DBM: Part of the pork barrel problem - or the solution?-A A +A
Thursday, October 10, 2013
THE multi-billion peso scam involving lawmakers’ Priority Development Assistance Fund (PDAF) orchestrated by alleged mastermind Janet Lim-Napoles has exposed an intricate web of lies, deceit and fraud involving not just the businesswoman but lawmakers and government agencies.
How Napoles and all those involved got away with the scheme for three years is still anybody’s guess. More importantly it puts into the spotlight the role of the Department of Budget and Management (DBM), supposedly the keeper of the government’s purse in safeguarding taxpayers’ money.
But determined thieves can crack any safe, said Budget Secretary Florencio Abad in an interview with the Citizen Action Network for Accountability (CANA).
“There's no perfect system. If the thief is persistent or determined, he can get what he wants. You can crack any safe so they say but more and more our direction is to be transparent about everything,” Abad said.
If the whistleblowers were to be believed, the DBM played a critical role in the scam. Without Napoles’ contacts with DBM insiders, her PDAF racket would not have been possible.
The PDAF process starts when a legislator submits a project request to DBM.
Each project identified or nominated in a request is actually based on the PDAF Menu, which includes information on the project title, implementing agency and a list of requirements.
Whistleblower Benhur Luy said that Napoles often called the office of Budget Undersecretary Mario Relampagos to follow up the release of two documents necessary to be able to utilize a lawmaker’s PDAF.
These are the special allotment release order (Saro), the document that authorizes a fund release from an agency’s allocation, and the notice of cash allocation (NCA), which is a cash authority which DBM issues quarterly to central, regional and provincial offices to cover the requirements of the cash requirements of agencies.
According to the whistleblowers, lawmakers will write the DBM through the heads of the Senate committee on finance and the House committee on appropriations. The letter will contain the identified projects, the description of the project and how much it would cost, Luy said.
In response, the DBM – upon completion of the documentary requirements – would then release the Saro to the respective implementing agency and then to the office of the lawmaker.
“Sometimes, we make follow-ups with DBM and also Napoles,” Luy said.
Abad conceded that Napoles must have had contacts inside the budget department for her to know in time when a Saro would be released.
“Napoles must have been competing with other NGOs. It's the premium she gets for getting information ahead of the rest. At the very least, she knew ahead of time that a Saro would be released. It’s the advantage she gets by having contacts here,” Abad said, referring to the DBM.
However, he assured that DBM employees implicated in the scam are properly cooperating with investigating authorities.
“It's hard for me to investigate that's why the President asked the NBI (National Bureau of Investigation) to conduct the investigation. As of now, I cannot conclude (if they were guilty),” he said.
At the same time, he believes that it was very likely that the implicated DBM employees were indeed entertaining calls from Napoles’ NGOs.
“They admit that they would get calls from them and give information. Were they making money from providing the information? I asked them, they said no. Until you investigate, it's really hard to make any conclusion,” Abad said.
DBM then and now
Abad stressed that the Napoles scam happened during the previous administration’s time.
“The period 2007 to 2009 was obviously not our time but when the president won and took over as president, there were rumors on PDAF, so the first thing that we did was to be transparent about the whole thing,” Abad said.
Abad said things now have changed drastically even before the PDAF scam had been exposed.
In a separate interview by e-mail, Budget Assistant Secretary Luz Cantor, head of operations said that there is a huge difference from the way things operated then and now.
“Basically, the main difference from the process flow in 2007 to 2009 and the present system is the oversight of the Office of the Secretary in the approval of releases.
“The documents are transmitted to the Osec twice before it is finally approved by the Office of the Undersecretary,” Cantor said.
In the present system, the Budget and Management Bureaus (BMBs) record and process the releases and transmit the copies to the Legislative Budget Research and Monitoring Office (LBRMO) and the Department Legislative Liaison Office (DLLO), she said.
The present system also requires the DBM to evaluate and check the compliance with the requirements when the lawmaker makes a request.
“If any detail in the project request doesn’t conform to the Project Menu, the request will have to be deferred until the submission meets all the requirements,” Cantor said.
For example, if a legislator submits a request for the release of his PDAF allocation for a farm-to-market road project, the request should be accompanied by a certification from the Department of Agriculture confirming that the project is included in the agency’s larger network plan. This is to ensure that the proposed construction of a particular farm-to-market road is in line with the specifications which the DA mandated.
If, on the other hand, the project meets all the requirements for the release of PDAF, the corresponding budgetary documents will be issued to the implementing agency.
“These documents authorize the disbursement of funds, so that the implementation of the legislator’s project can already begin,” Cantor said.
One crucial reform which the Aquino administration introduced in 2011 is the Electronic Transparency and Accountability Initiative for Lump Sum Funds (e-Tails) website which shows the PDAF releases from 2009 to the present.
“It was created to allow citizens to keep track of fund releases of legislators for each fiscal year. Through the database, citizens will find out how exactly did a legislator spend his allocation, who benefited from it, where and when It was released,” Cantor said.
As such, since 2011, the Budget department regularly provides the Commission on Audit copies of the releases based on the list posted in the e-Tails website.
As another safeguard, Abad said the Aquino administration also tried to limit the menu of projects to be funded through PDAF.
Through this new mechanism, the projects which the legislators will identify will be based on a tighter menu of eligible projects and excluding projects previously allowed, Cantor said.
No longer allowed are consumable soft projects such as fertilizers, seeds, medicines, medical kits, dentures, training materials and sponsorship of sports leagues. Cantor said these have been proven to be difficult to prove if these were indeed consumed by beneficiaries.
Also no longer allowed are temporary infrastructure projects.
“For instance, road widening and graveling projects, canal dredging and desilting, temporary bridges—which have proven to be susceptible to overpricing and kickbacks,” she said.
She also said that the Budget department would no longer allow NGOs as conduits to the implementation of projects, in light of the massive anomalies recently discovered in the use of “shell” or dubious NGOs to launder public funds.
Furthermore, the Budget department said certain non-government agencies and government-owned and -controlled corporations (GOCCs) identified to have the capability to use such projects would be abolished.
More so, those identified to have been instruments for corruption would be abolished, DBM said.
“The President has identified, in particular, the ZNAC Rubber Estate Corp (ZREC) and National Agribusiness Corporation (Nabcor), which will also be abolished,” Cantor said.
Abad said the Office of the Ombudsman would have to see if there is conspiracy or involvement on the part of the agencies.
“It is possible that there is negligence,” he said.
Just the same, the DBM would now require the submission of a physical report of projects by implementing government agencies and not just the financial report.
“The physical report will include for example the dimension of the school as well as photographs,” he said.
“The first line of accountability has to be the implementing agency because they received the money. But we required those reports because of our accountability as an oversight agency. We act as an act of oversight unlike the implementing agency, which has the principal accountability,” Abad added.
Cantor said another significant step is the implementation of the so-called Transparency Seal, which mandates certain information be indicated on the websites of government agencies. These include the agency’s mandates and functions, names of its officials with their position and designation, and contact information.
Other requirements are their annual reports for the last three years, their respective approved budgets and corresponding, major programs and projects, status of implementation and programs, annual procurement plan, as well as projects.
This provision enhances transparency and accountability in government, Cantor said.
No more PDAF in 2014
Moving forward, Abad said that there would no longer be a PDAF item in the 2014 budget.
“It’s deleted already. The full discretion now lies with the executive department. Right now, lawmakers are limited to identifying projects during the budget process,” Abad said.
Essentially, Abad said this means that lawmakers can no longer treat PDAF as their own money, which has led to abuse in the past.
With the abolition of PDAF, lawmakers would now have to identify their intended projects during the budget process.
“The best that they can do is to recommend projects during the budget process,” Abad said.
Furthermore, in the coming years, Abad said the operations of the Budget department and government would become digitized and the intervention of humans in the processes would be limited.
This is among the reforms introduced by the Aquino administration.
Abad conceded that the PDAF scam is just the tip of the iceberg among a vast web of scams masterminded by the previous administration.
“During the time of (former president) GMA (Gloria Macapagal-Arroyo), every year the budget was being reenacted. This was the source of a lot of discretion,” Abad said.
He explained that whenever a budget was reenacted, the government had absolute discretion.
“It's a deliberate policy from 2008 to 2010. She (Arroyo) was already under siege and her main preoccupation was political survival. That allowed her to generate a war chest,” Abad said.
Other means which the current administration unearthed was the deliberate use of different foreign exchange assumption.
“That's not the only means. The other means is that they played around with foreign exchange assumption so that interest payments will go down. So instead of paying P300 billion, they pay P200 billion or P250 billion then they can use the remaining for other projects. This can be released to the implementing agencies,” he said.
Under the current administration, Abad said, there has never been a reenactment of the budget and there are no plans in the remainder of the six-year term to work on a reenacted budget.
“We don’t do reenacted budgets and automatic appropriations so there’s no way to tamper with interest payments,” he said.
Abad also believes that with the environment now that pushes for transparency, people now are more encouraged to speak up on wrongdoings.
“The prevailing environment now is different. It encourages openness and accountability,” he said, noting that the PDAF scam was bound to come out in the open because of the current administration’s policy of transparency and accountability.
He noted for instance that in the case of the Malampaya funds, 98.5 percent of the funded projects were non-energy related.
Abad said this is not happening under the current Administration.
In all, Abad said the administration is doing what it can to improve the budget process and prevent misuse such as what happened to the Napoles scam.
However, he said, government needs to improve prosecution of anti-graft cases.
“The Sandiganbayan needs more divisions. They need 10 more divisions to prosecute anti-graft cases,” Abad said.
For former Budget Secretary Benjamin Diokno, what is needed is to improve transparency in government through the passage of the Freedom of Information (FOI) Bill.
“Observing transparency is the best step forward. It is important to pass the Freedom of Information bill now. If all parties are aware that the transaction will be open and will be made available to the public, then covert attempts to steal the people's money may be avoided,” Diokno said.
He also said that only the Budget Secretary should realign funds or use funds for other purposes other than the intended purpose.
“Any realignment of fund, after the Saro has been released, should be done by the Budget Secretary or his deputized senior undersecretary. Realignment at the level of individual departments is problematic. It is like shooting a moving target,” he said.
He also believes that the use of NGOs as implementing entities of projects should be stopped.
“NGOs are supposed to survive on their own without PDAF or other public funds, out of corporate donations or voluntary contributions by philanthropists or other donors,” Diokno said.
More than the PDAF controversy, however, Diokno said the allegation that DBM has used the vast power to implement the budget to 'bribe' or 'incentivize' good behavior to convict former Supreme Court Justice Corona is serious and needs to be addressed.
Senator Jinggoy Estrada has claimed that the Aquino administration rewarded lawmakers who voted to impeach former Chief Justice Renato Corona with a PhP 10 to PhP 50 million cash reward.
Abad denied bribing lawmakers.
However, Diokno said that Abad’s explanation that the additional PhP 50 million for each senator who voted Corona's conviction and some PhP 10 to 20 million for each representative who voted for the articles of impeachment were sourced from the Disbursement Acceleration Program (DAP) -- a fund that does not exist in the budget -- has only complicated and worsened the pork barrel issue.
“For one, it supports the awesome powers of the President to create a pork barrel fund out of Congress' approved budget. The DAP in 2011 was PhP 72 billion. That's on top of the other lump-sum funds in the budget,” he said.
This, he said, shows that the so-called budget reforms which the DBM under Abad had done are adjustments at the margin and not real reforms. One can even make a case that they're done to strengthen the ruling party.
“Real reforms have to take place to avoid the repeat of this pork barrel mess and in order to strengthen political institutions in the Philippines,” Diokno said.
Indeed, the Aquino administration owes the public genuine reforms following the exposure of this grand scheme dubbed as the Napoles PDAF scam.
One can only hope that when the dust settles and the air clears, the issue would not go down in history as just another forgotten story, where the whistleblowers are alienated and ostracized while the perpetrators are scot-free. (Iris Cecilia Gonzales/CANA/Sunnex)
(The author covers the economy for The Philippine Star and blogs about development and humanitarian stories. This story is published with permission from CANA. Original link of the article here.)