COA: P172M charity fund diverted | Inquirer News
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COA: P172M charity fund diverted

By: - Reporter / @KatyYam
/ 01:59 AM July 15, 2011

The Philippine Charity Sweepstakes Office (PCSO) may have diverted more than P172 million from its other accounts to intelligence funds, an act that Senate President Juan Ponce Enrile said was a violation of the agency’s charter.

COA Commissioner Heidi Mendoza said there were indications that charity funds in particular were used to augment disbursements for intelligence funds as authorized by then President Gloria Macapagal-Arroyo.

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Under the PCSO charter, earnings of the agency are divided as follows—55 percent are given out as prize money to lucky bettors; 30 percent are allotted for charity expenses; and 15 percent are earmarked for operations. Intelligence funds can only be drawn from operational funds.

In 2009, Rosario Uriarte, then PCSO vice chairperson and general manager, authorized the disbursement of P90 million in four installments, data from the blue ribbon committee showed.

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Figures presented by the Commission on Audit (COA) at the hearing of the Senate blue ribbon committee on Thursday showed that in 2009, the PCSO suffered “net losses” of P43,632,942 in operating expenses and P128,665,765 in charity funds.

‘Comingling’

Mendoza told senators that the net losses were not immediately reflected in the PCSO’s 2009 statement of income and expenditures because the account reports for prize money, charity and operations were “comingled” in the report.

Mendoza noted, however, that while the PCSO chair was given a P5-million regular intelligence budget, the general manager could get as much as P60 million in special additional expenses from the corporate operating budget.

She said the COA had been repeatedly requesting the PCSO since 2007 to refrain from the comingling practice.

Because of “comingling,” Mendoza said the PCSO’s net losses were not immediately detected when reported along with the P255,503,197 earnings recorded in the prize fund.

Neither Mendoza nor the members of the former PCSO board discussed the actual figures of the three accounts for 2009.

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“If you’re talking of the special (expenses), they’re coming from the charity fund and a certain percentage of the (public relations) fund. That is what we can draw from the information (provided by the PCSO),” Mendoza told senators.

Former PCSO Chairman Sergio Valencia maintained that intelligence funds and even those used for public relations campaigns only came from operational expenses.

Drawing from earlier data presented to the blue ribbon committee, Senate President Juan Ponce Enrile asked Valencia why the board had allowed excessive disbursements of intelligence funds despite the limits set by its charter.

Arroyo authorization

The Senate already learned at previous hearings that Uriarte disbursed a total of P325 million in intelligence funds from April 2008 to February 2010. This includes the P160 million in two installments—nearly half of the entire amount—that was spent during the months leading to the 2010 elections.

Uriarte earlier said that as special disbursing officer, she was able to go directly to Arroyo to ask for authorization to acquire additional intelligence funds.

“The President may issue an order (to release intelligence funds) but you as members of the board of a government corporation have a trust obligation to operate within your charter. You cannot pass the blame on somebody else. You assume that responsibility,” Enrile said. “The President does not assume that trust responsibility.”

“Do you obey ministerially or do you exercise judgment based on the mandate of Congress … which is contained in your charter?” Enrile asked.

Valencia replied, “We are very careful about the disbursements.”

At this point, Mendoza pointed out that the agency’s 2009 statement of expenditures showed that the previous PCSO comingled the funds.

“Meaning the income of the PCSO was not broken into separate accounts? Should there not be separate accounts?” Enrile asked.

“Yes,” Mendoza replied. “After the separation of accounts, it showed a net loss of P43 million. Operations take a hit because huge sums spent for confidential (expenses that) were charged to operations,” she said.

Lumped together

Mendoza said the losses would not be detected if all the accounts were lumped together.

“The income statement’s net total sums up the results, so this would not be detected. But this finding is included in the COA report (on PCSO funds). Since 2007, we have been reiterating our request for the PCSO to separate the accounts,” Mendoza said.

Ignorance not excuse

Senator Teofisto Guingona III, the blue ribbon committee chairman, confronted Valencia with this detail. “I’m not aware of that,” Valencia said. “Perhaps the officers in budget and accounting…”

“Mr. Valencia, you (were) the chairman,” Enrile snapped. “You cannot say you don’t know the charter of the corporation! Ignorance is not an excuse for you, my God! That’s the first thing any member of a board does, to study the articles of incorporation!”

Valencia said he was aware of the charter and of the separation of the three accounts. “All reports brought to the management seemed to be in order,” he said.

“You cannot scrutinize your financial records? You only rely on the report of your executives. You’re supposed to be the custodian,” Enrile shot back.

Obstruction in audit

Mendoza said one obstruction in audit efforts was a circular issued in 2003 that required only a certification to justify a disbursement from intelligence or confidential funds.

“The problem with this circular is that the responsibility for the installation of control was shifted by the auditor to the management (of agencies in charge of liquidation). So it is now management that has the responsibility to ensure that expenses are in accordance with rules and regulations,” Mendoza said.

Supporting docs not required

Mendoza said the circular “relaxed” the liquidation process because supporting documents and receipts were no longer required.

“We believe there is a need to revisit the law and make changes, but there is a need to consult with a lot of agencies (before this can be done),” she added.

Mendoza maintained, however, that the COA understood that limited disclosures were necessary for projects that involved national security.

Earlier on Thursday, Uriarte again found herself in hot water after Sen. Franklin Drilon presented data showing that at least three liquidation certificates for 2009 showed that P70 million in intelligence funds were used to monitor “bomb threats, kidnapping, destabilization and terrorism.”

Intel funds for terrorism

Another P37 million, released in two installments later that year, was used for bilateral and security relations.

“You have more than P116 million liquidated for bomb threats, kidnapping, destabilization and terrorism yet you also submitted (excuses for the same period) about using intelligence funds to monitor unauthorized use of ambulances and fraudulent schemes or to stop illegal gambling,” Drilon noted.

Uriarte said the PCSO’s data center and some lotto operators had received bomb threats. “That’s what I remember,” she replied.

“But after spending more than P100 million, did you at least file any case?” Drilon asked.

“Yes, it is reflected in (National Bureau of Investigation) records. We have made apprehensions,” Uriarte said.

Uriarte also explained that intelligence funds used for “bilateral and security relations” were in fact given as blood money to families of victims of crimes committed by overseas Filipino workers.

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TAGS: Commission On Audit, Graft and Corruption, hearing, investigation, PCSO, Philippines, Senate
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