Mendoza details more misuse of AFP funds

By RG Cruz, ABS-CBN News

Posted at Feb 08 2011 02:47 PM | Updated as of Feb 09 2011 03:07 AM

MANILA, Philippines - About half of the Armed Forces of the Philippines (AFP) modernization fund for 2001 was diverted for the purchase of office supplies.

Heidi Mendoza, former auditor at the Commission on Audit (COA), disclosed this before the House of Representatives on Tuesday as she fleshed out a money trail of AFP funds that were misused, converted or diverted from their intended purposes.

She said 94% of some P1.6 billion of the modernization fund went into letters of credit that were credited in advance. She noted this ensured extra revenue will be made out of the amount.

In 2001, around 50% of the fund went to the purchase of office supplies, with a hefty P76 million spent during the last 3 days of the year.

Mendoza said several transactions worth P17.9 million were made on December 28, 2001, and the suppliers were all the same. There were purchases of folders, toners, copy papers, printer ribbons, clear books, transparencies and diskettes.

Further investigation though revealed that the printer ribbons did not match available printers at the AFP.

As of posting time, Mendoza was still testifying before the House justice committee about the results of the review she made on 4 AFP funds, namely, the modernization fund, detention fund, United Nations (UN) fund, and the Balikatan fund.

She said the audit started after former Ombudsman Simeon Marcelo personally requested that she lead the team that will assist the Ombudsman in its investigation of then military comptroller Maj. Gen. Carlos Garcia.

Garcia has been accused of amassing at least P300 million in ill-gotten wealth.

Mendoza said her audit findings were already submitted to the Ombudsman and Sandiganbayan as evidence in the plunder case against Garcia.

UN and Balikatan Funds

Mendoza said the reimbursement of the AFP from the UN showed decreasing levels: from P548 million in 2001 to P275 million in 2004.

She said some of the funds passed through intermediary accounts of the AFP with the Land Bank of the Philippines in Iloilo and General Santos City.

However, she said some did not go into AFP accounts.

She disclosed that P120 million of the UN money went to the Philippine Air Force for the repair of a C130 aircraft in 2002. However, documents showed the repair of the same plane was already funded by another account, the Balikatan fund.

Some P9.1 million from the Balikatan fund was also used solely for fuel expenses in 2002, while fuel expenses worth P182.5 million were also withdrawn from the UN fund in the same year.

Mendoza said about 73.45% of the Balikatan fund for 2002 to 2003 went to just one food supplier.


Mendoza and former COA chairman Guillermo Carague faced off before the House panel on Tuesday.

Mendoza earlier said that ranking Palace officials asked her to "go slow" on her investigation into the missing AFP money after Ombudsman Marcelo asked her to conduct the probe in 2004.

Carague denied there was cover-up in the financial investigation, noting that it was not a COA audit to begin with.

The House hearing went on despite the death of ex-AFP chief Angelo Reyes, who was supposed to testify on the plea bargaining agreement entered into by the government and Garcia.

Reyes himself was accused of receiving P50 million from military funds as a send-off gift when he retired as AFP chief.