Audited intel funds, other AFP reforms now in place

MANILA, Philippines—Smarting from the “most corrupt” tag on the Armed Forces, Defense Secretary Voltaire Gazmin and AFP Chief of Staff Gen. Eduardo Oban Jr. Thursday presented reform measures to the Senate, including a lifestyle check on officials and an audit of the intelligence fund.

The AFP took a step further by ordering the deposit in the national treasury of P300 million—an amount connected to the United Nations peacekeeping fund—to prevent its diversion.

“No corrupt practices shall happen under my watch. We will never allow indiscriminate spending. The funds of the Department of National Defense and the AFP will be properly managed,” Gazmin told the Senate blue ribbon committee at the resumption of its inquiry into military corruption.

Oban also told the committee that the military had been “disgraced” by the scandal of past AFP chiefs pocketing multimillion-peso funds.

But the scandal exposed at the Senate by ex-military budget officer George Rabusa, and which led to the suicide of former Defense Secretary Angelo Reyes, spurred the AFP leadership to institute reforms, Oban said.

Loss of sense of honor

“We represent the more than 100,000 Filipino soldiers who up to this moment suffer the ignominious consequence of this Senate inquiry—that of being perceived as belonging to the most corrupt agency of government,” he said, adding:

“Indeed, the sins imputed to a few have become the fault of the entire organization. When the Pulse Asia survey placed the AFP on top of the most corrupt government agency list, we lost what every Filipino soldier holds dear: our sense of honor. Having experienced the sense of loss has given us the best motivation to ensue reforms within our ranks.”

Rabusa had testified that past AFP chiefs Reyes, Roy Cimatu and Diomedio Villanueva received hefty payoffs from a slush fund pooled from soldiers’ pay and intelligence funds. The three men had strongly denied the charge but the exposé roiled the military for months.

Recommendations

At Thursday’s hearing, Gazmin presented the recommendations of the defense investigating committee to make the military “graft-free.” The committee had looked into military corruption in reaction to Rabusa’s exposé.

The most important recommendations are the enhancement of auditing and monitoring mechanisms such as “asset disclosure and lifestyle checks,” and the audit of the intelligence fund “without compromising national security concerns,” Gazmin said.

He said he was open to an examination of the intelligence fund by the Commission on Audit.

According to Gazmin, the committee also recommended the computerization of AFP logistics and financial management system; strict implementation of laws and prosecution of offense; creation of a defense acquisition bureau; close oversight of the offices of internal audit, ethical standards, Inspector General and Judge Advocate General; shift from cash logistics to real logistics, continuing education and morality enhancement program; reconstruction of AFP financial and logistics documentation; and implementation of the defense system of management that discloses every stage of the budget process.

Concrete step

Oban mentioned “reform” measures—for example, stopping the military practice of fund conversion—but noted that the AFP had taken a more concrete step to address the alleged diversion of the UN peacekeeping fund.

“With regard to the UN reimbursement funds, we have effectively removed the AFP’s discretionary powers by directly depositing our remittances to the Bureau of Treasury, and have already deposited P300 million since I assumed my post,” he said.

Gazmin said the National Council for Peace Operations had been put up to ensure the effective management and transparent utilization of the reimbursements for the peacekeeping fund.

(COA Commissioner Heidi Mendoza had testified in earlier congressional hearings that during her special audit of military funds in 2004-05, P200 million in UN peacekeeping fund reimbursements could not be accounted for.)

Under the current setup, the government advances the expenses of deploying peacekeeping troops to conflict areas abroad, which the UN reimburses later. COA investigation has shown that because the money does not pass through the national treasury, the fund diversion takes place when the reimbursements are transmitted to a military account.

Payoffs major source

Oban also said the provisions for command-directed activities, the major source of payoffs to officials from AFP chiefs down to comptrollers as exposed by Rabusa, had been scrapped.

To stop the alleged conversion of funds for petroleum, oil and lubricants, Oban said he had initiated a terminal audit, a financial audit and a special audit.

“As chief of staff, my first order of the day was to put a stop to conversion. To this day we continue to stand firm behind this policy,” he said.

But according to Sen. Panfilo Lacson, a former national police chief, the practice of conversion cannot be totally stamped out in the countryside where some military provisions are bought from homes in villages.

Sen. Teofisto Guingona III, chair of the blue ribbon committee, agreed, saying: “You can’t just stop it. Experience at the ground level shows you need to convert.”

18-pt. reform program

Oban said the AFP had drawn up an 18-point reform program addressing financial and logistical flaws in logistics, finance, personnel, training, discipline, and law and order.

“Our initial efforts have produced the following results. Personnel fill-up of our procurement service has increased from 75 percent to 81 percent. Consequently, training in managing the procurement function and computer literacy was also conducted in preparation for the automation of the AFP procurement processes, a project being undertaken by our logistics and information specialists,” he said.

Asked later to comment, Guingona said: “Only time will tell whether the reforms that they proposed are actually effective.”

He also said that with some senators raising questions on the status of the pension funds, among others, the inquiry would continue.

“It’s non-ending,” he said.