The judicious spending of taxpayers’ money: Does it matter?



Part 2

WHAT picture would emerge if the Commission on Audit (COA) were to assess the detailed cost of what was spent on the automatic election system (AES) since 2003? It should show not only the direct cost related to the acquisition and lease of the machines, warehousing and maintenance, but also the cost associated with electricity and water consumption and personnel services. And then, there’s the impending P2 billion for the unreturned vote counting machines (VCMs) leased for the 2016 elections, which Smartmatic claimed to be considered sold as the Commission on Elections (Comelec) failed to return the VCMs (a.k.a., the precinct count optical scan or PCOS machines) on the due date, December 1, 2016.

If a banker were to compute the total AES project cost since 2003, it’s not only the direct cost that he would consider in the financial analysis, but also the opportunity loss if the billions of pesos had been placed in a high interest-earning deposit or overnight investment. Based on the figures presented in Part 1 of this two-part column, let’s do some quick arithmetic at a conservative interest rate of 3 percent per annum. For the unused automated counting machines in 2004, the interest of P1.2 billion could have been gained. A staggeringP2.2 billion would have been earned in interest for the PCOS machines leased in 2010. For the leased VCM machines in 2016, a possible P240 million interest could be earned by May 2017. There’s also some considerable interest from the use of the machines in the 2008 ARMM elections. To sum up, in terms of the interest that could have been earned since 2003, the total opportunity loss would be P3.6 billion. Add this to the total direct cost of Smartmatic’s AES of at least P23 billion, excluding other incidental costs, we are talking of almost P30 billion. If we use a 5 percent interest rate, the total opportunity loss would be P7 billion, or grand losses of almost P40 billion.

The direct cost plus the opportunity loss ultimately means billions of pesos in taxpayers’ money spent and wasted on Smartmatic’s AES in only four days (that is, the ARMM elections in 2008, and national and local elections in 2010, 2013, and 2016).As we have explained lengthily in this column for three years now, Smartmatic has neither complied with the Automated Election Law (RA 9369) nor with the terms of reference of Comelec’s bid document.

Imagine billions of pesos spent in four days just to allow a foreign company to meddle with Philippine democracy!
Those grand losses could have been used for the internal computerization of the business processes of Comelec, especially its accounting system, and a future transparent AES implementation using Filipino ingenuity in the next eight national and local elections; that is, the elections in 2019, 2022, 2025, 2028, 2031, 2034, 2037, and 2040. Perhaps, the technology from 2022 to 2040 would be more advanced as information technology is progressing exponentially. If we revert to controlled manual elections as some advanced countries have done, we could possibly use those grand losses for the next 15 to 20 national elections.

By the way, Comelec was already trained to use the COA’s electronic national government accounting system (eNGAS) last year to replace their ‘jurassic’ accounting process. But there was no move to implement it. In fact, eNGAS was introduced to the Comelec more than 10 years ago. Had they started using the eNGAS then, auditing their financial performance would be very easy. Before, COA was charging government offices for the development and maintenance cost of the NGAS, the predecessor of eNGAS. But now, a government office could just request for its use at no cost to them. The eNGAS is being positioned as the precursor of the future government integrated financial management information system (GIFMIS).

Going back to the grand losses incurred because of Smartmatic, it’s unfortunate that reality bites. Money down the drain must be charged to experience and be written off. Those who are accountable must pay; maybe not during their lifetime, but on judgment day. Concerning the P2 billion being pursued by Smartmatic, they really pushed hard for it, insisting that it be stipulated in their contract with Comelec for the second time as a “protection clause” the option to purchase (OTP) the 97,366 VCMs. They did it through deceit in 2010, telling the Comelec that the 83,040PCOS machines acquired in 2012because of the OTP clause could still be used in the 2016 elections. Comelec didn’t learn from that bad experience. Of course, the P2 billion would be an additional revenue to Smartmatic. Besides, they don’t need to worry about shipping these machines back to their headquarters as freight cost would surely reduce their revenue. In addition, if the VCMs are returned, they must think about maintenance, warehousing and selling them.

With all the mess that Smartmatic has left us to deal with, AES Watch recommends that they be held liable and be compelled to pay the corresponding damages.

(To be continued)


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  1. dating mandaraya on

    The unreturned VCM charges of P2 Billion should be charged to Marcos because he asked the PET that those VCMs need to be inspected by his team of experts. Secondly, the author should not blame Smartmatic on the expenditures of the government, instead, should have studied the fine prints written on the contracts, in case one party fails to meet the conditions and stipulations on whatever they have agreed upon. I still remember when the COMELEC sent out invitations to any interested person or party to come and inspect the election machines. The Smartmatic explained the features of their machines, and defined its parameters on what it can do and cannot do. Self proclaimed IT experts, such as the author of this article should have went to inspect the machine himself to learn the capabilities of the machines that was used on 2016 Presidential Election.

    The Optical Card Reader (OCR) can only read voting ballots that were shaded at least 70% of the circle, next to the name of candidate. If the condition (70%) is not met, the OCR machine will not recognize that partially shaded as a vote. However, when counting the votes manually, that shaded circle next to a candidate’s name can be seen clearly by the naked eyes, but the machine did not count that as a vote. Are you aware of this, Mr. Nelson Celis? The ignorant and illiterate self proclaimed IT experts will then go on line and talk about how bad this foreign company is or candidates filing protests because they were cheated. Another complaint was slow or delayed transmission of votes. This is beyond the control of Smartmatic nor COMELEC and should be adressed to the IP provider, whoever provided the services.

    • So you are saying that because of the cost to the government of the unreturned voting machines, all forms of cheating in the last elections, to save money should be tolerated and ignored. All election protests should not be heard and the Comelec and Smartmatic should be the permanent cheaters of all Philippine elections.

  2. In the UK we still use a pencil on a piece of string and a ballot paper. It works well, and is cheap! Nobody sees any merit in changing it.