COA: Red flags all over P15B Malampaya Fund

By: Leila B. Salaverria - 10 years ago

SEEING RED “Those were red flags, not audit findings,” Commission on Audit Chair Grace Pulido-Tan tells Sen. Nancy Binay (right), who requested highlights of the COA findings on other government agencies that allegedly received kickbacks from the Malampaya Fund during yesterday’s Senate hearing on the alleged P900-million scam. NIÑO JESUS ORBETA

MANILA, Philippines–The “red flags” uncovered in the use of the Malampaya Fund were not limited to one executive department.

The Commission on Audit (COA) has found indications of irregularities in transactions of other agencies that had received a total of more than P15 billion from the Malampaya Fund during the Arroyo and Aquino administrations, according to COA Chair Grace Pulido-Tan.

Red flags were spotted at the onset, even before the COA audit began, and are to be closely scrutinized, Tan said on Monday at the opening of the Senate blue ribbon committee hearing called to look into the alleged embezzlement of P900 million from the government share of revenues from natural gas fields off Palawan province, Tan said.

Tan declined to reveal details of the COA’s initial findings since the audit is ongoing, but she acknowledged that the fund releases to certain agencies had triggered questions. She later told reporters that not all projects were dubious.

Upon questioning by Sen. Sergio Osmena III, Tan said among the agencies where there were red flags were the Department of Agriculture (DA), which received P5.8 billion; the Department of Public Works and Highways (DPWH), P7.6 billion; and Department of the Interior and Local Government (DILG), P2.3 billion.

Allotments from the Malampaya Fund were released to the DA in 2008 and 2009, the DPWH in 2009 and those to the DILG in 2009 and 2011.

While Tan scrimped on details, she commented that there were many red flags in the DA releases.

“The Department of Agriculture received P5.8 billion. Were there no red flags there?” Osmeña asked.

“Sir, there were a lot,” Tan said.

The releases to the DILG were to “augment operational and logistical requirements in search, retrieval, rescue, relief and rehabilitation efforts,” which indicate maintenance and other operating expenses (MOOE).

“We all know that when we say MOOE, that’s where all kinds of expenditures fall under. Of course, from the statement of the purpose alone, we saw things that had to be looked into,” Tan said.

Departments involved

The COA is also scrutinizing other releases from the Malampaya Fund to the other executive agencies from 2002 to 2013, Tan said. So far, it had only completed the audit report on the P900-million releases to the Department of Agrarian Reform (DAR), where it found a slew of questionable transactions, she said.

The other agencies that got allotments from the Malampaya Fund were the Philippine Atmospheric, Geophysical and Astronomical Services Administration (P400 million); National Housing Authority (P1.398 billion); Department of Health (P745.926 million); Department of Transportation and Communications (P296.331 million); Philippine Coast Guard (P50 million); Department of National Defense (P7.456 billion); National Electrification Administration (P1.922 billion); National Power Corp. (P6.624 billion); Department of Energy (P550 million); provincial government of Albay (P47 million); city government of Tabaco (P15 million); the provincial government of Palawan (P1.782 billion); and the city government of Puerto Princesa (P270 million).

Of these agencies, the DND (2011 and 2012), NEA (2011 and 2012), Napocor (2011) and DOE (2011) also received releases during the Aquino administration.

The Malampaya Fund comes from the government’s 60-percent share from the Camago-Malampaya reservoir, a natural gas project in Palawan. Part of the government share goes to Palawan.

From January 1, 2002, to June 30, 2013, P173.28 billion has been collected, and total releases amounted to P38.83 billion.

Under a 1972 presidential decree, the fund is supposed to finance energy resource development and exploration programs. But it could also be used for such other purposes as may be directed by the government, though this provision was struck down by the Supreme Court in a 2013 decision.

As it turned out, the Malampaya Fund had been used for nonenergy related projects, including helping typhoon victims, as seen in the releases to the DAR.

The Senate inquiry into the use of the Malampaya Fund opened in the midst of a looming energy crisis, for which President Aquino is seeking emergency powers.

Cascading funds

Tan also said the COA audit, which she had ordered before the P900-million Malampaya Fund scandal broke out in October last year, had turned complicated because the agencies that had received the funds had cascaded these to their attached agencies.

For instance, she said the DA had downloaded its allotments from the Malampaya Fund to 33 other agencies, and these agencies downloaded the funds to another 74 entities.

It was also the case with the DND, which transferred the amount to five other agencies and did not implement the project itself.

She said she directed the audit because she learned that it was only the DOE that was being checked, when it fact, it was not receiving the bulk of the Malampaya Fund. And when the money passes through other agencies, it was not audited there.

“So we decided that it was about time to look at the entire state of the Malampaya Fund,” Tan said.

What the COA had initially found was that Janet Lim-Napoles, the alleged brains behind the P10-billion pork barrel scam, was behind the diversion to ghost projects of a dozen dubious foundations that received the P900 million released in 2009 to the DAR. It was intended to help impoverished victims of Storms “Ondoy” and “Pepeng” that year.

Tan told the committee that Napoles had links to the 12 foundations.

The committee plans to invite Napoles, her former employee Benhur Luy, former Malacañang Social Secretary Ruby Tuason, and former Agrarian Reform Secretary Nasser Pangandaman and his undersecretary, Rafael Nieto, among others, to subsequent hearings.

“We will be inviting everyone that has been involved,” Sen. Teofisto Guingona III, the committee chair, told reporters.

Ghost projects

Tan noted that majority of the 97 mayors who supposedly requested the DAR for the funds for projects to help their constituents denied taking part in the transaction, and none of the mayors said they knew of any project for their constituents.

“It seems there was no project,” she said, adding that 67 of the mayors denied their signatures on Malampaya document funding. “They knew of no assistance or project supposedly benefiting farmer-beneficiaries affected by Ondoy and Pepeng. None of the listed beneficiaries we chose for validation confirmed any project,” she said.

The NGOs were Karangyaan para sa Magbubukid Foundation Inc., Gintong Pangkabuhayan Foundation Inc., Kaupdanan para sa Mangunguma Foundation Inc., Kasaganahan para sa Magsasaka Foundation Inc., Dalangpan Sang Amon Utod Kag Kasimanwa Foundation Inc., Ginintuang Alay sa Magsasaka Foundation Inc., Bukirin Tanglaw Foundation Inc., Abundant Harvest for People’s Foundation Inc., Tanglaw para sa Magsasaka Foundation Inc., Saganang Buhay sa Atin Foundation Inc., Micro Agri Business Citizens Foundation Inc. and Masaganang Buhay Foundation Inc.

These entities were different from the groups that Napoles allegedly used in the diversion of the congressional Priority Development Assistance Fund (PDAF), or pork barrel, to ghost projects and kickbacks. The businesswoman has been charged with plunder in connection with the PDAF racket, along with Senators Juan Ponce Enrile, Jinggoy Estrada and Bong Revilla. The senators have denied wrongdoing.