MANILA, Philippines?The leader of the 11-member audit team called in to examine the coffers of the Armed Forces of the Philippines during the term of comptroller Maj. Gen. Carlos Garcia Tuesday revealed an intricate web of irregularities and cover-ups in financial transactions involving the military brass.
Heidi Mendoza told the House committee on justice chaired by Iloilo Rep. Niel Tupas that she had uncovered irregularities that included missing funds in millions of pesos and dollars despite the difficulty of sorting through the improperly maintained records of the AFP.
Among the missing funds, she said, was the P50 million that was taken from the P200-million United Nations fund representing reimbursement for peacekeeping operation expenses, and another $5 million representing UN reimbursement for equipment.
Mendoza, a former auditor at the Commission on Audit (COA), said she was assigned at the Office of the Presidential Chief of Staff in Malacañang as head of the financial investigation and transparency group that was conducting a lifestyle check on government officials when she was called to conduct the AFP audit.
She was tapped by then Ombudsman Simeon Marcelo, whose office was then building the plunder case against Garcia.
Marcelo Tuesday described Mendoza as the ?next Clarissa Ocampo??a reference to the bank manager who said she had witnessed then President Joseph Estrada open an account for questionable funds under the name ?Jose Velarde.?
Ocampo?s eyewitness account was a high point in Estrada?s impeachment trial.
In her testimony at the House, Mendoza said the P200-million transaction made on Nov. 28, 2002, with an accompanying voucher signed by Garcia, raised red flags.
She said that while the P200-million check was in the name of the AFP Inter-Agency Fund, the amount was split into three accounts?P50 million and P100 million in the AFP accounts with United Coconut Planters Bank on Alfaro Street, Makati City, and another P50 million with UCPB on Tordesillas Street, also in Makati, under an unknown account.
The first two deposits with the Alfaro branch were covered by deposit slips but the P50 million with the Tordesillas branch was not, Mendoza said.
She said she brought the passbook for the P50 million to the Tordesillas branch manager to ask for a bank statement but was told that ?no record existed? of the amount.
?But she asked to get the passbook because up to that time, even up to now, she could not close it,? Mendoza said, adding that the passbook showed a P50-million deposit with P300,000 in interest.
Asked what could be the implication of the branch manager?s statement, Mendoza said: ?Since the passbook is validly issued by UCPB Alfaro, any time somebody presented that passbook to the teller, UCPB has no option but to give the P50 million.?
She said that because the passbook with the unidentified owner constituted evidence, she submitted it as part of the evidence against Garcia at the Sandiganbayan.
Mendoza said Ethel Bondoc, the former branch manager of UCPB Tordesillas, had confided to her in a private e-mail that there was a ?cover-up? by the military in the transfer of the UN funds.
She said she was surprised to receive the e-mail from Bondoc because she came up empty in their initial meeting, when she asked the branch manager about the circumstances surrounding the P200-million check from the AFP?s trust account at Landbank Edsa-Greenhillls and issued in the name of the AFP Inter-Agency Fund by Garcia and the then AFP finance center chief Fernando Zabat.
?I was excited when I got this letter because it confirmed our findings. I thought she would be brought here but the lawyers said there was no need to bring her here,? Mendoza said.
She added: ?The admission of no less than the manager who issued the passbook will sustain our observation that initially, when the P200 million was split into three accounts, there was already the missing P50 million. Ethel Bondoc admitted that the P50 million at the Tordesillas branch was a fresh deposit.
?Based on my expertise as an accountant and a fraud auditor, and given my experience in [providing] training on fraud investigation, I was very confident that there were some leads [we could follow] when I presented the P200 million check.
?You don?t split a check without encashing it, and you can encash a check from the issuing bank. When I asked for the deposit slip with the tampered passbook, I could not get any.?
Mendoza said those ?red flags? would have led the audit team to the fact that ?there is something missing.?
?But our effort was stifled by the letter presented by UCPB and AFP [to explain the existence of the P50 million in the Tordesillas account],? she said.
Bayan Muna party-list Rep. Neri Colmenares said the P200-million Landbank check could prove to be the ?smoking gun? in the case because it would show that P50 million was indeed diverted from the P200-million UN fund.
Pressed by lawmakers what the missing money was intended for, Mendoza said she was told by AFP officials it was for a ?pabaon? (send-off gift) for a general who was then retiring.
Tupas then asked AFP Chief of Staff Ricardo David to name the AFP chief who was retiring or who retired when the Nov. 28, 2002, transaction was made. But David could not do so.
When asked to identify his superior then, Garcia said he could not recall because he served under three AFP chiefs. With the help of the committee secretariat and former AFP chiefs present at the hearing, the committee was able to identify the retiring AFP chief as Gen. Benjamin Defensor, a brother of Sen. Miriam Defensor-Santiago.
Tupas said that according to committee records, the following were the AFP chiefs: Diomedio Villanueva, March 17 to May 18, 2001; Roy Cimatu, May 28 to Sept. 10, 2002; Defensor, Sept. 10 to Nov. 28, 2002 (the date on the check); and Dionisio Santiago, Nov. 28, 2002, to April 2003.
$5M also missing
In another incident of missing funds, Mendoza said that before she resigned from the COA in 2005, the US Justice Department?s legal attaché Jeff Cole asked that she be allowed to audit the UN reimbursements for the expenses of Filipino peacekeepers.
She said one of the questionable transactions being examined then was a $5-million check that was personally picked up by an AFP officer at the Philippine Permanent Mission in New York but was not reflected in the AFP?s book of accounts or deposited with its banks.
She said the name of the military officer was not mentioned to her but that the House committee could ask the Philippine mission for his identity.
Mendoza said Cole told her that he had written then CoA Chair Guillermo Carague to let her go to New York to look into the matter but that the latter disapproved the request.
She said someone from the private sector had offered to shoulder her airfare but that she refused for lack of authority to do so. It was then that she decided to quit, she said.
Mendoza also said she found two separate bank accounts in General Santos City and Iloilo during the terms of Garcia and Jacinto Ligot, also a military comptroller. She said these were used as clearing accounts for the UN funds.
The arrangement, she said, was highly irregular because the remittances should have been coursed through the bank nearest to Camp Aguinaldo, which was Landbank.
Told that the money would go back to the AFP account once cleared, Mendoza said the UN funds, usually in dollars, were usually converted to pesos once remitted to the clearing accounts. As pesos, the money was then transferred to the accounts of the AFP but only after it had earned interest.
Mendoza repeatedly broke into tears as she recounted her difficulties in conducting the audit of AFP funds.
She said even Carague was not supportive of her efforts.
She recalled that when then Ombudsman Marcelo quit, she did not know where to submit her report and consulted Carague.
She quoted Carague as saying in a mix of Filipino and English: ?Don?t bother to write the report because, after all, the Ombudsman has resigned. Heidi, this is not a CoA audit; it is an Ombudsman investigation. ... It is all right to pack your things. I have been hearing good things about you. If you want, you can continue your consultancy, or you can be posted in international audit.?
Mendoza said Carague?s statement disheartened her, particularly because she was told by CoA Commissioner Emmanuel Dalman at the start of the AFP audit to go slow on her investigation of the generals because the Palace had called: ?Dahan-dahan lang kasi tinawagan tayo ng Palasyo.?
Asked who had called from Malacañang, Mendoza said she could not remember but that it might have been the Office of the Executive Secretary.
She also said she was dismayed to learn that Garcia had hit Prosecutor Joji Capistrano on the nape during the plunder trial.
Mendoza narrated how the AFP tried to make simple ?offerings? in the course of her audit, such as gasoline stubs that she could exchange for cash at the gas station, which she refused, as well as food which she sometimes partook of along with other members of the audit team.
She said she decided to move out of the office of the CoA resident auditor in the AFP, where she was conducting the review of AFP funds, to the Office of the Ombudsman in order to free herself of these ?temptations.?