PCSO bares ad kickbacks

Friends in media of then President Gloria Macapagal-Arroyo got hefty kickbacks from advertising placements of the Philippine Charity Sweepstakes Office (PCSO) on their radio programs, television shows or newspapers, the new PCSO management said.

PCSO Chair Margarita Juico said the commissions ranged from 40 percent to 50 percent of the ad budget. The media personalities themselves put up the ad agencies to facilitate their commissions.

The kickbacks came amid overspending on advertising by the charity agency whose board was “packed with media personalities,” Juico said.

The PCSO board in the last two years of the Arroyo administration consisted of then Chair Sergio Valencia, Vice Chair Rosario Uriarte and members Manuel “Manoling” L. Morato (columnist and TV host), Jose Taruc V (son of dzRH executive and news anchor Joe Taruc), Raymundo T. Roquero (former Tempo sports reporter) and Ma. Fatima A.S. Valdes.

Other media members like Resty de Quiros and Robert Rivero, then dzRH and RMN reporters, respectively, had been named to the board during the nine-year Arroyo administration.

Juico said the PCSO’s advertising budget had grown exponentially from only P319 million in 2001 to P1.7 billion in 2010, an election year.

Juico, who met recently with Inquirer editors and reporters, said that after a year of “housecleaning,” her legal team had come up with records showing how Arroyo used agency funds to line the pockets of her media friends and allies in Congress.

She said Arroyo also lavished funds of the charity agency on allies in the House of Representatives at the height of moves to oust her.

“Most of these congressmen were those who voted against her impeachment. She used (PCSO funds) like a pork barrel,” Juico said.

In its 2008 audit report on the PCSO, the Commission on Audit (COA) said the nearly P529.45 million the agency paid for advertising contracts that year was too much.

The COA said the advertising money could have been used to help the less fortunate instead.

“Considering PCSO’s mandate to raise funds for health and charity programs, instead of spending on advertising expenses, a portion could have been used more meaningfully for charity,” the agency said.

Excessive

The audit agency noted that the PCSO placed excessive advertisements in media—sometimes over 20 spots per day on the same TV or radio station—leading to the unnecessary spending of public money.

The COA also said the charity agency placed ad placements based not on a single media plan, but on requests from TV and radio stations.

Sometimes, there were overlapping contracts for advertisements within the same program. It seemed as if the PCSO accepted all proposals made by media agents and program hosts, the COA said in the 2008 audit report, its latest on the charity agency.

Furthermore, there was no policy for the monitoring of the actual advertisements, the COA added.

Juico said the ad placement racket was perpetrated by then PCSO PR Manager Manuel Garcia who was fired in March after 12 years in the position.

Bank accounts

Juico said there were PCSO checks issued to media block-timers that found their way into Garcia’s bank accounts.

“He got the PCSO checks and deposited them in his account. He never thought he’d get caught until we got the return checks,” Juico said.

She said Garcia, who reportedly has a logging concession in Papua New Guinea, had “connections” in Congress being the son-in-law of a former Pangasinan representative.

Garcia obtained a medical certificate from the House of Representatives to justify his application for a one-year leave of absence from the PCSO.

“We did not honor it (medical certificate) so we dropped him from the rolls,” Juico said.

“We’re still trying to establish whether he had links with former First Gentleman Jose Miguel Arroyo but so far I’m not convinced.”

As early as 2005, the COA had already warned the PCSO not only about its unusually high ad expenses (it said that being a monopoly business, a reduction in ad expenses would hardly impact its sales), but also about its practice of charging expenses to next year’s budget (which enabled it to hide the fact that it was losing P89 million as early as 2003).

In the 2005 report, the COA said the PCSO, which accumulated a deficit of nearly P1 billion, should have been reduced had it cut its ad expenses.

P4-B debt

Juico said that when the old board left in July 2010, the PCSO’s accumulated debts had reached a staggering P4 billion.

She said that among the promotion deals that perplexed the new PCSO management was how the agency could have lost P77 million for its P75-million diamond anniversary sweepstakes draw in 2009.

Based on her experience, Juico said the PCSO had been taken hostage by some “vicious” media personalities.

“If you pull out their ad, you become fair game,” said Juico, who has made a review of all ad contracts that has led to a termination of a huge chunk of ad placements.

The COA also pointed out that the PCSO should not be involved with marketing consumer products that required extensive advertising.

The COA said in its 2008 report that the number of advertisements placed to promote the sweepstakes or lotto must be carefully planned, evaluated and limited to what was just enough.

The PCSO management said then that it would comply with the requirements before entering into advertising placement contracts, and adopt guidelines to facilitate the preparation of advertising placement contracts before the airing of commercial spots.

Share of lawmakers

The COA also found something amiss in the issuance of checks worth P7.043 million in the names of members of the House, representing the 2.5-percent share of their districts from the STL Charity Fund.

The COA said that by doing this, the PCSO could not have closely monitored the amount if the money was used for medical and health programs as required.

The audit agency said the PCSO should have released the funds to hospitals, health facilities and other institutions chosen by the lawmakers.

Stamp tax

Aside from the deficiencies in the handling of ads and other funds, the COA also questioned the PCSO’s use of charity funds to pay for its documentary stamp tax (DST) obligations for lotto operations amounting to P1.686 billion in 2008.

This resulted in the substantial reduction of charity funds, and affected its health and medical assistance programs, it added.

The PCSO then agreed with the COA, but said it could not do anything but implement the long-standing practice of deducting the DST from the charity fund. This started since the introduction of the lotto.

The DST is imposed on documents, loan agreements and papers which show the acceptance, assignment, sale or transfer of an obligation or right. It is a tax on the privilege to enter into a transaction and is meant to raise revenues.

The COA also said the PCSO had not given priority to remitting its mandatory contributions to other government agencies, such as the Commission on Higher Education and the Dangerous Drugs Board.

Juico said she planned to submit her findings that showed how funds meant for charity were diverted in the form of endowments to favored politicians and commissions to media personalities, in a plunder charge against Arroyo, now a Pampanga representative, to the truth commission.