Saturday, August 18, 2007 Lapu-Lapu scored for LBP deal
LAPU-LAPU City agreed last year for a bank to get 6.32 percent of its total time deposits, as collateral for a loan of P31 million.
State auditors, however, found the condition disadvantageous to the city.
Because it could withdraw only an amount equivalent to how much it paid on its loan principal, the City, in effect, restricted its access to funds for its needed projects, auditors said.
The Commission on Audit (COA) report for 2006 said that by agreeing to a hold-out fund of P40 million from its time deposit, the City bound itself to a “secured loan.” The collateral cannot be withdrawn until the loan is “125 percent” paid.
“As a consequence, it appears that the loan was already paid out by the hold-out deposit, a condition disadvantageous to the city,” the report added.
The P40 million is a fraction of the city’s cash in the bank, deposited in two high-yield accounts with the Land Bank of the Philippines (LBP).
Under the terms, the loan is payable in seven years, and the amortization started last May 31. The City may be able to withdraw from the collateral, but only up to the amount equivalent to how much the City has paid so far on the principal.
COA asked the city accountant to reveal in the financial statements the amount used as a collateral for the loan, the balance and the corresponding payments made by the City.
This way, local officials will be updated on how much they could use out of the P40 million.
Chief accountant Buenaventura Igot admitted that payments since May have not been reflected in the financial statement, but that all the receipts are being kept by his assistant.
“We haven’t been able to disclose it in the notes (to the financial statements), but we have a complete record of it. We will do it,” Igot told Sun.Star Cebu in an interview.
The City had applied for the loan to finance various projects. (AIV)
