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COA scores DBM over Malampaya Fund release


The Commission on Audit (COA) has criticized the Department of Budget and Management (DBM) for haphazardly disbursing P23.6 billion from the Malampaya Fund during the Arroyo administration, which spent 60 percent of the money a few months before the end of its term.

The COA has also recommended that charges be brought against officials, employees and recipients who benefited from the careless use of money from the Malampaya Fund.

In two consecutive annual audit reports on the DBM from 2010 and 2011, the COA cited several serious lapses in releases from the Malampaya Fund, labeled as “Special Account in General Fund 151”: actual cash allocations exceeded official allotments by close to P4 billion; several checks for a total of P271.798 million were released to unidentified people without authorization papers; no accountability for the release of P2.609 billion to local governments; recipients were not obliged to report their use of the funds; and the DBM did not give disbursement vouchers to the audit.

The COA report gave an “adverse opinion” on the fairness of the DBM’s financial report on the Malampaya Fund due to these glaring lapses in fund monitoring.

Unauthorized projects

In a separate report on the Department of Public Works and Highways (DPWH) in 2010, the COA said the P7.07 billion from the Malampaya Fund the agency received was not in accordance with the use of the fund (for energy-related projects) as the projects were not approved by the Department of Energy.

Releases from the Malampaya Fund used from 2006 to December 2010 are currently the subject of a special audit by the COA, including P900 million released through the Department of Agrarian Reform (DAR) that was allegedly channeled through questionable nongovernment organizations (NGOs) set up by detained businesswoman Janet Lim-Napoles.

In both the 2010 and the 2011 reports, the COA noted that the number of notices of cash allocation (NCAs) issued by the DBM exceeded the total amount of special allotment release orders (Saros) it released in 2008 (with an excess of P2.090 billion) and in 2009 (with an excess of P1.716 billion).

“We recommend that management conduct an investigation into the releases out of Fund 151 and make the concerned officials, employees and recipients benefited liable for their illegal actions if proven guilty,” the COA said.

Local shares

The COA recommended that the DBM coordinate with the Department of Energy (DOE) and the Bureau of Treasury to properly account for the share of the national government and Palawan province from the oil and gas find in the Camago-Malampaya reservoir under Service Contract 38 operated by Shell Exploration and Occidental Philippines.

The COA also recommended the transfer of the authority to release NCAs from the DBM to the Treasury “because there is no independent body checking on whether the NCAs being prepared and issued by the DBM do not exceed the amounts of Saros issued.”

The COA cited the DBM for issuing four checks—two of which were for P100 million each—for Palawan province and Bago City between April and June 2009 received by unidentified people who had no authorization letter from the payee-government servicing bank.

The COA noted that the local governments have yet to confirm receipt of the funds.

The DBM claimed that the people who received the checks were liaison officers of the bank, but when the COA checked with Land Bank of the Philippines’ branch in Malacañang it found that the bank had no liaison officer.

Different codes

Another cause of confusion in tracking the money from the Malampaya Fund was the DBM’s use of different codes other than the designated Fund 151 in the accounting report.

The COA said this was in violation of COA guidelines as it resulted in “difficulty in recording, reporting and auditing of the release and utilization of the funds.”

Why, the COA wanted to know, did the DBM not require the local governments to submit reports, including the list of projects for which the funds were used?

The COA said the accountability for P2.609 billion from the Malampaya Fund that went to local governments could not be determined because these were booked as outright subsidies or expenses that did not require liquidation reports instead of as interagency fund transfers that required strict reporting.


Based on the COA memo on the special audit, the recipients of the Malampaya Fund were the DPWH, with P7.073 billion; Department of Agriculture (DA), P5.824 billion; Palawan, P3.958 billion; Department of the Interior and Local Government (DILG), P2.14 billion; Department of Finance-National Housing Authority (DOF-NHA), P1.398 billion; Department of National Defense (DND), P1.198 billion; DAR, P900 million; Department of Health (DOH), P745.926 million; DOE, P250 million; DBM, P62 million; Department of Transportation and Communications (DOTC)-Philippine Coast Guard, P50 million; and Department of Science and Technology-Philippine Atmospheric, Geophysical and Astronomical Services Administration (DOST-Pagasa), P400,000.

Only P9 billion from the Malampaya Fund was released outside the October to December 2009 period as then President Gloria Macapagal-Arroyo and her Cabinet officials agreed to release over P14 billion supposedly to bankroll efforts to help victims of Tropical Storms “Ondoy” and “Pepeng.”

Palace ‘misuse’

Meanwhile, Bayan Muna Rep. Neri Colmenares on Monday said President Aquino’s channeling of the Malampaya Fund to the defense department and the military should be considered misuse, as this did not fall under the purpose of the fund.

Colmenares said he did not buy Malacañang’s reason that the use of the funds for the defense department was to protect the Malampaya gas project. Such a reasoning was a stretch of the imagination, he said.

Colmenares said about P1.3 billion from the Malampaya Fund went to the acquisition of a cutter from the US Coast Guard and for the transfer, dry-docking and hull maintenance of the vessel, while another P4.95 billion was given to the defense department to upgrade its capabilities for the security and protection of the Malamapaya gas project.

“If this is their reasoning, maybe the President’s purchase of a nuclear missile could be charged to the Malampaya Fund by saying that it is intended to protect the Malampaya project,” Colmenares said in a statement.

No other purpose

Deputy presidential spokesperson Abigail Valte earlier said the Aquino administration used the Malampaya Fund for energy-related projects, including the purchase, refurbishment and transport of a cutter from the US Coast Guard.

Valte explained that the cutter, renamed the BRP Gregorio del Pilar, was to be deployed to secure the country’s energy resources in the West Philippine Sea.

According to Valte, the Aquino administration did not use the fund for purposes other than what was laid down in the presidential decree covering the use of the fund.

Under the Marcos-era decree, the fund can only be used for the government’s energy-development projects.

The administration has disbursed P15.255 billion from the Malampaya Fund.

Lower power cost

But Colmenares said that if the fund was just used for the development of the energy industry as intended, the money could have helped lower power costs or reduce blackouts in the country.

“This kind of spending is what makes the pork barrel, especially the presidential pork barrel, anomalous,” he added.

He said that in sum, nearly half of the P15 billion Malampaya disbursements went to the defense department and the military.

“It is in this light that we are urging Malacañang to stop being a hypocrite and stop fooling the public,” he said.—With a report from Leila B. Salaverria

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Tags: Commission On Audit (COA) , Department of Budget and Management (DBM) , Malampaya fund , Malampaya fund misuse

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