Tuesday, August 27, 2013

PNoy's P1B 'Pork' in illegal NegOr contracts---COA

Nearly One Billion Pesos of President Benigno Aquino’s ‘Pork Barrel’ officially listed under “Calamity Funds” in 2012 were channeled to illegal infrastructure contracts by the Governor of Negros Oriental, of which half, or P480-million, has already been illegally disbursed, the latest report of Commission on Audit disclosed. On June 5 2012, the Department of Budget and Management issued Special Allotment Release Order No. RO VII -12-0009202 directing the release of P961,550,000.00 from the Calamity Funds, which are part of the President’s discretionary funds in the General Appropriations Act, to the Province of Negros Oriental as implementing agency (IA) to be used for the rehabilitation of rivers, and bridges in Negros Oriental after the massive destruction by typhoon Sendong in 2011 and the earthquake on February 6, 2012. On June 8, 2012, following the issuance of the SARO, P480,775,000.00, constituting fifty percent of the total SARO was deposited to the DBP bank account of the Province of Negros Oriental. However on June 29, 2012, the Department of Budget and Management issued a ‘Negative-SARO”, withdrawing the June 5, 2012 SARO and ordered the Governor to immediately return the deposited amount to the National Treasury and submit the deposit slip evidencing such return. The Province was instead asked to coordinate with the Department of Public Works and Highways for the release of funds to cover the repair of damage infrastructure. The Governor of Negros Oriental, disregarded the order to return the P480,775,000.00, and instead proceeded with the negotiation/bidding and entering of construction contracts with private contractors, amounting to P955,122,944.12 . A total of P480,771,898.58 was disbursed the Province as Implementing Agency and paid to the contractors leaving only P3,101.42. The Commission on audit in its report in 2013 said the contracts entered into by the Province of Negros oriental were illegal because the withdrawal of the SARO by the DBM on June 29, 2012 meant the withdrawal of the allocation. Thus the Province of Negros Oriental as implementing agency could not legally enter into construction contracts. The CoA has issued a Notice of Disallowance and recommended the payment/restitution of the released amount of P480,775,000.00. The Calamity Fund Mess: What happened? On December 17, 2011 typhoon Sendong struck hard Negros Oriental, destroying roads, bridges, and rivers/riverbanks. On February 6, 2012, a massive 6.8 magnitude earthquake hit Negros Oriental claiming lives and destroying major infrastructure, including roads and bridges. Because of these major infrastructure setbacks, the Office of the President directed the release of P961,550,000.00 (or P.961-billion) from the national calamity funds for the repair, and rehabilitation of Negros Oriental roads and bridges. On June 5, 2012, the Department of Budget and Management (DBM) Regional Office in Cebu issued Special Allotment Release Order, S.A.R.O. (No. RO VII-12-0009202). On June 8, 2012, three days after the issuance of the S.A.R.O., a total of P480,775,000.00 was deposited to the account (C.A. No. 740-012666-030) of the Province of Negros Oriental at its DBP Dumaguete branch, under Credit Advice T#740A002, representing the calamity fund from DBM. The DBM regional director Carmela S. Fernan told the Governor of the release, which constituted 50% of the total calamity fund allocation of P961-million. Eleven infrastructure projects were listed for rehabilitation. On June 15, 2012, the Provincial Accountant issued a certification to the availability of the funds. On June 29, 2012, however, the DBM regional director Fernan informed the governor that the SARO for P961-million covering the release of the calamity fund has been withdrawn. (this is called a “Negative-SARO”) The governor was instructed to “return and deposit immediately to the National Treasury” the P480,775,000.00 earlier deposited and submit the deposit slip evidencing such return. In addition, the DBM asked the Governor to “coordinate with the DPWH regarding DPWH requirements and compliance process to expedite the release of funds to support the rehabilitation projects However, the governor did not return the money. Instead, what happened was, the Province continued negotiations and implementation of the eleven projects listed in the withdrawn SARO. On July 30, 2012, eleven contracts amounting to P955,122,944.12 were awarded through negotiation to seven contractors, mostly coming from Albay, Samar, Iligan, under BAC Resolutions 266(A)-12 to 266(K)-12, approved by the governor. On August 1, 2012 Notice of Awards were given to the contractors On August 24, 2012 and September 2014 a total of P143,268,441,59 were given to the contractors as advance payments. A liquidation report was submitted to the auditor for verification of the released amount. On October 9, 2012, a government audit team informed the governor that since the SARO has been withdrawn last June 29, 2012, there was no longer any allotment to cover the contracts, which made these construction contracts null and void, or illegal. On November 29, 2012, the audit team disallowed the disbursement of the P143,268,441,59 advance payment to the contactors. As of December 31, 2012, a total of P238,732,603.20 were already disbursed for the contractors’ progress billings. On March 19 2013, the auditors received an appeal memorandum from the Governor and other persons made liable under the disallowances refuting the disallowances. As of March 1, 2013 (two months before last May elections) the accounting office of the Provincial Government reported a total of P337,503,456.99 already disbursed for progress billings. If we add the advance payments of P143,268,441,59 to the total disbursements (progress billings), the total disbursements amounted to P480,771,898.58. Remember, P480,775,000.00 was deposited June 8, 2012 to the account of the Province, which was ordered to be returned, but not returned. If you deduct P480,771,898.58 (total disbursements) from P480,775,000.00 (deposited, un-returned), what remains is P3,101.42. CoA: P.9B NegrOr infra projects illegal In its latest 2013 audit report, the Commission on Audit (CoA) has found that the P961,550,000.00 infrastructure projects for the repair and rehabilitation of riverbanks and bridges in Negros Oriental are illegal. As a consequence of its audit findings, the CoA has recommended that the provincial government: 1. Stop all on-going projects under implementation pursuant to the awarded contracts amounting to P955,122,944.12; 2. Comply with the Notices of Disallowances (N.D.) which the CoA had issued in 2012 (ND Nos. 2012-139(100) to 2012-149-100(12) of P143,268,441.59; 3. Henceforth, not to make further payments on all contracts relating to the projects of P955,122,944.12. With the finding that the contracts entered into by the provincial government are illegal, there is no more basis to continue with the projects. The problem is that the money has been disbursed already, and there is even a supposed report of “partial accomplishments”. As early as November 29, 2012, the CoA had already issued notice of disallowance on the payments under the illegal contracts. The CoA has explained that a Notice of Disallowance is a written notice issued to the heady of implementing agency, in this case the governor, and concerned officers when a transaction is disallowed in audit for being illegal. The audit disallowance shall be settled by the persons liable through payment or restitution, or by any modes of extinguishment of obligations under the law. A notice of disallowance is subject to an appeal process in case a person is aggrieved by a notice of disallowance. In ruling the construction contracts to be illegal, the CoA said that since the Special Allotment Release Order (SARO) issued on June 5, 2012 by the Department of Budget and Management in the amount of P961,550,000.00, was subsequently withdrawn on June 29, 2012 through the issuance of a “Negative-SARO”, “there was no longer any allotment to cover the contracts”. “Thus, the contracts awarded thereafter, were null and void, and consequently, payment of advances to contractors, and subsequent project billings were illegal,” the CoA said. However, two of the CoA recommendations can no longer be enforced. There is nothing to stop as the projects had long been performed. No payments can be stopped also, as recommended by the CoA, as the payments had long been disbursed and virtually wiped out. If there is a payment that needs to be stopped, it is the remaining P3,101.42, the money left out of the P480,775,000.00 released by the national government to the provincial government. Governor refutes: Negative SARO illegal, criminal However, Negros Oriental Governor Roel De Gamo refuted the Commission on Audit saying the implementation of the projects were in accordance with law. He turned the tables on the CoA saying it was the withdrawal of the SARO, through the issuance of a negative SARO, that was void. According to the governor, withdrawal of the allotment and subsequent issuance of a negative SARO is patently void and criminal, and is a mere political harassment. The governor maintained there was a lawful appropriation of P961,550,000.00 under the 2012 General Appropriations Act, which which fifty percent was released and deposited to the province. The fact that the amount was deposited in the account of the province proves there was lawful appropriation, and availability of funds. He also said that as governor, he is bound under the law to implement and continue to implement the emergency infrastructure projects for the welfare and benefit of the province. The governor also argued that the subject fund is a trust fund and not part of the general fund of the province. Thus the accounting and auditing should be different from accounting the general funds. P.9Billion Calamity Fund is PNoy’s Pork The P961,550,000.00 that has been “illegally” contracted out to various contractors to repair infrastructures damaged by Typhoon Sendong in Negros Oriental, of which P480,775,000.00 has already been released and spent, was taken out of the so called “Calamity Funds”. What is this Calamity Fund? Calamity Funds are public funds that are regularly appropriated under the annual General Appropriations Act. What is the purpose of these Calamity Funds? Calamity Funds have a specific purposed spelled out in the General Appropriations Act: “For aid, relief and rehabilitation services to communities/areas affected by man-made and natural calamities, and repair and reconstruction of permanent structures, including other capital expenditures for disaster operation, and rehabilitation activities,..” “Calamity Funds” is President’s Pork Barrel Calamity Funds are to be released only “upon approval by the President of the Philippines.” Release of calamity funds is upon the discretion of the president, through recommendations from various government agencies like the National Disaster Risk Reduction and Management Council (NDRRMC), and the Department of Health . Calamtiy Funds therefore, is a tiny part of the President’s humongous Pork Barrel in the National Budget. The 2012 General Approproiations Act (Republic Act No. 10155) Under the 2012 General Appropriations Act where this anomalous P.9Billion Calamity fund was appropriated, the use and release of Calamity funds, under Chapter XXXVII of the law, it is stated: “Use and Release of Fund. The amounts appropriated herein may be made available for relief, rehabilitation, reconstruction, and other works or services in connection with natural calamities, epidemics as declared by the DOH, crises resulting from armed conflicts,insurgency, terrorism, and other catastrophes, which may occur during the budget year or those that occurred in the immediately preceding year…”. How is the Calamity Fund Released? According to the General Appropriations Act of 2012 (R.A. 10155), “Releases from this Fund shall be made by the DBM directly to the appropriate implementing agencies upon approval of the President of the Philippines, and in accordance with the favorable recommendation of the NDRRMC …” Negros Oriental: the implementing Agency Records from the Department of Budget and Management show that the Province of Negros Oriental, a local government unit, was made the “implementing agency” for the release of the P961,550,000.00 under Special Allotment Release Order No. SARO RO VII -12-0009202 . Negros Oriental: Not owner, a mere “trustee” of the funds As a mere implementing agency, the Province does not transform to become owner of the Calamity fund. It is a mere “trustee” of the funds, according to the Commission on Audit. The CoA went to the extent of citing the constitutional declaration that “a public office is a public trust” (Supposed to be) When the Department of Budget and Management ordered the return of the money to the National Treasury, did the Province of Negros oriental have the legal right to disregard such directive? The Commission on Audit says the Governor should have returned to the national treasury the released portion of the calamity funds amounting to P480,775,000.00 . It is the Funds, the release of which is subject to the President approval. The governor, on the other hand says the order for the return through the “negative-SARO, is illegal, and even criminal. Status The CoA has issued Notice of Disallowance, meaning the amount released and spent (P480,775,000.00) by the Governor must be restituted. The Governor appealed this CoA position.

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