PCIJ finds same patterns of pork misuse under PNoy gov't

By Malou Mangahas, Philippine Center for Investigative Journalism

Posted at Aug 17 2015 12:16 PM | Updated as of Aug 17 2015 08:26 PM

Pork à la Gloria – ‘Kahindik-hindik’; Pork à la PNoy – ‘Unconscionable’

First of a Series

“KAHINDIK-HINDIK” or horrible in English, was how then Commission on Audit (COA) Chairperson Maria Gracia Pulido-Tan described the corruption in pork that her team of 18 COA Special Audits Office staff and a Technical Audit specialist uncovered when they scrutinized pork-barrel projects supposedly implemented from 2007 to 2009.

The special audit covered part of the last half of the Gloria Macapagal-Arroyo administration, and Pulido-Tan’s rather colorful description of what had taken place had been prompted by her team’s findings: P79.878 billion of pork monies lost to wasteful spending, including P6.156 billion that went to 82 fake nongovernment organizations (NGOs) endorsed by 188 legislators for 772 fake projects designed for fake beneficiaries covered by fake receipts and reports.

In recent weeks, COA has set off a series of annual audit reports (AARs) on government agencies, this time on how pork monies were spent during the first half of the administration of President Benigno S. Aquino III. The reports do not present a pretty picture. They reveal how, in about a dozen public agencies that served as conduits of pork or the Priority Development Assistance Fund (PDAF), the Disbursement Acceleration Program (DAP), and other lump-sum funds from 2011 to 2013, COA has already recorded a continuing abuse and misuse of pork.

‘Unconscionable’

Curated, sorted, and analyzed by PCIJ, pages and pages of the COA AARs showed a trail of pork à la PNoy infected by the same corruption that marked the trail of pork à la Gloria. In fact, much like its former chief, COA itself in one of these reports chose a searing description for what has been going on under the present administration: “unconscionable” – walang awa in Filipino.

COA’s Circular 2012-003 defines “unconscionable expenditures" as those that are “unreasonable and immoderate, and which no man in his right sense would make, nor a fair and honest man would accept as reasonable, and those incurred in violation of ethical and moral standards.”

In addition, several COA agency reports noted that despite explicit advisory from the Supreme Court to stop the disbursement of PDAF by September 2013, multimillion pesos of pork monies were still released, while the fund balance for projects not yet covered by Notices of Cash Allocation (NCA) were not reverted to the Treasury, by a number of pork-conduit agencies and legislators.

For sure many Filipinos had wanted to believe that the Aquino government’s much-touted “daang matuwid (straight path)” pledge would mean, among other things, the prudent use of state funds for projects. At the very least, they probably expected that the findings of the voluminous COA special audit report on pork disbursed from 2007 to 2009 would no longer be found in similar reports covering Aquino’s term.

Arroyo era findings

Released on Aug. 16, 2013, the COA special audit report on corruption in pork under Arroyo noted in part:

• About P79.878 billion in PDAF and its “hard projects” component called Various Infrastructure Including Local Projects (VILP) from 2007 to 2009 “were not properly released” and documented by the Department of Budget and Management (DBM).

• The funds coursed through seven government corporations and agencies, and 14 local government units (LGUs) were “not appropriately, efficiently, and effectively utilized.” Ten agencies moved the monies to 82 NGOs illegally, or “without any appropriation law or ordinance.”

• The NGOs and their suppliers could not be located at their listed addresses, had no addresses or only fake addresses, or were located in shanties and residential homes.

• Legislators themselves and/or their relatives were incorporators of six of the 82 NGOs; several others had the same officers or interlocking directorates.

• The pork projects of these NGOs had ghost beneficiaries, or the same beneficiaries attending two or more project events held on the same day at different locations. One NGO had even submitted “the same list of beneficiaries to two different agencies, and/or a list of beneficiaries taken from the published list of board/bar examination passers for various professions.”

• These NGOs and their suppliers had none to negligible equity and gross sales; many had no business permits, registration papers, or track record; several used the same taxpayer identification numbers and issued fake or irregular receipts. Yet still, they secured from P300,000 to P585.4 million or pork funds because they had legislators as “sponsors” and the projects were not subjected to bidding.

• About P1.531 billion of pork funds transferred to 55 NGOs “remained completely unliquidated” as of 2013, when the COA report went public, “including P28.605 million for the conduct of three studies which were not at all used.” The liquidation documents submitted by the rest of the NGOs “were found in audit to be deficient or otherwise irregular.”

Aquino era findings

PCIJ’s review of COA’s latest agency audit reports reveals that the same patterns of abuse and misuse of pork funds have lingered on under the Aquino government. These took place even in agencies headed by those considered as trusted allies of the President.

For instance, in the Department of Agriculture (DA) under Secretary Proceso Alcala, a Liberal Party stalwart and close Aquino friend, COA found that the implementation of PDAF projects was “ineffective” because:

• In the National Livelihood and Development Corporation (NLDC), an agency attached to the DA that had been linked to the Napoles pork-barrel scam, “nine livelihood projects in the total amount of P235 million funded from the PDAF of seven legislators, which were implemented by four NGOs, were found to be unconscionable as names from published list of board examination passers were used as supposedly beneficiaries of the projects.”

• “Checks, together with supporting disbursement vouchers (DVs) and documents totaling P301.505 million for CYs 2010 and 2011, were not submitted to the Audit Team, contrary to the provisions of Section 100 of Presidential Decree (PD) 1445, hence, prevented the Team from completing the audit of all PDAF disbursements made during the period.”

• “NAFC (National Agriculture and Fisheries Council), a government council, was given fund transfers of ?199,400,000 in CY 2012 through the endorsements of legislators, for the implementation of various livelihood projects the purposes of which are not within the mandate and functions of the Council.”

• “Provision of additional fund transfers to NABCOR (National Agribusiness Corp.) of ?5,000,000 in CY 2011 out of PDAF despite the absence of Progress or Status Reports on the implementation of various projects funded out of DA funds, and liquidation of previous fund transfers to the agency.”

• “Unclear approved guidelines on the monitoring, validation, and evaluation of the projects by DA representatives, which caused the delay or non-submission of the required reports to determine the progress of the projects.”

• “Non-compliance with pertinent laws and regulations in the awarding of contracts to NGOs/POs.”

• “Questionable utilization and implementation by the NGOs/POs for (sic) PDAF projects.”

• “Non-submission of assessment report by DA representatives for PDAF projects already completed.”

• “The total reported balance of the accounts Due from NGAs/GOCCs/LGUs, NGOs/POs charged to PDAF funds as of year-end amounting to ?1,151,534,853.82 cannot be relied upon due to the (a) inclusion of long outstanding/dormant balances of ?972,193,603.82 aged more than one year to over five years, the purposes of which were deemed to have already been completed/terminated considering their ages; and (b) recorded liquidations and write-off of accounts totaling ?271,161,500 were not supported with documentation.”

TESDA’s billions

In the Technology and Skills Development Authority (TESDA) headed by Director General Joel Villanueva, another close friend and political ally of Aquino, COA observed:

• In 2013, “out of the total budget of P2,393,733,631.00 for 261,865 targeted scholars for the implementation of TESDA’s Training for Work Scholarship Program (TWSP) and Cash for Training Program (C4TP), a total of P2,101,620,243.56 was utilized with 234,223 graduates/on-going trainees, thereby leaving an unutilized fund of P292,113,387.44.” TESDA failed to achieve its target 27,642 scholarship slots “due to the absence of Qualification Maps (QMs), which impact on the allocation of scholarship funds to provide opportunities for employment.”

• TESDA has yet to revert the unexpended cash balance of over P292 million to the National Treasury, COA said.

• “Inadequate monitoring on the implementation of training programs resulted in various deficiencies such as: a) absence of mandatory assessment of 481 scholars out of 623 sampled scholars; b) payment of training cost of P582,500.00 for 127 scholars who did not complete the required training hours; c) improper selection of beneficiaries; and d) non-compliance on 25 scholars per batch/session with one instructor, thereby affecting the objective of the training programs to fill up the skills gap of gainful employment.”

• Of the total PDAF worth P125,952,200 coursed through TESDA in 2013, only “P92,177,215.11 was disbursed, P12,986,674.89 (was) for unbilled trainings, P1.5 million was reverted” and P19,288,310 has yet to be returned to the National Treasury.

• Of the P1.3 billion TESDA received in CY 2012 under the Disbursement Acceleration Program (DAP) from the Department of Social Welfare and Development (DSWD) to provide technical education and skills development to the disadvantaged youth, P1.1 billion was disbursed, and P200 million was not utilized. “As of May 2013, only 19,243 were trained out of the targeted 47,167 trainees, which resulted in the delay of the implementation and extension of the project to December 31, 2013.”

• Furthermore, deficiencies were noted in the implementation of the said program due to lapses of the procedures as required under TESDA Circular No. 33 series of 2012.

• “Post-audit of the paid disbursement vouchers under PDAF, showed that there are two or more batches/courses conducted with 33 to 76 scholars in the same place, day, and time, and two or more batches conducted on the same day and time but in different locations with only one or the same instructor/trainer in violation of the above mentioned TESDA Circular No. 17 and Section 3.5 of the Training Regulations.”

• “Post-audit of the paid disbursement vouchers under PDAF, showed that there are two or more batches/courses conducted with 33 to 76 scholars in the same place, day, and time, and two or more batches conducted on the same day and time but in different locations with only one or the same instructor/trainer” in violation of TESDA’s own circulars.

Not indigents only

The state auditors also found problems with the Department of Health (DOH) and public hospitals supposedly accommodating indigent patients with financial assistance from legislators. It cited “lapses in the grant, release and distribution of financial assistance out of the PDAF amounting to P56.103 million” that it said “cast doubts on the propriety and veracity of such transactions/payments, (and) hence, may result in the suspension/disallowance in audit.”

This total amount was meant to support a program for indigent patients sponsored by 20 legislators. According to COA, however, the “lapses” included:

• The lack of a proper Memorandum of Agreement (MOA) between eight of the 20 legislators with the public hospitals to support the use of the allocated funds. Said COA: “The signed MOAs were undated. Indicated therein were always the date when it was notarized.”

• “Two SAROs [Special Allotment Release Orders] no longer issued NCAs by DBM as it has been overtaken by the SC Decision declaring PDAF as unconstitutional were obligated to purchase of reagents (P1 million) from Sta. Ana Enterprises per DV No. 13-10-2009, as proposed by Sen. Alan Peter Cayetano.”

• The fund of four legislators registered in the program had negative balances but were not replenished; moreover, the fund was used “beyond validity period.”

• “Three (3) beneficiaries were granted the amount of P100,000 and more, while 21 were given P50,000 each, representing reimbursement of the cost of medicines and hospital expenses from private hospitals, hence, only few patients were benefitted.”

• “Financial assistance was also granted several times to beneficiaries ranging from P2,000 to P50,000 for reimbursement of the cost medicines and hospital expenses from private hospitals. At least 25 sales invoices/ORs attached to the claims were tampered and with erasures while 83 of the ORs were unreadable/faded.”

• “Purchases of drugs and medicines intended for indigent patients were not in accordance with the proper mode of procurement, as provided under R.A. (Republic Act) 9184. The only documents attached to the vouchers are the official receipt/sales invoices in the name of the patient beneficiaries. The required documents were also not attached to support the claims for financial assistance/reimbursements of the drugs and medicine and hospital charges.

Lapses in CHED, too

COA was apparently not impressed as well with the Commission on Higher Education (CHED), which is administering the Students Financial Assistance Program (StuFAP) for scholars that legislators may only endorse – but which the CHED should screen and select – under PDAF in 2012 and the so-called amended pork system in 2013. In many cases, however, the legislators managed to impose their choice of scholars, as well as the amount of grant money they should receive. For example, the state auditors noted:

• In 2012, “the selection, screening, awarding and determination of the amount of the grant to each student beneficiary, which are normally functions of the CHED – Office of Student Services/Regional Scholarship Unit, were entrusted to the Office of the Legislator thru a MOA in the CHED-CO and the CHED-NCR, (and) thus resulted in the granting of financial assistance ranging from P16,000 to P110,000 per semester per grantee, which are more than the maximum allowable benefit of P15,000.00 per semester given by CHED to Full Merit scholars, per CMO No. 29; and the absence of undertaking between the CHED and the student grantee assuring the continuity of the educational assistance until they graduate, which is presently done in scholarship programs regularly funded under the GAA (General Appropriations Act) and HEDF (Higher Education Development Fund).”

• In 2012, “claims totaling P112,638,412.43 were not supported with adequate documentation such as ITR [income tax return], students’ grades, etc., or documents submitted were not authenticated in CHED-CO and CHEDROs NCR and V, contrary to Section 61 of PD 1445, thus failing to ensure that the grantees are qualified beneficiaries of the scholarship program.”

• In 2012, “checks totaling P18,840,038.60 were released by the Cashiers of CHED-CO and CHEDROs NCR and IV-A to persons other than the payees/student – grantees, contrary to Section 3.1 of COA Circular No. 2004-006 dated September 9, 2004, failing to ensure that the educational benefits were received by the students and on time.”

• “Delayed processing/release of claims ranging from one month to 17 months and unclaimed/cancelled/stale checks totaling P11,264,376.95, in nine CHEDROs deprived the qualified student beneficiaries timely receipt of the financial assistance and entailed additional cost to CHED, in terms of reprocessing of claims and replacement of stale checks.”

• In 2012, “the processing and awarding of double/multiple scholarship slots to 63 students were not immediately detected and cancelled, thus, depriving other qualified students to avail (themselves) of the allocated slots to CHEDRO VI.”

• In 2013 in CHED-NCR, claims for admission in the StuFAP funded by pork “were forwarded in bulk to the CHED-NCR by the OSDS, CHEDCO, from the Office of the Legislators.” But because only three work-swamped personnel were assigned to review these, “control measures like verification/indexing of payments and sorting to detect double/multiple payments were no longer done, as they have to rush the processing of claims to avoid the monthly reversion of the NCAs and to comply with the timelines set by the CHED guidelines.” The workload was “really beyond the absorptive capacity of the office” and “some double claims were noted and (CHED) made the appropriate cancellation of the subsequent checks.”

• In 2013, the CHED-Central Office had “insufficient documents to warrant the validity of payables amounting to P19,637,287.88, claims outstanding for more than two years of P1,956,762.70 and the obligated balance of P14,008,420.00 at year-end of the PDAF of legislators for scholarship program, which was declared by the Supreme Court as unconstitutional.”

• In 2013, at CHED-Region IX, CHEDRO-IX, there were “claims of 2,748 students without adequate documentation of P26,024,787.77, unutilized PDAF without NCAs of P654,000.00 and the unutilized Disbursement Acceleration Program (DAP) Fund of P60,000.00 with lapsed NCAs and without valid claimants.”

High court TRO

On top of all these, COA has pointed to another unsettled issue: how much of the balance of pork monies in 2012 and 2013 had actually been reverted to the Treasury, in compliance with a Supreme Court directive?

On Sept. 10, 2013, the high court en banc, in a unanimous decision, had issued a Temporary Restraining Order (TRO) on the disbursement of pork. Separate petitions filed against Aquino, Senate President Franklin Drilon, House Speaker Feliciano Belmonte Jr., and Executive Secretary Paquito Ochoa Jr. by several individuals and private organizations had triggered the court’s decision.

On Nov.19, 2013, or more than two months later, the Supreme Court (SC) reversed two prior rulings upholding the constitutionality of pork and ruled to expunge PDAF from the national budget.

Voting 14-0 with one abstention, the high court declared “the entire 2013 PDAF Article” and all legal provisions behind its prior incarnations – Countrywide Development Fund and Congressional Initiatives Allocation – to be unconstitutional.

It noted that the pork system “authorized lawmakers, individually or through committees, to intervene, assume or participate in any of the various post-enactment stages of the budget execution, such as project identification, modification and revision of project identification, fund release, and/or fund realignment.”

The Court directed “all prosecutorial organs of government to, within the bounds of reasonable dispatch, investigate and accordingly prosecute all government officials and/or private individuals for possible criminal offenses related to the irregular, improper and/or unlawful disbursement/utilization of all funds under the Pork Barrel System.”

Halt, return funds

The September 2013 TRO turned permanent and mandatory with the court’s ruling in November 2013. Yet by the Court’s TRO, the disbursement of pork funds should have already stopped; beginning Sept. 10, 2013, funds for projects covered only by SAROs and not by NCAs should have been reverted to the Unappropriated Surplus of the General Fund.

But confusion ensued among pork conduit agencies about what to do with projects already under way, even as some agencies and legislators went on with their merry ways with pork.
In truth, several agency audit reports done by COA for 2013 reveal that some agencies and lawmakers defied the high court’s orders, by acts of omission and commission.

For one, according to COA reports, TESDA alone has yet to return to the Treasury about half a billion pesos in unutilized, unobligated tax money. According to COA, these include P292 million of the P2.4-billion budget for its Training for Work Scholarship Program and Cash for Training Program in 2013; P19.3 million of the P126-million PDAF monies it got in 2013; and P200 million of the P1.3 billion DAP funds it received from DSWD in 2012.

COA also documented similar lapses in a number of regional offices of the Department of Public Works and Highways (DPWH), including one where “expenditures amounting to P18,652,689.81 relating to PDAF projects were paid while the unutilized PDAF of P46,520,960.42 were not reverted to the Unappropriated Surplus of the General Fund, in violation of the Supreme Court Decision declaring PDAF as unconstitutional.”

The incidents happened despite two memoranda – one dated Sept. 16, 2013 and the other Dec. 9, 2013 – from DPWH Secretary Rogelio Singson spelling out clear guidelines to regional and field personnel on what to do with pork-funded projects.

The DPWH memorandum in September stated: “In view of the Temporary Restraining Order (TRO) issued by the Supreme Court on the release of PDAF allocations and on the instruction of the Department of Budget and Management, there shall be no obligation for projects funded from PDAF under FY 2012 and FY 2013 General Appropriations Act starting from September 10, 2013 until the TRO is lifted. Hence, if the allotment has not been obligated as of September 10, 2013, it is covered by the TRO. If the projects are contracted out before September 10, 2013, implementation can proceed accordingly.”

DPWH reiterated the policy in December: “You are hereby directed to suspend all ongoing projects funded by PDAF and not to cause payment of any accomplishment thereof, pursuant to the Supreme Court decision Greco Antonius Beda B. Belgica et al. versus Honorable Executive Secretary Paquito N. Ochoa et al. G.R. Nos. 208566, 208493 and 209251 promulgated November 19, 2013.”
Meanwhile, at the Department of Education, state auditors found that an unobligated PDAF balance of P9,559,136.03 for 2012 was not reverted. The CHED, however, issued a check on August 27, 2014 for P14.2 million to revert the payables set up for the Student Financial Assistance Program funded by PDAF in 2013, in compliance with the Supreme Court decision.

In defense of pork

For all these, it seems like the last man standing in favor of pork, other than the legislators themselves, has been President Aquino himself.

A congressman and senator before he rose to the presidency, Aquino had at first stood firm in defense of pork amid strong public clamor for its abolition. Three days after COA had made public its special audit report on pork disbursed in 2007-2009, Aquino even told reporters: "I think the premise (of people who want it abolished) is that all the ways pork barrel is used are wrong. But if you look at the COA report, I don't think that's the case. “There are some ways it was wrongly used but those cases, we investigate. There's a case now against Mrs. (Janet Lim) Napoles, there's a warrant of arrest against her for something somewhat related to (the pork barrel).”

"Maybe what we should do,” Aquino continued, “is that those who misuse the pork barrel should really face more serious punishment.”

He said that his government had already made “huge improvements in safeguards that have lessened the chances pork barrel can be misused, but I think there are more ways we can improve the process so there would be no opportunities to take advantage of them."

"I think it's difficult to generalize and say the whole system is wrong,” the President said. “What's just is to scrutinize how it was used. If it's right, we support it, if it's wrong then we stop and ensure it won't happen again.”

But more and more people appeared to be pushing for the government to rid itself of pork altogether, and a “Million People March” against PDAF was scheduled to take place in Luneta on Aug. 26, 2013.

New, improved pork?

On Aug. 23, 2013, Aquino faced the nation to finally declare, “Panahon na po upang i-abolish ang PDAF (It’s now time to abolish PDAF).” Yet in the next breath, he talked about a new mechanism that seemed to smell and sound like pork, as well as how legislators may still endorse projects for funding by five executive agencies, according to his “mga patakaran laban sa katiwalian” or rules against corruption.

These include, he said, a limited menu of projects that could be funded; a ban on “soft” projects or “consumables” like fertilizers, seedlings, medical kits, medicines, training materials, etc.; a ban on short-term infrastructure projects; a ban on coursing pork through the state entities and NGOs linked to the Napoles pork-barrel scam; open bidding and online posting of project documents; and monitoring of project implementation via the website of the Budget department and the National Data Portal.
Apparently, to the President, the pork system ain’t broke, it just needs a little fixing. – With research and reporting by Vino Lucero, Rowena F. Caronan, and Fernando Cabigao, PCIJ, August 2015