolfo Noel Lozada Jr., the key witness in the Senate inquiry into the scandal-tainted national broadband network (NBN) deal, but insisted that no public funds were involved.

Neither, said Gaite, was the money intended to keep Lozada from testifying on the alleged corruption surrounding the controversial deal, which had been awarded to China’s ZTE Corp. but was subsequently scrapped after the Senate began its probe.

At the same time, Gaite asked whether Lozada asked him for the money as “bait.”

"I was surprised when i learned that he [Lozada] was coming home already the day after I gave the money. Did he really need the money or was he just baiting me?" Gaite said in a statement released by the Palace.

"It's unfortunate that all my efforts at helping Jun Lozada have been twisted by him or made to appear as part of a scheme to prevent him from testifying in the Senate hearing on the NBN-ZTE project," he said.

"I wish to state that no government fund was used in the money that I gave to Lozada,” Gaite said, as he rued having helped the former president of the Philippine Forest Corp., who was a consultant to then socioeconomic planning secretary Romulo Neri on the NBN deal.

“With the way Jun Lozada has twisted my response to his personal appeal, deceived me about his dire circumstances, publicly and repeatedly dragged my name into a controversy I have no personal knowledge about, I regret that my act of compassion for him was taken advantage of, and was used to suit his story," Gaite said.

Gaite also denied arranging for Lozada's travel abroad or buying his airplane ticket.

Lozada said he had been sent to Hong Kong to prevent him from appearing at an earlier Senate hearing.

Gaite said he gave the money to Lozada's brother, Owe, on February 4 on the request of Lozada himself who, the Palace official said, told him he had no winter clothes and was "running out of funds."

Since Lozada's brother signed an acknowledgement receipt for the P500,000 cash, Gaite said he expected the Senate witness to "account" for how he spent the funds on his return.

Lozada returned what he said was the money Gaite had given during Monday’s hearing of the Senate inquiry.

"I would like to emphasize that from the start, I did not seek Jun Lozada to provide him with legal advice. It was he, through CHEd [Commission on Higher Education] chairman Romy Neri, who sought my legal assistance," Gaite said.