Last of Five Parts
FELICIANO MENDOZA was enjoying semi-retirement in his hometown of San Rafael, Bulacan last September when he received a letter that jolted him from his life of relative calm.
The letter was from the Commission on Audit (COA), which was performing a cursory audit of Priority Development Assistance Funds (PDAFs) released from 2007-2009. The commission wanted to confirm if Mendoza had availed himself of a P120,000-loan in June 2007 from a nongovernment organization (NGO) that implemented a social development project of a Bulacan legislator at the time. That year, 2007, was also when Mendoza served his last term as barangay captain.
COA’s letter came with an attached disbursement voucher supposedly issued by the NGO to him. According to the voucher, Mendoza had indeed received the P120,000 loan. This was validated by a signature affixed on the voucher.
Except, says Mendoza, the signature wasn’t his.
"Ay talagang hindi po akin ‘yung pirma at ni hindi po inihawig sa pirma ko, eh. (The signature was clearly not mine and it did not even remotely resemble my signature),” Mendoza tells PCIJ in an interview.
Mendoza would soon discover that his was not the only name used by the NGO in a purported livelihood capital assistance project supposedly implemented with PDAF or pork money – a total of P9 million in all – in the district. In San Rafael town alone, 12 other barangay captains who supposedly received funds would deny having ever heard of the NGO, much less having transacted with it.
Unfortunately for Mendoza and the barangay captains, the NGO seemed to have vanished into thin air by the time COA came knocking on their doors. More unfortunately, the case is not unique.
Born for pork?
Social Welfare and Development Secretary Corazon ‘Dinky’ Soliman herself says there are many other NGOs that were set up for only one purpose: “to get the money” or the pork. These NGOs would then disappear as soon as their PDAF patrons have finished their term in Congress, and with them, the millions they had received from the pork barrel.
This has left the DSWD in a bind. Being the conduit of most of the so-called ‘soft’ pork projects, it is the agency that COA will hold accountable for all the PDAF it releases to NGOs, which are supposed to implement these projects. Yet there may be little that DSWD can do when it finds itself dealing with ghost NGOs and ghost projects.
For every peso of pork funds that legislators have awarded to NGOs from 2003 to 2011, up to 20 centavos involved fly-by-night or bogus NGOs, according to Soliman. Most of the time, these are NGOs that had been created, born, and organized apparently for the purpose of just getting PDAF shares.
In addition, a handful of NGOs and foundations have apparent links to, and are precisely named after the spouses, parents or grandparents of the lawmakers who gave out the pork.
And even against the better counsel of the DSWD that only NGOs with clear track record and registration papers must be conduits of pork, six in every 10 lawmakers insist that the funds be awarded to their handpicked NGOs, Soliman says.
DSWD officials may protest the choice, but only to their own peril – if their wishes are not granted, some lawmakers have threatened to get them transferred or to humiliate them “on the floor,” or in the case of Soliman, to be given rough sailing at the Commission on Appointments.
Pressure, meddling
COA and DSWD have laid down several rules to control the awarding, monitoring, and accounting of pork releases to NGOs and foundations. But intense pressure and meddling by lawmakers in NGO selection and project implementation, along with loose monitoring and reporting mechanisms within the government, have nevertheless allowed millions of pesos in pork funds to be funneled into bogus NGOs across the country. Real and potential conflicts of interest and questionable arrangements between NGOs and their PDAF patrons have also gone unchecked.
All these have resulted to a lot of leakage of public funds in organizations that are supposed to augment the gaps in the government’s delivery of much-needed social development projects.
While DSWD has yet to provide PCIJ with the total amount of pork that all its Field Offices have released to NGOs across the years, DSWD’s Central Office alone reports to have released P1.4 billion to NGOs in a span of nine years, or from 2003 up to Dec. 31, 2011. Of this amount, P388.9 million or nearly 28 percent remain unaccounted for as of June 2012.
The DSWD’s central office accounts for the largest share of unliquidated PDAF releases to NGOs. Across all the DSWD’s offices, however, the total amount of unaccounted PDAF releases to NGOs by DSWD within the last decade or so today stand at about P770 million.
Eighty percent of that total, or P620 million, went to only 21 NGOs that were the most favored by congressmen and senators alike.
The DSWD figures cover PDAF transferred to NGOs from prior to 2003 until Dec. 31, 2011, or across four Congresses, from the time of President Gloria Macapagal-Arroyo up to the current administration of President Benigno Simeon C. Aquino III.
Soliman estimates that out of the hundreds of such PDAF transfers to NGOs, some 15 percent to 20 percent have involved fly-by-night NGOs.
Budget Secretary Florencio ‘Butch’ Abad also speaks of cases where lawmakers have “created the facility” for the purpose of appropriating the funds for themselves. “Some have gotten into trouble for it,” he says.
It’s a situation that is hardly new. In fact, two of President Aquino's immediate predecessors had allegedly been involved in shady dealings with foundations of dubious origins within the past decade. (See: http://pcij.org/stories/arroyos-run-a-horde-of-foundations/)
CIDSS catch-all tag
Soliman is quick to add though, that being on DSWD’s ‘red list’ does not always mean that the NGO is guilty of wrongdoing. There are also those, she says, who fail to liquidate the funds according to COA’s stringent standards.
NGO involvement in promoting the nation’s welfare is mandated by the Constitution. Soliman, who had worked in NGOs before joining government, says that working and partnering with such groups is part of a vibrant democracy. That is, she says, provided that the NGO-government engagement continues to be “based on shared values and principles" of "integrity, accountability, and good governance.”
She says she still believes that many NGOs and people's organizations (POs) are “along those lines.”
Soft projects coursed through DSWD are generally labeled Comprehensive Integrated Delivery of Social Services or CIDSS. It appears to be a catch-all phrase for “anything that is not infrastructure,” according to Soliman.
For so long as the lawmaker can justify that his pet project has to do with “development” or the provision of “social services,” Soliman also says that his pork may go to anywhere from scholarships, to capital assistance, to purchase of school uniforms.
Too, the preferred soft projects of many lawmakers – burial assistance and medical assistance – are allowed under “assistance for individuals in crisis,” Soliman explains.
The General Appropriations Act of 2012 prescribes that P30 million of the P70 million PDAF allocated to each member of the House of Representatives should go to 'soft' projects while 'hard' or public infrastructure projects get P40 million. But the GAA prescribes an even share between soft and hard soft projects for the P200 million earmarked for each senator.
A congressman may opt to award his PDAF to a local government unit within his district, instead of to an NGO. Many lawmakers, however, opt to course their soft projects to NGOs, especially in areas where the LGU official is not an ally of the lawmaker – and that’s where the trouble usually starts.
Screening process
As Soliman tells it, the pressure from lawmakers – almost always congressmen rather than senators, she says – begins to be felt right at the PDAF awarding process. Per DSWD’s guidelines, the prescribed process is such: a congressman identifies a soft project for which he wants to allocate his PDAF and endorses it to DSWD. The department assesses whether the project is appropriate to the community’s needs. DSWD would then invite NGOs to submit proposals to implement the project.
The NGOs that would apply for the project would be screened by DSWD according to the requirements for availing PDAF-funded projects. These include registration with the Securities and Exchange Commission (SEC), Department of Labor and Employment (DOLE), Cooperative Development Authority (CDA) or the DSWD, plus a track record of delivering social services.
But Soliman herself concedes that “documents are not that difficult to produce.” She adds that bogus groups set on getting accreditation even produce “proof” of their supposed track record.
She also says that “60 percent” of the time, the lawmaker insists the PDAF be awarded to an NGO that he had handpicked. According to Soliman, DSWD too often succumbs to the congressman's wishes. She says, “Unfortunately, nagpa-power over sa amin (they exercise their power over us).”
Not surprisingly, this practice has sometimes resulted in pork going to NGOs that pose real and potential conflicts of interest with their PDAF donors. The most obvious involve PDAF awarded to a number of lawmakers’ own family foundations.
PCIJ’s perusal of the 215 NGOs on DSWD's red list reveals that at least six have apparent links to the families of their pork sources (See Table 1).
Table 1. Family Foundations and their Pork Patrons
The foundations offer a host of community-based programs – from livelihood, environmental and waste management, financial support for indigents and disadvantaged sectors, to “sports upliftment.” Altogether, these six family foundations account for more than P21 million in unliquidated cash advances from DSWD (2.7 percent of total outstanding cash advances) incurred from 2005-2010.
Improper, not illegal?
Budget Secretary Abad remarks that while allocating PDAF to one's own family foundation may be “improper,” the practice is “not, in a sense, illegal.” He even says that a lawmaker could get away with it so long as the supposed projects are rationalized as meant to “benefit the public.”
One way to ensure that, of course, is if agencies such as the DSWD are able to do their watchdog task over the use of pork funds. But Soliman admits that her agency lacks the capacity to monitor and verify PDAF-funded projects being implemented by NGOs. She says DSWD personnel are limited to conducting only “spot checks” of the projects. In some instances, the agency is alerted of irregularities only when constituents write to it to question certain projects.
In most other cases, DSWD would only discover that certain projects have not been implemented according to plan upon the NGO’s failure to liquidate the allocated amounts – as what happened with the case of the former barangay captains and the NGO in Bulacan.
But DSWD officials still have a last resort. According to COA rules, they can file criminal charges against the officers of these NGOs. That is, if the agency can still find them. Laments Soliman: “The problem is, we cannot find even the shadow of the leaders of these NGOs, not even the addresses they had provided.”
The problem is compounded when the lawmaker concerned is not in power anymore. In such cases, Soliman says, DSWD finds it almost impossible to get the ex-legislator’s assistance in holding to account the NGO leaders whom he or she had recommended in the first place.
Gone missing
The seemingly futile task of running after ghost NGOs was corroborated by PCIJ's repeated attempts at contacting some of those with the biggest unliquidated cash advances.
Using the data they submitted to DSWD, PCIJ tried calling 17 NGOs. Only five had live phone numbers. One of them, the Ignacio Lacson Arroyo Sr. Medical District Hospital, is also the only one among the six family foundations in the DSWD red list that still had a valid phone number. (See Tables 3 and 4)
Table 3. NGOs with Outstanding Cash Advances from PDAF Contacted by PCIJ*
Table 4. NGOs with Outstanding Cash Advances from PDAF that Could Not be Contacted by PCIJ*
That might leave one into thinking: There are NGOs that received millions of pesos in pork money, but had never really existed at all. By many indications, that fear has basis.
Golden Palmdale Association, for example, is a community-based NGO that is supposed to serve “socially disadvantaged, distressed, abused, and indigent families and individuals” in the 4th District of Manila.” From 2004-2007, the NGO racked up a total of P45 million in unliquidated cash advances from the PDAF of 4th District of Manila Representative Rodolfo Bacani.
And yet, despite this seeming deluge of funds, Golden Palmdale’s 2008 Annual Financial Statement submitted to SEC says that “although registered in 2004,” it “is still in its pre-operating stage and has not started its operations.” By its own admission thus, the NGO appears to have been inactive in all the years it was supposedly receiving Bacani's PDAF.
Like Golden Palmdale, Kabalikat sa Kabuhayan, Inc. filed an “Affidavit of No Operation” with SEC on Nov. 25, 2006, barely a year prior to its first PDAF allocation in 2007. Despite its failure to submit any financial statement with SEC since 2006, the Makati-based NGO received millions from the PDAF of four legislators: Reps. Carlos Imperial, Robert Jaworski Jr., Alfonso Umali, and Rene Velarde, from 2007-2008. Of these allocations, the NGO failed to account for P10.3 million. The organization’s SEC registration has since been revoked by SEC.
Just last April, Sun.Star Cebu had also reported how beneficiaries of a PDAF project purportedly implemented by Manila-based Aaron Foundation turned out to be non-existent. In addition, the foundation, which had received P7.8 million in pork from 4th District of Cebu Representative Benhur Salimbangon, had a “vacant lot” as an address and a non-working phone number, according to Bogo City Mayor Celestino Martinez Jr., who supposedly had constituents among the beneficiaries. The mayor pointed out as well that Aaron Foundation had been implicated in the P728-million fertilizer scam in 2004.
Salimbangon told Sun-Star, however, that it was the Technological Resource Center that chose Aaron Foundation. He also noted that Martinez is his “political opponent.”
Intense pressure
Secretary Soliman may find some comfort in the fact that in this instance, it wasn’t her agency that was involved. After all, she seems to already have her hands full with errant NGOs, existing or not, along with their patron lawmakers.
Soliman says that the most intense pressure from legislators often comes once DSWD starts refusing to release additional funds to wayward NGOs. She says certain congressmen insist that the agency keep releasing funds to their pet NGOs even if these still have to account for funds previously received – or else. According to Soliman, DSWD regional directors are even threatened with transfers or being “humiliated on the floor.”
Soliman says even she has been threatened with political backlash by some politicians. “They would say, ‘haharangin namin, pahihirapan namin (We will block you and make it difficult for you).”
DSWD’s database shows at least 21 NGOs that appear to have been most favored by legislators, based on their outstanding cash advances amounting to upwards of P10 million. These cash advances were drawn either from the PDAF of multiple legislators, or from the PDAF of a single lawmaker across several years (See Table 2).
Table 2. NGOs with unliquidated cash advances from PDAF worth P10 million and up (as of March 31, 2012)
PEDAI & READ
One such standout is the Quirino-based Palacian Economic Development Association, Inc. (PEDAI), which has the biggest accumulated outstanding cash advances at P105 million, according to DSWD’s database. These cash advances were all drawn from 2008-2010 from the PDAF of then House Appropriations Committee chairperson Junie Cua, Representative of the Lone District of Quirino. PEDAI’s outstanding balance makes up 99 percent of the outstanding cash releases of DSWD Field Office for Region II (P106 million as of March 31, 2012).
Cua is now Quirino governor. His provincial administrator is Elizabeth Nicolas, PEDAI’s former executive director. According to Nicolas, the funds supported Cua’s CIDSS program that served “indigent individuals and families in crises situations requiring financial assistance, educational assistance, burial assistance, medical assistance, individuals and families affected by disaster and other services.”
She also says that the 20-year-old NGO’s outstanding cash advances are much less than DSWD’s figures and that “the liquidation process for this outstanding balance is still ongoing.”
Cua, for his part, says he had nothing to do with the selection of the organization as implementer of his PDAF projects. “The choice of PEDAI as the recipient of PDAF is a decision made by DSWD,” he tells the PCIJ in a letter.
Unlike Cua, Senator Edgardo Angara readily says he chose Rural Empowerment Assistance and Development Foundation Inc. (READ) to be among the recipients of his PDAF. A community-based organization operating in the NCR, Luzon, and the Visayas, READ’s services include educational and financial assistance, crisis intervention, livelihood, and research and development.
According to DSWD Central Office records, READ also has unliquidated cash advances totaling P43.9 million, all drawn from Senator Angara’s pork from 2006-2009. As of June 30, 2012, READ still has nearly P27 million in unsettled cash advances from Angara’s PDAF.
Angara & READ
When the senator was asked questions about his relationship with specific incorporators and trustees of READ, he merely copied and pasted the reply that READ earlier sent to PCIJ: that READ’s incorporators “are not connected directly or indirectly, by consanguinity or affinity with Senator Edgardo J. Angara.”
He replied to PCIJ’s queries on his PDAF allocations by saying that that his office “guarantees both the integrity of the project and the use of the money.” He said that he chooses his pork recipients based on “the integrity and backgrounds of the people running the foundations” and “the integrity – and relevance – of their project proposals.” Angara, who coursed his PDAF to three other NGOs besides READ, added that “there should be an intersection of my view of what to support and the foundations’ mission/vision at some point.”
With READ, that shared vision seems to have manifested itself in four books on culture and history that were published by the NGO and either authored or co-authored by Angara. READ Executive Director Leonardo U. Flores even says one of these tomes, Baler, Aurora, “has helped Aurora tourism immensely.” He also says the books’ publication is in line with READ’s research and development program. But he is mum on PCIJ’s question on whether any of Angara’s pork supported the venture.
Yet just like PEDAI, READ says its unliquidated cash advances from pork is less than what DSWD records say. Flores says that of the P49.2 million in pork READ received, only “P21 million has yet to be liquidated.” This amount, says Flores, “covers ongoing projects,” some of which has a “four-year life, from 2009-2013.” READ attributes the delay in liquidation to funds allocated to local governments, which “cannot meet timelines.” He guarantees “full liquidation after project completion.”
Soliman stands by her agency’s data. She says, “Our finance [department] has put the unliquidated figures there because there are no reports submitted yet.”
Gordon & Red Cross
Yet the problem could also lie in DSWD’s tedious liquidation and review process. The Philippine Red Cross for one says that even though the liquidation reports have already been submitted to DSWD, fund advances are considered settled only after the agency “clears” the documents.
The humanitarian organization is listed as the second highest with outstanding cash advances of P90.2 million, although it, too, reports having conflicting figures with those from DSWD.
By Red Cross’s own accounting, it has been allocated since 2004 a total of P194.6 million from the PDAF of two of its governors: then Senators Juan Miguel Zubiri and Richard Gordon. But Red Cross says that only 59 percent of the total allocations, or P114 million, has been released by DSWD thus far.
According to Red Cross, it has already liquidated a portion of the pork monies it had received, while other portions of the funds are either not yet disbursed or are in the process of liquidation. The allocations that Red Cross did receive were spent to purchase rice and relief goods, emergency vehicles, as well as “for the construction of a blood and disaster center in Olongapo City,” says its secretary general Gwendolyn Pang.
Interestingly, the source of nearly all of Red Cross’s pork allocations – P193 million – is just one person: former Senator Gordon, who has been its chairman and CEO since 2004. Yet while this might raise some eyebrows, Gordon thinks allocating his pork to Red Cross was only “natural.”
Zubiri awarded only P1.5 million of his pork to the Red Cross in 2004.
“This is not an organization that makes me wealthy,” Gordon says. “I’m a volunteer here.” In fact, he has been a Red Cross volunteer for 45 years. Gordon says that PDAF or no PDAF, he “has been raising money for the Red Cross” since he was “a kid.”
‘Most bang for buck’
Allocating his PDAF to Red Cross is the best way to give taxpayers’ money “the most bang for the buck,” he says. Gordon even quips, “If there’s any conflict of interest there, then I’m the one on the losing end.”
But Soliman remarks, “It would have been better if Gordon was not involved in the organization.” She says she believes Gordon “did not intend to have a conflict of interest in this situation,” and that “Senator Gordon has helped a lot of people because it’s Red Cross.” Soliman says, though, that what also matters is “the principle of the whole thing.”
Principle- and figure-quibbling aside, the Red Cross, READ, and PEDAI have all indicated willingness to settle their outstanding advances. But Soliman seems to have had enough. She has requested the budget department not to course the PDAF to DSWD anymore.
“Many of my regional directors and colleagues in the department wish that we are not made conduits of PDAF,” she says. “I empathize with them. We will be held accountable for many things we have no control of.”
In the meantime, she has recommended stricter measures in the awarding of pork monies, such as creating a selection committee within the DSWD national office and its regional offices that will take charge of project assessment and selection of NGOs.
But she hopes to see a time “when PDAF will not be existing.” She says the execution of programs and projects is better left to the executive branch anyway. Soliman clarifies, though, that her stand is “not a position of the current administration.”
“I’m saying this at great risk,” she says. “I have to toe the line.” – With additional research and reporting by Anne Ednalyn dela Cruz, PCIJ, July 2012