Wednesday, October 15, 2014

The Basic Flaw Exploited for Corruption

Today I was pleasantly surprised that Jarius Bondoc, a columnist known to have a knack for sniffing out simmering anomalies, published my email in his column Gotcha in Philippine Star.

That email is actually an insider’s “tip” and a reaction to his column that last Monday where he exposed the “car rental scam” in PDEA. 

Salamat sa media mileage Sir Jarius.  Dumami hits ng blog ko!  Hahahaha.  Pati CPSM at PNP PCRG ay nag email na rin sa akin at nagbabasa na daw sila ng blog ko.

Anyway, this exposé of Mr. Bondoc is very timely and sigurasong pinsan ito ng current simmering anomaly in the AFP Medical Center:



So why is it that despite all these investigations done relative to malversation of government funds, like the DAP investigations, the NAPOLES fund scam, Malampaya, the V-150 repair scam that sent several generals to detention, it appears that so many people still do not learn the lessons of the past and continue with these shenanigans? 

Answer:  Because they are forced by the system to do it!


This is the system that Commodore Rex Robles was referring to when, in an interview in the aftermath of the suicide of the late Angelo Reyes, he said, “Former Secretary Angelo Reyes just inherited a [rotten] system and he wasn’t greedy.”  I discussed this in an article that I wrote in 2011.

So what is this “Rotten System?”  It is the flawed financial management system of the PNP.  Let me limit my answer to the PNP alone.  Whether this is also applicable to other agencies like the PDEA and the AFP is for them to find out.

There are reforms being done by the PNP to address the gaps in the system and the latest of these notable efforts is the release of Fiscal Directive 2014-001 by the Directorate for Comptrollership where the Maintenance and Other Operating Expenses (MOOE) allocation for each police station is computed at P1,000 per personnel.  That means that for a station with 45 personnel, the monthly allocation of MOOE is P45,000 or close to it.  This is a very laudable effort because Chiefs of Police now have an easy way to determine how much are they supposed to receive as MOOE of their respective stations as compared in the past where the funds trickling down are purely dependent on how good is the COP’s relationship with the comptroller or finance officer.  But the heart of the problem was still not addressed by the fiscal directive and the other reforms. 

What is the heart of the problem?  Let us take a look at an actual breakdown of allocation by a station with 50 personnel:



The table shows the actual amount that the Chief of Police receives from the Finance Officer/Comptroller of the Provincial Headquarters which is P47,509.50.  Take notice of the .50 which shows that the money is really computed down to the last centavo.  It can also be seen from the table that the money received is pre-allocated for specific programs or category:  Maintenance and Other Operating Expenses, Gender and Development Program, and NAPOLCOM-directed Police Activities (What this stands for and why is it in a separate category all by itself, only the most intelligent policemen knows.  Why, are there activities in the PNP that is not directed by the NAPOLCOM?  But this topic will be reserved for another separate article).  Within these programs, the money is further pre-allocated to specific purposes, called object classes and coded with numbers as follows:  755-Officer Supplies, 758-Food Supplies, 765-Others.  These object classes supposedly ensure that money will be spent according to its programmed intent unless realigned with the approval of the DBM!  At the recapitulation portion, there are other object classes:  761-GOL (Gas, Oil, Lubricant), 782-Rent, 841-Repair of Vehicles, 821-Repair of Facilities, and 751-Travel.  The incredibly miniscule amounts will not be the focus of my point—though the reader will surely be thinking, what facility in the police station can be repaired with P1,284.05! 

To understand the flaw of this system, one needs to examine the job of the Chief of Police.  As a manager and leader of the Police Station, what does a COP do and how much money does he need to accomplish these tasks?  For this question, the PNP is implementing the performance governance system that forces policemen from the regional, down to the police station levels, to prepare their plans and programs that include their goals, objectives, performance indicators, and funding requirements.  At the heart of these plans is the “dashboard” which is a variant of the strategic planning process.  (My acid comments on this hifalutin PNP program will be reserved for a separate article).  Here is an example of a dashboard:
 


Disregard the disconnect in the amounts stated in the two tables because they refer to two different units.  What I want to emphasize is the way the dashboard allocates the amount and the way the amounts are actually disbursed.  Obviously in the dashboard, the funding requirements are just “guesstimates” because unless a specific work plan is prepared, there is no way that anybody can accurately allocate money for “Judicial Process Approach” (Which is another hahaha moment.  What do they mean by this?  Are they insinuating that they will spend money for the judiciary?  How?  Wine and dine?  Bribes?  Crazy di ba?)  It is for this reason that the people in the Comptroller, when presenting the PNP budget to Congress for approval, simply revert to the dating gawi:  get last year’s budget, factor in the inflation, add a little here, add a little there, accommodate the insertions of the congressmen and the senators (hahaha yes, meron po!) and viola, there is next year’s budget.  This system had been the same since the PC days with just minor variations like the code numbers of the object classes.  But the basic principle is still the same.
 
Now back to the COP who received P47,509.50.  How will he actually spend this money?  If he refers to his dashboard, I am sure as hell that he will crack his head trying to figure out how to comply with the COA rules.  In fact, he cannot actually spend the money for their pre-allocated purposes because in reality, his needs are very far different.  His needs are not even on the dashboard!  One of the common needs of a COP is money for lunch of his office personnel.  While strictly speaking this is not an obligation of the COP, this is an unwritten add-on for all office personnel in police stations.  He may also need money for liaising with various groups.  He may have visitors to entertain so he also needs money for that.  Mostly, his needs are similar to the so-called Representation and Travel Allowance or “RATA” in the private sector.  But this is not even in the object classes and the travel object class is a miniscule portion of the funds!  The money given to him are allocated to things that he does not need at all!  The COP does not need funds for gasoline, repair, office supplies, and other administrative needs because if he only does his work well, the LGU has far more money than the PNP to spend for these things.

So here is what a COP does so that he will have money for his ACTUAL needs.  To show to the COA that the GOL fund was used to buy gasoline, there are two things that the COA needs:  a SINGLE receipt for the entire amount, and that receipt must be issued by an accredited petroleum dealer.  The ideal and “Boy Totoo” way of doing this is to buy the gasoline in bulk from a dealer and store it in the station and sell it to convert it back to money.  But there is no facility for that in the station so the gas dealer may just issue “gas tickets” or purchase orders equivalent to the amount bought.  The end user then just surrenders these tickets when fuelling up and these tickets are as good as cash.

But a COP does not need all these gasoline because the LGU usually underwrites all his needs.  Actually, most of the patrol cars in the police stations are LGU-loaned vehicles thus gasoline is not a problem.  So how does a COP clears the GOL allocation without spending all of it for gasoline yet comply with the COA requirement?  He talks to a gasoline dealer and asks that he be given a receipt for the entire amount of P18,460.52 and yet only pay for the taxes that the dealer will incur because of the “sale” and the margin that the dealer may require.  So if the dealer asks for 3% margin and the 12%VAT for a receipt of the whole amount, the COP pays P2,769 and he gets his receipt for P18,460.52 and the dealer gets to keep his gasoline to sell again.  The COP now “CLEARS” the whole amount and “save” P15,691 in cold cash.  He can now use this money for lunch, for allowance of his driver, or keep the money for himself.  See the temptation now?  For the idealist COP, it is necessary for him to dance with the music because this is the system.  If he does everything by the book, then he has gasoline but no lunch money!  Anyway he says, "I will use this cleared or "CONVERTED" money for the accomplishment of my mission."  (This process is also known as conversion.)  But he can very well keep the money for himself!  This is where Commodore Robles is coming from when he said that the late Secretary Reyes is not greedy.  He meant that the secretary did not keep all those money for himself when in fact, he can perfectly do so.  Back to the COP:  He does the same for the other object classes.  Only the dealers (or the source of receipts) change.  To further increase the retained amount, there are cases that the receipts are manufactured altogether by the COPs or their finance officers which I suspect is the case in this PDEA car rental scam exposed by Jarius Bondoc.  Imagine the amounts involved at the higher headquarters!

Before the late Jessie Robredo became DILG Secretary, all these money are “cleared” at the higher headquarters.  The money that the COPs receives are already “cleared” and these can be spent at their discretion without being concerned about receipts or the rules of the COA and DBM.  However, during that time, the allocations are very small and there are units, especially in Metro Manila, that do not receive any allocation at all.  This is because at the higher level, the COA comes into play.  The amounts at the higher headquarters run into millions and because of this, another law comes into consideration and has to be complied with:  Republic Act 9184, otherwise known as the Government Procurement Reform Act.  Because of this, the “clearing instruments” pass through the COA and obviously, hindi bulag ang COA na pipirma na lang without the WIIFM-What’s In It for Me.  Twenty (yes 20) years ago, this system is already in place and the “clearing fee” cut of COA is only 2% and the total “clearing fee” is just 5%.  But now, with the corruption being systematized and perfected, the COA cut is 10% and the whole clearing fee is 30%.  All happy di ba?  The problem only arises when somebody is not happy with his cut.  A smoke goes out and the “transaction” is brought to light.  This is what happened to the V-150 repair scam.  I think this is also the same with the simmering V Luna medicine procurement issue.  But for the PNP General Hospital?  All happy.  No problem whatsoever.  No medicine, no equipment, no nothing, no problem!  And for the other funds of the PNP including the pork barrel of some senators and congressmen?  No problem too!

But it is actually very easy to solve these things.  One only has to look at the “clearing documents” submitted and kept at the COA.  Priority should be given on the repair funds (Object class 841 and 821) and I am sure that the AFP medical supplies mess mess will look like loose change.

Naku, baka biglang masunog ang COA ha!

1 comment:

  1. tama po,sa istasyon namin ang MOOE ay 21k...pero ang nagagasta lang ng COP kalahati lang ang 10k kanya na personal....

    ReplyDelete

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