(First of three parts)
SOMEWHERE in Central Luzon—In the foothills of the Sierra Madre mountains, Army soldiers are on a mission to “achieve strategic defeat of the communist terrorist movement” in three years, just as their Commander in Chief has ordered.
But the soldiers wish they had helicopters and fixed-wing aircraft to conduct air strikes, thermal-imaging weapons and night-vision goggles to locate the enemy in mountainous terrain even at night, bulletproof vests and helmets to protect soldiers’ “fatal body parts,” and secure, lightweight all-weather radios for quick contact with army base.
That’s all in their dreams. In their makeshift base, the soldiers do have a solitary Simba tank, as well as a few handheld radios. But they are basically going to war with only re-barreled or repaired M-16 rifles for firepower, a few night-vision goggles for increased visibility, and for communications, mostly personal cell phones loaded with prepaid unlimited text.
Apart from that, “we rely on God’s will, our training and common sense to protect us,” says one Army commander. Yet the soldiers continue to believe “we will win this war” against the Communist Party of the Philippines and the New People’s Army, which are waging Asia’s longest-running insurgency.
By now, the Armed Forces of the Philippines should have been a modern, professional force capable of dealing with both external threats and internal security concerns. In December 1996, Congress approved Joint Resolution No. 28 in which both the Senate and House of Representatives gave their blessings to Republic Act No. 7898, known as the AFP Modernization Act.
The law envisioned a professionalized armed force, as well as “the acquisition and upgrading of appropriate technology and equipment” to bring the AFP into the 21st century.
Magnet for graft
Ten years and more than P11 billion later, there has been very little actual acquisition of new equipment for the AFP. Government auditors and budget officials have found that there are weak controls over funds of the AFP, whether for modernization or not, such as those intended for peacekeeping forces or “Balikatan” exercises.
Procurement officials likewise say the AFP has shown a disregard for procurement processes provided by law. As a result, the multibillion-peso AFP budget, its modernization fund included, has been a magnet for graft and corruption.
What has instead happened is that the modernization program, whose core component is capability, materiel and technology development, has turned into one of repair and refurbishment, with a huge chunk of the funds being spent on regular items like office supplies.
“I cannot consider that AFP modernization,” said Sen. Rodolfo Biazon, a retired AFP chief of staff who coauthored the AFP modernization law in the Senate.
In its present state, Biazon said, the AFP “is not capable of addressing the insurgency threats” from the CPP-NPA and the Moro secessionists.
Still in Square One
The government practically acknowledges that the AFP Modernization Program (AFPMP) is still where it was 10 years ago—in square one. Last year, the Department of National Defense rolled off an 18-year plan called the Capability Upgrade Program (CUP), which takes over the equipment procurement functions of the AFPMP.
Under the CUP, the AFP will get P5 billion yearly, apart from its regular budget appropriations, for the next six years.
Defense and AFP officials acknowledge that the early years of the AFPMP were difficult ones. The program was intended to span 15 years, with a budget of P50 billion for the first five years—or P10 billion a year—over and above what the AFP would receive from the General Appropriations. The funds for modernization are supposed to come from the AFP’s share of proceeds from the lease and sale of former military camps and the income from the government arsenal.
But during President Fidel V. Ramos’ term, no funds were made available for the AFP modernization. It was only in 2000, under the administration of President Joseph Estrada, that the modernization started receiving income from the sale of Fort Bonifacio. And only in 2002 did Congress allocate funds for the AFPMP.
As of 2005, the total amount of money that had gone into the program stood at P11.8 billion, the bulk of which came from the lease of military property, disposal of AFP assets and congressional allocations.
At the time the AFP Modernization Law was passed, the AFP’s principal function was “to uphold the sovereignty and preserve the patrimony of the Republic of the Philippines.” The law had a different enemy in mind—external forces threatening Philippine territory, including the disputed Spratly Islands. The task of fighting the communist insurgency and other internal threats was the responsibility of the then newly created Philippine National Police.
But the internal threats—the communist insurgency, the Abu Sayyaf and the Moro Islamic Liberation Front—proved too much for the PNP to handle. This forced a revision of the AFP’s priorities from external defense to internal security.
Unimplemented
This refocusing of priorities also resulted in several changes in the AFPMP priority projects, which were revised at least three times—in 2000, 2002 and 2004 with the drafting of the Integrated Priority Projects List. The program underwent another reinvention with the CUP.
In its annual report for 2005, the Commission on Audit found that out of 48 priority projects worth P10 billion scheduled for implementation by Dec. 31, 2005, only 24 percent had been completed. Eight projects worth P2 billion were ongoing while 26 projects totaling nearly P6 billion remained unimplemented at the time.
The COA said the AFP’s “failure to maximize the AFP modernization fund resulted in the delayed implementation” of the program … and will greatly affect its primary objective to modernize the AFP to a level where it can effectively and fully perform its mandate.”
As of the end of 2006, the program still had five ongoing projects and 20 more, worth P5 billion, still in the procurement process.
In its early years, AFP and defense officials cited a lack of funds and the cumbersome procurement process as among the reasons for the AFP’s failure to acquire equipment.
Even the Feliciano Commission, which investigated the complaints of disgruntled young officers who took part in what is now known as the Oakwood mutiny of July 2003, found out as much. “Procurement under the AFP Modernization Program is even lengthier and more complex than the ordinary AFP procurement process,” it said.
23 steps
The commission noted that it took the AFP 23 steps to procure weapons and other defense equipment—from the formulation and issuance of the Circular of Requirements or Bid Evaluation Plan (COR-BEP), to the bidding and award, and to project implementation.
The Feliciano Commission said a substantial bottleneck existed at the initial stages of this process. The COR-BEP is formulated at the headquarters of the Philippine Army, Philippine Navy or the Philippine Air Force, and then has to go to the AFP General Headquarters (AFP-GHQ) for another round of evaluation before approval is sought from the Department of National Defense. In certain cases, approval of the Office of the President must be obtained.
As a result, “not a single weapon or equipment had been acquired and upgraded” under the AFPMP from 2000 to 2002, a DND report said.
Conversion
Despite the failure to acquire new equipment during that period, the AFP was already spending the AFP Modernization Fund on items, like office supplies and catering, which have little to do with the program.
A special team from the COA found that from 2001 to 2004, certain transactions under the Modernization Fund became subject to conversion. Conversion is a long standing practice in the AFP and an issue that Oakwood mutineers raised.
The Feliciano Commission defined conversion as “the transforming of allocated funds into cash, most commonly in collusion with suppliers and some of the officers involved in the procurement process in an AFP unit.”
Converted cash, which can eat up at least 30 percent of the budget, usually ends up in the bank account of the commanding officer of the unit for whom the funds are intended, according to the commission.
The special COA team, headed by auditor Heidi Mendoza, was created in October 2004, shortly after Maj. Gen. Carlos Garcia, a former AFP comptroller, was charged with siphoning off AFP funds into his personal bank account. The team worked out of the Office of the Ombudsman.
Mendoza and her team presented their findings to top COA officials as well as to the Ombudsman for the military. But the team was not allowed to further investigate the AFP, and its findings were not acted upon. Mendoza, who later quit the COA out of disgust, declined to be interviewed for this report.
‘Office supplies’
Among the team’s findings was that as of 2003, for instance, out of the P160 million transferred to the Philippine Army from the modernization fund, 32.5 percent or P52 million went to office supplies.
In the case of the Philippine Air Force, about P24 million or 62 percent of its P39-million budget from the fund also went to office supplies.
At the AFP General Headquarters, P48.4 million went to office supplies between 2001 and 2004. “Purchases of supplies are made not to meet basic office requirements but more of a scheme to convert cash,” said the COA team.
It found that in 2001, as much as P17 million was spent on various office supplies, mostly printer ink, and all receipts were dated Dec. 28, 2001. It also found rigged bidding in the procurement of these supplies. The contracts also went to the companies whose owners were related to each other.
“Various office supplies were purchased at the last working day of December, which rendered the transactions doubtful as each entire transaction is completed within a day. All documents attached are dated Dec. 28. It is highly questionable that while the procurement directive was dated 28 Dec. 2001, the items directed to be procured are also delivered and inspected on the same date,” said the COA team.
Huge catering bill
The auditors also found that in the case of the AFP-GHQ P17.6 million was spent on food and catering from 2001 to 2003. The COA team found the figure unusually large and documents pertaining to it questionable. There were even separate invoices that showed catering services contracted for activities happening at the same time at the same venue.
More than half the amount, or P9 million, went to only one “caterer”—Alvenru Enterprises, which is also a supplier of printer ribbons, computer forms and other office items.
On the food and catering expenses, the COA team also found that:
The agenda of the meetings for which the caterers were hired showed the same names of participants and notices of conferences, which the COA auditors said were “recycled.”
As a result of recycling, then Brig. Gen. Generoso Senga came out looking like he had presided over 22 out of 32 meetings of the bids and awards committee to discuss infantry weapons and mobility.
The list of participants did not tally with the invoice. The participants listed in some meetings numbered only 20, but the invoices showed that the food served was for 100 people.
Unreported interest earnings
The audit findings also point to weak controls in the handling of the modernization fund. In particular, the auditors took issue with the AFP’s failure to report P11.7 million in interest earnings on its P271.1-million share from proceeds of the lease agreement with Ayala Land Inc. for the modernization program.
The AFP collected the sum on Feb. 12, 2002, but held on to it for more than a year before remitting it to the Bureau of Treasury, according to the COA team. All the while, it had invested the money in a special savings deposit with Development Bank of the Philippines (DBP) that yielded P11.7 million.
“Yet (the deposit) was unrecorded and the interests accrued out of the special savings, undeclared and unrecorded (in the AFP’s books),” the COA team said.
The regular audits the COA did on the AFP in 2004 and 2005 came across the same problem. In the 2005 audit, the unrecorded interest income on the AFPMP’s 103 current and saving deposits with LandBank and DBP reached nearly P79 million.
Uncollected
Unlike other units at the AFP-GHQ, the program accounts for a tiny fraction of the P310 million in cash advances that remained unliquidated as of Dec. 31, 2005. The advances totaled a minuscule P839,309, according to the COA report for 2005.
But also unlike the rest, the program was the only unit that ran into one major problem when asked by the COA to send demand or collection letters to the accountable officers to settle their accounts.
“Demand letters were not sent to the accountable officers due to the absence of records to locate their whereabouts,” the COA report said. (To be continued)
