Malampaya natural gas platform off northwest Palawan —EDWIN BACASMAS
The Commission on Audit (COA) has called for an “immediate” investigation of the Department of Budget and Management (DBM) and other government agencies over irregularities in the use of P36.288 billion in royalties from the Malampaya gas fields from 2004 to 2012.
COA’s Sectoral Performance Audit report, which was released this week, said that “in general, releases of funds by the DBM, out of the Malampaya Fund, to the different [implementing agencies] may not be considered proper.”
The audit covered funds that were released not for energy development-related purposes, but for “other purposes authorized by the President”—a practice struck down by the Supreme Court as unconstitutional in November 2013.
Disregard of laws
Auditors said the apparent disregard of applicable laws, rules and regulations contributed to the misuse of the funds.
For one, the auditors flagged the lack of documentary requirements to establish the basis for the release of the P36.288 billion to 62 implementing agencies.
The report also cited the DBM’s failure to establish first the propriety of the projects to be funded and the reasonableness of the requested amounts. It also noted that as much as P2.171 billion was diverted to purposes other than those authorized by the President.
“The [audit] team recommends immediate conduct of investigation to determine officials and employees who may be responsible for the questionable release of funds and file appropriate charges, if warranted,” the report said.
It urged the DBM to thoroughly evaluate the “actual needs” of the agencies requesting the Malampaya funds and ensure the completeness of their documents first.
Not energy-related
The audited funds were released during six years of the Arroyo administration under then Budget Secretaries Emilia Boncodin, Romulo Neri and Rolando Andaya Jr., and two years of the Aquino administration under then Budget Secretary Florencio Abad.
As of May 21, 2012, P38.807 billion—22.41 percent of the P173.28 billion paid to the national government as of June 30, 2013—was released for “other purposes as may be directed or authorized by the President,” instead of funding energy resource development and exploitation.
“The very purpose for which Malampaya Fund was established is therefore yet to be served,” said the COA, which was prompted by the Supreme Court case to look into all funds released just on the President’s say-so.
The report specifically zeroed in on P36.288 billion in fund releases to national government agencies, as a separate fraud audit covered the P2.572 billion allotted to the projects of the Palawan provincial government.
Missing documents
In the case of the audited funds under 184 special allotment release orders (Saros), the mandatory documents required before the approval of the disbursement could not be located.
The COA took this as a sign of the DBM’s failure to “properly evaluate and establish the basis for the release of Malampaya funds.”
Such documents include the endorsement of the Department of Energy, the DBM’s evaluation, or even the fund requests from the implementing agencies. The DBM claimed it could not submit the results of its evaluation to the COA audit team because these were “classified internal documents.”
Agencies involved
The Armed Forces of the Philippines general headquarters accounted for the largest portion of unsupported releases at P7.268 billion, followed by the Department of Public Works and Highways at P7.103 billion, National Power Corp. at P6.624 billion and Department of Agriculture at P5.824 billion.
Other agencies that received substantial irregular disbursements were the Philippine National Police (P2.14 billion), National Electrification Administration (P1.922 billion), Department of Energy (P1.91 billion), National Housing Authority (P1.399 billion), Department of Agrarian Reform (P900 million) and Department of Health (P745.926 million).
Instead of requiring certain documents to serve as basis for the allocations, the auditors said the DBM only required the documents for compliance under the Saros that released the funds already.
Twenty-four releases totaling P2.171 billion, meanwhile, were diverted by the DBM for purposes other than those authorized by the President, in violation of Section 8 of Presidential Decree No. 910.
In October 2009, then President Gloria Macapagal-Arroyo approved the use of these amounts for relief operations and rehabilitation of areas affected by the widespread devastation of several typhoons. —VINCE F. NONATO