More bombshells of AFP corruption bared

By David Dizon,

Posted at Feb 03 2011 05:59 PM | Updated as of Feb 04 2011 05:07 AM

MANILA, Philippines – Diversions of soldiers’ salaries and United Nations funds, multi-million cash gifts to military chiefs of staffs, and illegal military contracts were just some of the bombshells revealed during Thursday’s resumption of the Senate Blue Ribbon committee hearing on military corruption.

Former military budget officer George Rabusa, aided by his former staff Lt. Col. Ramon Antonio "Sonny" Lim, said former military chiefs Diomedio Villanueva, Roy Cimatu and Angelo Reyes received “pabaon” (send-off money) upon their retirements from active service.

Villanueva allegedly received the largest “pabaon” of P164 million, followed by Cimatu with P80 million and Reyes with P50 million.

Rabusa said the pabaon came from the Provision Command-Directed Activity (PCDA) fund, which is a slush fund sourced from the budgets of the major services of the Armed Forces. The PCDA allegedly had a P40 million monthly balance or P480 million for 1 year.

The former military budget officer said the Office of the Military Comptroller (J6) removed an “agency reserve fund” in 2002, which is a separate fund from the PCDA, because major AFP services complained of too many cuts in their budgets.

He said the J6 also created an additional operational enhancement fund (AOEF), which was used to fund military operations in Basilan.

A recommendation that the AOEF be sourced from the PCDA was struck down by then military chief Villanueva because he did not want the fund touched. When Villanueva retired in May 2002, the PCDA balance was P296 million.

“Umaangal na ang staff, bakit mayroon na nga contribution sa PCDA, nawawalan pa ng flexibility sa iba’t ibang operations,” he said.

UN fund diversion

Rabusa confirmed that the military diverted millions of dollars of United Nations funds, which were supposed to reimburse the government’s expenses for the deployment of Filipino peacekeepers in East Timor.

He said the million-dollar refunds were deposited directly to the Armed Forces account in Landbank, which violated the one-fund concept of the Bureau of Treasury.

“This is wrong because all the collected funds paid for rentals such as the East Timor should be deposited to the Bureau of Treasury, which is the sole repository of the cash,” he said.

He said the deposits were done in coordination with the Commission on Audit, the bank, and recommendation of his bosses.

What was worse, he said, was the diversion of the East Timor funds to command-directed activities.

“We charge it to East Timor funds para ma-preserve yung PCDA. This is wrong, it is used for other activities. It was diverted,” he said.

The Office of the Spokesperson for the Secretary General (OSSG) of the United Nations, meanwhile, issued a statement on the alleged malversation of UN funds by the AFP.

"This is a national matter. The UN reimburses governments, not soldiers, and we rely on the Member States to disburse the funds in accordance with their national norms and standards, the OSSG said.

Ghost deliveries, conversion

The military brass also connived with suppliers to make ghost deliveries and pocket the military funds for themselves, Rabusa said.

As an example, he said a military supplier could pocket 15% of the actual cost of a supply contract while the military general headquarters keeps the remaining 85%. No deliveries, however, will be done.

He said that, aside from the ghost deliveries, the J6 and other military commands practice RTS or return to sender, which is the military euphemism for conversion. He said the divisions vary per unit from 50-50 to even 70-30 in favor of the PCDA slush fund.

He said the RTS was a system to gather funds for the PCDA.

He also noted that intelligence projects were a prime source for conversion because military commanders could simply detail the operations of the projects when asked to liquidate the funds.

He called the conversion technique “James Bond,” and said those who practiced it were the J7 (civilian military operations), J2 (military intelligence service) and the Intelligence Service of the Armed Forces of the Philippines (ISAFP).

Soldiers’ salaries for illegal military contract

Rabusa also revealed that, upon the instructions of his boss, military comptroller Carlos Garcia, he diverted at least P200 million in soldiers’ salaries for an illegal military contract to purchase howitzer shells from Thailand.

The former military budget officer said he was ordered to produce the P200 million after then President Joseph Estrada ordered an all-out war against the Moro Islamic Liberation Front (MILF) in Mindanao.

He said he diverted savings from soldiers’ salaries since the budget department gave fund releases not on the actual strength but the troop ceiling. “There’s a little extra,” he said.

Rabusa said the P200 million was converted to dollars and transmitted by the ISAFP to a bank in Thailand. He said the contract was illegal since there was no bidding and no government to government agreement or contract.

AFP loses $2M in defective UAVs

He also revealed that the military lost $2 million or around P90 million to an illegal military contract to purchase unmanned aerial vehicles (UAV) from an Israeli firm.

He said a certain retired General Logico approached the military top brass including then Defense Secretary Angelo Reyes, then AFP chief of staff Diomedio Villanueva and then AFP vice-chief Roy Cimatu to present the proposal.

Because of a desire to beef up its capability against the Abu Sayyaf, the military top brass approved the project and ordered Garcia and Rabusa to produce the $2 million in just one week for the purchase of UAV demo units.

“Since it was approved, we were instructed to produce the money. Siyempre wala kaming isasagot kundi yes. We had no canvass, no bidding,” Rabusa said. 

The $2 million was deposited to the Security Bank Makati Herrera branch, whose manager, Bernie Tocmo, was a friend of Logico.

However, he said the UAV project was a disaster because the demo units were falling from the sky after being deployed in Mindanao. 

“Nagbagsakan yun. Hindi po nagamit. I don’t know how long. Palpak, nagbagsakan. Na 1-2-3 tayo. We had no more contact with the Israeli company,” he said.

Rabusa said a certain Commander Paglinawan from ISAFP was able to recover more than P2 million in Customs duties paid for the UAVs.

However, he said Paglinawan asked for a cut of the recovered Customs duties before sending the rest to the J6.

“I told him, awasin mo na yung ‘for the boys.’ Yung pera binigay ko kay General Garcia, about P2 million something. Naghirap kami pero wala kaming nakuha,” he said.

Garcia got cut from ‘pabaon’?

Rabusa said he had doubts if some of the outgoing military chiefs received the full amount of the “pabaon.”

In the case of Reyes, he and his former boss, Jacinto Ligot, personally delivered the money to the outgoing military chief.

On the other hand, he said a P164 million fund that was supposedly allotted for outgoing military chief Villanueva was not given as a lumpsum but given in P10 million increments to General Garcia.

Rabusa said he told Garcia he had to withdraw the P164 million deposited in a Security Bank account since Congress was about to pass an anti-money laundering law. The fund consisted of a P95 million deposit in July 19, 2001 and P65 million in September 12, 2001 plus P4 million interest.

He said Security Bank officer Tocmo even asked for a commission.

Asked who determines the amount of the pabaon, Rabusa said: “The instructions come from Garcia. I don’t know if the instructions came from the chief of staff.”

He said that after he gave the P164 million to Garcia, he started having doubts about whether or not the military comptroller gave the full amount to Villanueva.

“I told Sonny (Lim), sa tingin mo nakarating kaya ito kay General Vilanueva?” he recalled, adding that he even thought of calling the military chief directly since Villanueva and Rabusa’s father knew each other.

He said he decided not to call Villanueva since “it violates protocol to go over my superior.”

Later, however, he said his doubts were strengthened after he heard that Villanueva was having money problems. He said he called the ex-AFP chief and asked if Villanueva got the P164 million. All he got in response, he said, was a bewildered “Ha?”

For his part, Lim confirmed that he personally delivered cash to Villanueva as part of the monthly PCDA "allowance" of the chief of staff. He said he usually placed the money in expandable envelopes.