(Third of a series)
Using just a list of bogus recipients and foundations, and forged signatures of local officials, a small company has allegedly converted billions of pesos in government funds into kickbacks.
For nearly a decade, Janet Lim-Napoles and her company, the JLN Group of Companies, had been running the alleged racket with the complicity of officials, including legislators, and had gotten away with it because of her extensive connection in the government, her former employees said.
The scheme involved the Malampaya funds, the fertilizer fund and the lawmakers’ allotments from the priority development assistance fund (PDAF), or pork barrel.
“She’d tell us that as long as the government is there, there’s money,” Napoles’ former aide, Arthur Luy, told the INQUIRER.
Napoles and her company had been trading agricultural products since 2000 until she reportedly discovered in 2003 a quicker scheme to make money, her former employees said in interviews and affidavits submitted to the National Bureau of Investigation, which is looking into her activities.
For such a high-stakes racket, the modus operandi was surprisingly simple, the INQUIRER has learned.
Napoles, who allegedly ran the racket from unit 2502 of Discovery Suites in Ortigas Center, Pasig City, established foundations or nongovernment organizations (NGOs) to serve as recipients of the funds and named her own employees, including a nanny, as presidents of these outfits.
The funds, which were deposited in the foundations’ bank accounts, were eventually remitted to her to be split between her and the lawmaker whose PDAF allotment was used, or the official of the state agency involved.
The first step was to identify the source of fund, such as the pork barrel.
Napoles talked to senators
Either JLN staff would write a lawmaker requesting funding, say for the purchase of farm inputs on behalf of mayors or governors, or the lawmaker himself would indicate that his pork barrel be allocated to an agency, say the Department of Agriculture (DA).
It was Napoles who would talk to the senator, or his or her chief of staff, according to Merlina Suñas, JLN’s former account executive.
For good measure, the letters forwarded to the lawmaker’s office bore the scanned letterhead of the mayor’s or governor’s office, and the official’s forged signature.
Once everything was cleared, the staff would convince local governments to agree that the fund be released into preidentified foundations or NGOs with the promise of commission. The Department of Budget and Management would then issue a special allotment release order (Saro) to be charged against the lawmaker’s PDAF allocation, and later the notice of cash allocation (NCA), to the agency upon the submission by the lawmaker of a list of beneficiary-agencies.
Special projects team
The NCA was “good as cash.” The money would then be deposited in the account of the foundation and be withdrawn in favor of JLN.
“After we had delivered the money, we didn’t know what happened,” said Merlina Suñas, 59, president of the People’s Organization for Progress and Development Foundation Inc. (POPDF).
Suñas was part of JLN’s “special projects” team that carried out the alleged racket. And part of her job was to form a foundation, whose name she had pieced together by Googling, and drew up a list of fictitious beneficiaries, and withdrew the money and delivered it to Napoles.
‘Everything is forged’
A communication from a senator indicating that his or her PDAF fund be allocated to an agency, say, the DA, would start the ball rolling.
The team would prepare the paper work, such as a memorandum of agreement, a project proposal and a letter for financial assistance from a mayor to the secretary of agriculture. Napoles’ personal assistant Benhur K. Luy would sign as the “mayor,” Suñas said.
“Everything is forged,” Arthur Luy said. “The mayor was unaware of such a project and that there were funds for this.” (Arthur and Benhur Luy are brothers.)
The requested “fund assistance” would range from P1.5 million to P10 million.
“We only wait for the Saro. Once we get a copy, that’s the time we determine the beneficiaries of that senator. If the senator says the PDAF should go to the LGU, then we identify a municipality,” Suñas said.
In other instances, the senator would write the mayor endorsing a certain foundation to implement, say, a P5-million project from his or her PDAF fund.
As she had done to other “original” employees, Napoles named Suñas as president of the POPDF, a dummy foundation registered with the Securities and Exchange Commission to act as recipient of the funds.
In the instances where POPDF was named recipient, Suñas withdrew the money from a bank in Greenhills, San Juan City, and delivered it to Napoles in her office or at home.
“We called it ‘going to market.’ We’d stuff the money into a Samsonite traveling bag,” she said. “The tellers knew me; they called me by my first name. They’d ask, ‘Where did this come from?’ We’d tell them it’s payment for supplies.” On one occasion, she withdrew up to P30 million.
Suñas confirmed that in 2012 her foundation received P5 million in pork barrel funds from each of then Senate President Juan Ponce Enrile, Senate President Pro Tempore Jinggoy Estrada and Senate Majority Leader Vicente Sotto III, and the Dinalupihan municipal government in Bataan was used as a conduit.
Once the money was downloaded, a memorandum of agreement was signed between the foundation and the local government for the delivery of farm inputs, she said.
Following the agreement, P15 million worth of fertilizer was delivered to the municipality, she said. “We delivered the fertilizer. There was no overpricing.”
Previously, there were no deliveries; the implementation of the project “was only on paper,” Suñas said. “Mostly, they were ghost deliveries.”
But in 2012, the mayors insisted that farm inputs be delivered, as state auditors would personally verify the deliveries, she said.
But whether there was delivery or not, it was well-known to JLN employees that Napoles and the lawmaker would share the pork-barrel allocation, Suñas said.
If there was no delivery, the senator or congressman would get a “rebate,” say, 50 percent of the allocation, and the rest would go to Napoles, she said.
If there were deliveries, the lawmaker would still get a substantial cut, and the rest would go to Napoles to cover the cost of the farm inputs, “bribe money” for local officials and other expenses, she added.
“It’s just a verbal agreement. That’s the practice. For our part, we just did our job, and we got paid for it,” Suñas said, adding that Napoles would give the foundation officials and employees commissions if she was in a good mood.
Suñas had been working for Napoles since 1997. Napoles set up Jo Chris Trading (after her eldest daughter) but renamed it JLN in 2010. Suñas used to be a civilian employee of the Philippine Navy, where she became acquainted with Napoles, who supplied motor-vehicle spare parts to the Navy.
Suñas also claimed that apart from being assigned as head of a dummy NGO, she was also a project coordinator and liaison for JLN to the implementing agencies and local governments, particularly Pangasinan and government agencies like the DA and the Department of Agrarian Reform (DAR).
Nova Batal Macalintal of North Cotabato stated in her sworn affidavit that she was appointed by Napoles as president of Tanglaw para sa Magsasaka Foundation Inc. and the papers for registration were prepared for her by a certain Evelyn de Leon.
She also said that she never opened an account for the NGO she supposedly headed, but she was asked to sign withdrawal slips.
“They asked me to sign withdrawal slips under the account of my NGO but I cannot recall opening a bank account for Tanglaw para sa Magsasaka,” she said.
Gertrudes K. Luy, mother of Benhur and Arthur Luy and former nanny of Napoles’ son, claimed she was made president of Bukirin Tanglaw Foundation Inc. and she also did not sign any documents.
“I learned I was made president of one NGO, but Evelyn de Leon signed for all the documents,” Luy said.
In a joint affidavit, Macalintal and Gertrudes Luy claimed their dummy NGOs were used by JLN as beneficiaries of Malampaya funds, with the DAR as the implementing agency.
Arthur Luy also claimed that among the tasks he did for JLN was fabricating names of recipients as well as forging their signatures to complete the paperwork.
Benhur Luy, in his sworn statement, said he was also ordered by JLN to open bank accounts for the NGOs. He said he made deposits and withdrawals on behalf of the NGOs.
Making up names
The whistle-blowers also said that they became adept at creating names of recipients from long practice.
“We just wrote first and last names that came to our mind and then [signed above them] as recipients,” Arthur Luy told the Inquirer in an interview.
Luy said they also produced project proposals supposedly from a local government asking for funds to an implementing agency like the DA and the DAR.
Some LGUs victims
The whistle-blowers also said that some local governments were victimized by the scam. “They were used as beneficiaries of government-funded projects through the use of counterfeit LGU logo and forged signatures,” they said.
Gertrudes Luy said that without her knowledge she and her daughter Annabele were made incorporators of JLN.
She added that as a trusted relative and longtime employee, she sometimes accompanied Napoles and saw lots of cash handed to her by other staff of JLN. “The money was placed in duffle bags and brought to her unit in Pacific Plaza or in the Discovery Suites office,” Luy told Inquirer in an interview.
Earlier COA inquiry
The Commission on Audit had reported that some P195 million in pork barrel from Enrile, Estrada and Sen. Ramon Revilla Jr., and then Buhay Rep. Rene Velarde went to a questionable nongovernment organization in 2011.
The audit report identified the four lawmakers as the sources of the P206-million PDAF allotted for the DA in 2009 and 2010.
Of the amount, P201 million was turned over by the agriculture department to ZNAC Rubber Estate Corp. (ZREC), a government-owned and controlled corporation, which in turn transferred P194.97 million to Pangkabuhayan Foundation Inc. (PFI).
Of the amount received by PFI, P74.69 million came from Enrile’s pork barrel, P106.7 million from Estrada’s, P9.7 million from Revilla’s, and P3.88 million from Velarde’s, the COA said.
The COA said the offices of Enrile, Estrada, Revilla and Velarde all nominated PFI as the beneficiary of the funds to implement its claimed livelihood projects.
The COA report reiterated its previous recommendation to ZREC to require PFI to refund P162 million “due to fabricated documents and forged signatures” it submitted for the liquidation of funds received from ZREC.
(Part 4 tomorrow: Who’s who)
First posted 12:31 am | Sunday, July 14th, 2013