MANILA, Philippines -- Malacañang officials Tuesday continued to deny that President Gloria Macapagal-Arroyo had admitted the National Broadband Network (NBN) deal with China’s ZTE Corp. was flawed, and claimed that it took a while to cancel the deal because of back-channel talks with the Chinese government.

The Palace went all-out in making the denial in the face of the claim of opposition lawmakers that the delayed cancellation of the questionable deal showed Ms Arroyo’s involvement -- and liability for impeachment.

“What she said in her radio interview [on Feb. 23], and which she repeated in her speech after Mass the following day, was that she had moved quickly to cancel the deal when she learned of the slightest sign of impropriety attending it,” Press Secretary Ignacio Bunye said in a statement, which he reiterated in interviews over radio stations dzMM and dzBB as well as ANC television.

Bunye also quoted Ms Arroyo as saying that she had told Executive Secretary Eduardo Ermita and Interior Secretary Ronaldo Puno “of the attempted bribe with the view of having the matter investigated by the officials tasked by law to do the same.”

In her interview over dzRH on Saturday, Ms Arroyo said she took steps to cancel the deal after being told by someone of purported anomalies on the eve of the signing of the NBN-ZTE supply contract on April 21, 2007.

She witnessed the signing of the contract between Transportation and Communications Secretary Leandro Mendoza and ZTE vice president Yu Yong in Boao, Hainan, China. The contract was canceled in September, or five months later.

Embarrassment

Bunye said that if Ms Arroyo had decided to push ahead in witnessing the signing of the supply contract, “it was so as not to embarrass Chinese partners and the Chinese government itself, confident that the [Philippine] government would do what was necessary to correct whatever infirmities there might have been.”

“She in fact canceled the deal even before any party could perform on it according to its terms,” Bunye said. He said this was why her cancellation of the deal “should be taken in favor of the President rather than against her.”

“It is unreasonable to conclude that she was complicit in whatever wrongdoing is alleged to have afflicted the deal,” he said, adding that so far, the proper forum had “not established that ... there was a crime committed.”

On why it took time for the administration to cancel the deal, Bunye said Ms Arroyo had to explain the matter to the Chinese government. He pointed out that Ms Arroyo had said in her radio interview that at first the Chinese did not understand.

He said Trade Secretary Peter Favila “had to do a lot of back-channeling with his counterpart.”

“It was after her own subsequent meetings with top Chinese officials that the latter agreed to the cancellation,” Bunye said.

Both Bunye and Favila said they did not know whom Ms Arroyo was referring to when she said someone had told her of the purported irregularities in the deal.

‘Very sensitive’ matter

Favila, who was at Tuesday’s Cabinet meeting in Malacañang, told reporters that Ms Arroyo had assigned him to talk with his Chinese counterpart, and that he did so a number of times until it was decided that the deal should be canceled.

“So they’re asking why it took five months? It’s not that simple because this is very sensitive and we are trying to be careful here because we have good relations with China,” Favila said.

“This matter should be discussed properly, and that was what I did, which initially led toward [the deal’s] suspension and eventually the cancellation of the project itself,” he said.

Per Favila’s account, he had a series of meetings with his Chinese counterpart, first to ask the latter to give the Philippine government time to answer questions being asked at home on whether the NBN project was needed.

“They listened to me. They waited. Then I went back there,” Favila said in Filipino, adding that this time, he asked his counterpart to understand that the Philippine government had to answer questions on the project’s legality.

“They said, ‘Go ahead, we’ll support you, we’ll give you time to explain that,’” he said.

The Department of Transportation and Communications made the explanations, Favila said.

‘Ano ba talaga?’

Continuing with his account, Favila said he returned to China in September 2007, this time to tell the Chinese officials that the NBN project was being alleged as tainted by corruption.

He said the Chinese officials asked him, “Ano ba talaga?”

“So they told me, ‘What exactly is it, Mr. Secretary? You’ve been talking with us for months, making all sorts of apologies, explaining. So what is it?’ That’s why it took five months,” he said in Filipino.

Before September, Favila said, he was able to convince his Chinese counterpart to suspend the implementation of the supply contract because of the issues that needed to be explained.

“Then dumating sa panahon na kanselahin na lang ito para matapos na lahat ito (It got to the point where it was canceled just to end everything),” he said.

What prompted him to say that the deal should just be canceled was the fact that the Chinese officials did not understand the situation, Favila said.

He added that it was the Philippine government which initiated the cancellation of the deal.

Persistent questions

When whistle-blower Rodolfo Lozada Jr. came forward to corroborate the alleged corruption in the deal, the Chinese officials asked Favila why the issue was still being questioned and investigated when the deal had been canceled.

“They told me, ‘Secretary, we backed you in your call for the cancellation of the deal. So it was canceled. Why can’t you get done with the issue?’” Favila said.

He said a top Chinese official, whom he declined to name, had posed the question.