MANILA, Philippines--President Gloria Macapagal-Arroyo admitted Saturday she was aware of allegations of high-level corruption in the National Broadband Network project, but she did not stop the signing of the deal with ZTE Corp. last April 21 because she felt then that diplomatic relations between the Philippines and China were in peril.

The President, speaking mostly in Filipino, made this disclosure 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 told her about the purported corruption.

According to Arroyo, she addressed the "anomalies” in the NBN-ZTE deal 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: "The people are angry about corruption. So am I," she said in Filipino. That is why as soon as there was talk about corruption in this I project, I took steps to cancel it."

Arroyo canceled the project only in September 2007, about five months after her visit on April 21 to Hainan province in China.

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 Communication Secretary Leandro Mendoza and ZTE Corp. vice president Yu Yong.

During the signing of the contracts, Cabinet officials were highly optimistic about the benefits of the national broadband deal to the country.

Arroyo said she personally informed Chinese President Hu Jintao about her decision to cancel the contract with ZTE Corp. during a visit to Shanghai on October 2, 2007.

"At the first opportunity I had, I talked to the president of China and told him we had to cancel the contract. At first he was surprised but he understood and we remain friends," she said.

To prove that she was serious about stamping out corruption from her scandal-rocked administration, she said had increased the budget of the Office of the Ombudsman and has had various groups monitor government procurement and bidding processes.

"This is one of the reforms in the system that we have undertaken to lessen corruption in government," she said.

The Inquirer learned that Romulo Neri, then director general of the National Economic Development Authority (Neda), went to Malacañang on the eve of Arroyo's departure for Boao, China to attend the Boao Forum.

It was said that during this brief encounter in April, Neri warned Arroyo about the bribe-tainted deal.

Neri was later transferred by the President from NEDA to the Commission on Higher Education in August 2007, a move seen as part of Palace efforts to silence him.

When he faced the Senate the following month, Neri claimed that he had told President Arroyo about the purported P200 million bribe offered to him by then Commission on Elections Chair Benjamin Abalos Sr. in exchange for approving the deal with ZTE.

On February 11, ZTE whistleblower Rodolfo Lozada Jr. testified in the Senate about a $130-million kickback demand for First Gentleman Jose Miguel Arroyo and Abalos in the $329-million NBN deal.