COA confirms Marcos money used in fertilizer scam

First posted 02:45am (Mla time) Mar 25, 2006
By Philip C. Tubeza
Inquirer

THE Commission on Audit has found that part of the P100 million in recovered Marcos wealth intended for the government's controversial farm inputs program was used to buy fertilizer overpriced by a total of P42.4 million, Senate President Franklin Drilon said yesterday.

Drilon said preliminary results of the COA's "special audit" on the use of the Marcos funds for the Department of Agriculture's Ginintuang Masaganang Ani (GMA) program showed overpricing in at least four regions-Ilocos, Western Visayas, Northern Mindanao and Davao.

The P100 million is part of the P544 million in Marcos funds that the administration released weeks before the May 2004 elections to buy seeds and fertilizer for the GMA hybrid rice program.

It came from the P35-billion Marcos Swiss banks deposits that were recovered in late 2003.

The COA also discovered that no public bidding was conducted, and that the majority of the purchases was made through "direct contracting" although the fertilizer could be "obtained from many sources," he said.

"The COA report showed the grossly overpriced purchase of fertilizer in at least four regions [by an] average of 700 percent," Drilon said in a statement.

"The DA, through [its] regional field units (RFUs) and [local government units], paid P48 million for fertilizer worth only P6 million, or an overprice of P42 million," he said.

The P100 million was distributed to 13 regions, but the Audit Observation Memorandum prepared by DA supervising auditor Flerida Jimenez on Feb. 23 showed overpricing in at least five regions.

The fertilizer purchases-whether made by RFUs (in the Ilocos and Davao), LGUs (in Western Visayas and Northern Mindanao), or nongovernmental organizations (in Central Visayas and Northern Mindanao) were overpriced by a total of P42,431,400, the COA report said.

"[They] purchased fertilizers from exclusive distributors when substitute products are available in the market at lesser prices," it said, adding:

"A previous canvass of similar items from the same suppliers disclosed an excess cost of P42,431,400."

Padded costs

In the Ilocos, the fertilizer was overpriced by P4.005 million. (The purchase price was P4.5 million, but a canvass by the COA showed that it should have been only P495,000, the report said.)

In Davao, the overprice reached P2.55 million. (Purchase price: P3 million; market price, according to COA canvass: only P450,000.)

The overprice in the Western Visayas amounted to P2.760 million. (Purchase price: P3 million; market price, according to COA canvass: P240,000).

In Northern Mindanao, the fertilizer was overpriced by P7.253 million. (Purchase price: P9 million; market price, according to COA canvass: P1,746,500.)

The COA also reported that three NGOs purchased fertilizer that was overpriced by a total of P25.59 million. (Total purchase price: P28.851 million; market price, according to COA canvass: P3,256,850).

In Northern Mindanao, the "validity of the delivery and distribution of fertilizer could not be established" because of insufficient information, like the address of farmer-beneficiaries, the report said.

The list provided contains only the names and the quantity of the fertilizer received, it said.

Delayed distribution

The report also said the Davao-RFU's distribution of foliar fertilizer worth P3 million was not effectively monitored, "resulting in the delayed distribution of 1,501 bottles for about 10 to 16 months, while 2,249 bottles remained undistributed."

"The delayed distribution and the failure to distribute the remaining bottles of fertilizers deprived the farmers of benefits in time for the cropping season. The undistributed bottles may be susceptible to loss or damage if not immediately disposed of," the report said.

It also said only 14.35 percent of the recipients of foliar fertilizer were agrarian reform beneficiaries (ARBs).

The law requires that ARBs should comprise 80 percent of the recipients in agrarian reform programs funded by recovered Marcos funds.

"Since the source of the funds emanated from the Agrarian Reform Fund, it is understood that the intended recipients are [ARBs]," the report said.

It noted, however, that the DA-Office of the Secretary "made no mention of specific activities to be undertaken utilizing" the funds in its memoranda of agreement with the RFUs for the fund transfers.

"As a result of the failure of the DA-Osec to specifically mention the intended uses of the release, funds were treated as regular release[s] for the implementation of the banner program of the department, which is the GMA program," the COA report said.

It added that "almost all the funds were used to purchase fertilizers and other farm implements including shredders."

No clear basis

Another Audit Observation Memorandum prepared by the DA supervising auditor on Jan. 30 said there was "no clear basis for the distribution of the funds by region and by municipality."

"Although the memoranda of agreements made no mention of the fund to be transferred to LGUs, the DA-RFUs downloaded [the money] to the LGUs within their regions..." the report said.

The report also said that of the P100 million, the RFUs had liquidated only P90,703,829.25.

It said that the unliquidated amount stood at P8 million, and that around P1.2 million had not been released to the Caraga Autonomous Region.

There were added "deficiencies," based on Feb. 23 Audit Observation Memorandum.

DA-Region IV paid P3 million for five fabricated shredders and other machines through direct contracting and without patents as required by law, the COA report said.

But two of the shredder chippers were overpriced by about P452,625. The other units were a shredder, a hammerhill/shifter and a pelletizer, which were "donated by the Robison Homes Association Inc." in Antipolo City, the report said.

It said one of the shredder chippers was found in the farm of Rep. Victor Sumulong in Antipolo. It was overpriced by P303,680 (purchase price: P750,000; market price, according to COA canvass; P226,320).

Request, purchase same date

The report also said the five machines were not included in the list of equipment provided in the GMA rice program as certified by its national coordinator, Frisco Malabanan.

It noted that the resolution of the Bids and Awards Committee, the purchase request and the purchase order bore the same date of May 5, 2004.

It said this was "irregular" because a purchase request was usually made before the BAC resolution and the purchase order.

The COA report also noted that the Municipal Agriculture Fishery Council chair of Libertad, Antique, charged farmers P100 per gallon of liquid fertilizer, "contrary to the intention of the program."

"Farm inputs and implements, as provided in the guidelines, should be given free to beneficiaries," it said.

The report recommended further investigation of the farm inputs purchases, "to determine the persons liable in the purchase of fertilizer and farm implements on the level of the RFUs, LGUs and NGOs and file legal action if warranted," and of "the excess costs" of the shredders and other implements.