AN incumbent board member of the Philippine Charity Sweepstakes Office (PCSO) revealed that the accused in the P366-million PCSO scam “commingled” the funds of the charity agency to divert “excessive disbursement” to the confidential intelligence fund despite deficit in its operating budget.

PCSO Board Member Maria Aleta Tolentino and head of the board audit committee, testified that she reviewed the annual financial statements of the agency dated 2005 to 2009, where she noted irregularities.

Tolentino stepped into the stand of the Sandiganbayan First Division as the first witness of the prosecution in line with the bail hearing of PCSO Board Chairman Sergio Valencia, board member Manuel “Manoling” Morato and former budget and accounts manager Benigno Aguas.

She noted that the fund was disbursed despite the lack of fund as shown in the deficit of the charity agency.

“There is excessive disbursement to the confidential intelligence fund [CIF] and advertising expenses. The internal audit was merged with budget and accounting management,” Tolentino said.

The defense objected that there is none in the charge that showed commingling of funds. The prosecution countered that there are only “laying the basis” to show how the money was drawn from the PCSO operating budget.

According to Tolentino, a lawyer-accountant, the operating budget of PCSO for year 2005 was in deficit for about P900 million and also in deficit for about P1 billion in 2006.

Citing Republic Act 1169 or the PCSO Charter as amended, Tolentino said that 55 percent of the gross receipts from the sale of sweepstakes or lottery will go to the prize fund, 30 percent to the charity fund and 15 percent as contributions to the operating fund.

However, she said that such partition did not happen because the “funds that should go to the prize fund and charity fund were simply maintained in the main account, which violated general accounting principles.”

Tolentino added that there had been diversion of cash to the CIF before but only in small amounts.

During the time of former chairmen Rosario Lopez and Ricardo Golpeo, former president Joseph “Erap” Estrada approved the diversion of P10 million for each administration to the CIF. The chairman and the president would request P5 million each.

She pointed out that the transfer of money, which Rep. Gloria Macapagal-Arroyo of Pampanga province approved was excessive because it more than the 15-percent allocation for the operating fund.

“Before the budget for the CIF must be disbursed, there should be funds first. The CIF should come from the operating fund,” Tolentino said.

She told in open court that the commingling of the funds for charity, prize and operating made possible the “excessive” channeling to the CIF despite deficit in the operating funds, the only legal source of the CIF.

She read a portion of a Commission on Audit report on the PCSO that the P1-billion deficit in 2006 was “caused by excessive expenses” which pointed to the alleged diversion of more than P200 million to the CIF in 2006.

The Sandiganbayan will continue hearing the direct examination of Tolentino on Tuesday.