|
By Yvonne T. Chua And Luz Rimban
Vera Files
(Editor’s note: The first
explained how the Quedancor Swine Program was a scam, not so
different from the multi-billion fertilizer fund scam that allegedly
funneled money intended for farmers to the administration’s
campaign kitty in 2004.)
Second of three parts
The Quedan and Rural Credit
Guarantee Corp. (Quedancor) does not only give out loans to the
poor. It also “lends” money to “needy” politicians,
congressmen included.
Insiders say Quedancor is the one
government corporation politicians know they can run to when they
want cash—for political reasons or otherwise. The “loans” are
known within Quedancor as “political accounts.”
Officially, these “political
accounts” do not exist; there is no record of them in
Quedancor’s books. A Quedancor official The said these are either
hidden in Quedancor’s local government account or distributed
across various programs.
These “political accounts”
have partly contributed to the huge past due receivables—nearly P4
billion—that Quedancor is saddled with. Metro Manila accounts for
P745 million and Region 13 (Caraga), P636 million.
At first, it was easy holding
politicians accountable since a number of these loans were actually
documented. That was in the few years after 1992 when Congress
passed the law turning Quedancor into a state corporation.
For example, the Agricultural
Credit Policy Council, an agency attached to the Department of
Agriculture, loaned about P20 million to Quedancor in 1993 and 1994.
The money went to a micro-credit program that was among the
congressional initiative allocations—in other words, pork barrel
projects—Rep. Junie Cua of Quirino. A decade later in 2004, P15.4
million of that loan was still unpaid and had to be restructured.
Cua is now chairman of the House appropriations committee.
Efficient processing
Nowadays, politicians no longer
leave a paper trail at Quedancor, thanks to a four-member “Special
Operations” Group, which is Quedancor’s “one-stop shop”
for congressmen, governors and mayors.
This group has existed since the
late 1990s and takes orders from a Quedancor executive who transacts
directly with politicians, especially those allied with the
administration, a Quedancor official privy to the group’s
operations said. The group includes a Quedancor district supervisor
and an assistant vice president.
The group goes through the
motions of processing loans. It supposedly conducts credit
investigations, but in reality, it lines up “ghost” borrowers in
whose names the “political accounts” will be given. The group
also manufactures or over-appraises collaterals in exchange for 15
percent to 20 percent “commission,” the official said.
Quedancor’s poor accounting
system makes it difficult to trace the funds. An internal audit
found no clear trail of fund transfers from the Quedancor central
office in Quezon City to its field offices, which rarely monitor
remittances and often submit financial reports information late.
URP Program
In 2001, Quedancor undertook a
program that four Quedancor officials, in separate interviews, said
was tantamount to yet another “political account,” the Urban and
Rural Poor Program, or URP.
Launched in Pangasinan months
after Gloria Arroyo assumed the presidency, the program was designed
to win over the poor, including those in the urban areas. The idea
came after the May 1 rally in which the urban poor marched to Malacañang
in an attempt to unseat her shaky government. “We didn’t have an
urban poor project until then,” said one of the officials.
On June 6, 2002, about 2,000
residents of Barangay Holy Spirit in Quezon City, mostly market
retailers and ambulant entrepreneurs like taho and balut vendors,
received loans totaling nearly P15 million, with Arroyo herself
handing out the checks. A week later P10 million was released to
Caloocan City residents.
“Bumuhos ang pera; doleout
talaga [Money flowed; it was really doleout],” the official
said.
On some occasions, individual
checks, averaging P10,000, were released even before vouchers were
signed, another official said. The vouchers would be fixed
afterward.
In the program’s early years,
all the departments at Quedancor were sent out to conduct credit
investigations. “Tumigil ang mundo ng Quedancor noon. May nag-utos
sa taas [Everything stopped at Quedancor at that time. The order
came from above],” the official said.
The official said many of them
found the task ridiculous: “What credit investigation can you do
on an ambulant vendor? How do you monitor urban gardening?”
To this day, the Urban and Rural
Poor Program records the lowest repayment rate and fewest
accomplishments, and is characterized by incomplete or nonexistent
paperwork. Yet more than P1 billion has been poured into the
program. This includes at least P110 million from the controversial
P5-billion loan released by Equitable PCIBank and Land Bank to
Quedancor before the 2004 elections.
The P110 million accounts for
one-third of the P393 million released to the program, the biggest
sum ever released in its seven-year history.
Of the P393 million, one-third or
P135 million went to Region 13 (Caraga), where Quedancor
President-on-leave Nelson Buenaflor hails from. Buenaflor is from
Tandag, Surigao del Sur. Region 9 (Western Mindanao) and Region 7
(Central Visayas) also received big amounts. These are areas where
Mrs. Arroyo posted big wins in the 2004 elections.
SRT Model
In a book titled Quedancor: The
Country’s Premiere Credit and Guarantee Company, Quedancor
executives wrote that the Urban and Rural Poor Program
“precipitated” what would later be touted as an innovative
no-collateral lending scheme for micro-borrowers: The Self-Reliant
Team (SRT) Model. In fact, Buenaflor likes to be called the
“Father of the SRT.”
A team consists of three to 15
members who live in the same barangay or village, have the same
project and act as co-guarantors. The self-reliant team issues
postdated checks to Quedancor as payment for a three-year loan of up
to P50,000 for production projects and P20,000 for a livelihood
project.
The projects range from grains
and high-value crops, to fisheries, livestock and poultry, and other
commodities, including swine-raising and the Urban and Rural Poor
Program. A production loan bears a yearly interest of 14 percent and
working capital loan, a monthly 2 percent.
Quedancor claims that half a
million beneficiaries availed themselves of the billions of pesos
released as self-reliant team loans, including those funded by the
Department of Agriculture’s Agricultural Competitiveness
Enhancement Fund. It also claims a 98-percent repayment rate.
But the teams appear to be going
the way of the Quedancor Swine Program. Some borrowers are already
defaulting on their loans, after they organized themselves into
municipal cooperatives or agri-fishery business organizations (AFBOs)
in 2005 to qualify for the bigger loans that ran into millions of
pesos.
It turns out that some of these
teams in agri-fisheries had Quedancor officials and employees
themselves as members.
When 2006 ended, these teams in
agri-fisheries owed the government P380 million, which the
Commission on Audit reported run a “high risk of credit
default.” The loans were released to cooperatives, mostly in
Mindanao. Caraga got P212 million or more than half the amount.
“Most of the SRT-AFBO loan
applications were processed in haste and were approved despite the
borrowers’ noncompliance with the guidelines,” the Commission on
Audit reported, hinting that Quedancor appears to have “construed
its mandate simply as doleout of government funds [and] disregarded
its recovery.”
Formed only in 2005, all the
cooperatives could not meet the required two-year track record of
lending activity. But Quedancor still released loans to many less
than a month after they registered with the Cooperative Development
Authority (CDA). Quedancor also granted many loans to agri-fisheries
businesses that lacked the required capital, net worth, collateral
and security documents.
The cooperative in Digos, Davao
del Sur, for example, got its first loan of P4.5 million from
Quedancor on December 14, 2005, less than a month after registering
with the CDA. Its paid-up capital was only P48,000. Yet by October
2006, it had received P16.2 million in loans.
Several cooperatives like those
in Koronadal and Norala in South Cotabato had received loans even
before they registered with the CDA.
The Commission on Audit also said
it was unsure if the cooperatives ever released loans to their
members because there was no money trail.
Massive default rate
Already, the commission has come
across a number of self-reliant teams in the agri-fisheries
defaulting on their loans. Repayment is a low 2 percent to 5 percent
for many cooperatives.
“The problem with the SRTs is
they were prematurely converted to cooperatives or AFBOs. The loans
reached millions where it used to be just P20,000. Nasira ang credit
discipline [The credit disipline was ruined],” said a Quedancor
executive.
The Commission on Audit has
called Quedancor’s attention to what it suspects to be the
involvement of its officials and employees in flouting the
corporation’s guidelines on the self-reliant teams in agri-fisheries.
An internal audit said those
teams, which are private entities, were practically established and
financed by Quedancor. It organized and paid for the training of
cooperative officers and personnel, including a seminar in Camelot
Hotel in Quezon City in 2005, it said.
The internal audit also found
that some Quedancor district officers, particularly in Caraga, even
hired and paid emergency employees and later assigned them to the
cooperatives.
In all, Quedancor issued 17 memoranda
related to the self-reliant teams in agri-fisheries between June 14,
2005 and June 20, 2006. A number of these were apparently designed
to enable the cooperatives to skirt Quedancor’s loan requirements,
according to internal auditors and the Commission on Audit.
Because all the newly established
cooperatives could not comply with the required two-year track
record, Quedancor issued Memorandum 196 removing this requirement,
as well as the security arrangements for the issuance of postdated
checks.
Memorandum 123, meanwhile,
authorized the regional assistant vice presidents to approve all
loans of the self-reliant teams in agri-fisheries, regardless of the
amount. Previously, the regional executives could approve loans of
up to P1 million only.
The Commission on Audit said the
issuance of Memo 123 raises a big question: Why was the authorized
loan limit removed? Without the limit, the loan privilege was opened
to abuse and the working capital easily depleted.
Without monitoring and
accounting, the decentralization of Quedancor’s authority became,
in the words of another Quedancor official, “a grand scheme of
robbing the organization.”
Conflict of interest
Both the Commission on Audit and
internal auditors point to what constitutes conflicts of interests
on the part of several Quedancor officials, including Buenaflor, who
had a hand in getting the cooperatives to form the SRT Philippines
Federation of Municipal Agri-Fishery Multipurpose Cooperative (SRT
Philippines) and the Kaisa sa Mabuting Gawa Foundation (Kaisa). The
two organizations were registered on December 27, 2005.
Organized by 52 cooperatives, 36
of them Mindanao-based, SRT Philippines is headed by Nelson Bughao,
Quedancor’s former regional assistant vice president in Caraga and
Buenaflor’s townmate.
Its certificate of registration
with the CDA lists Quedancor’s address at 34 Panay Avenue, Quezon
City, and Buenaflor as honorary chairman. “He will be lifetime
honorary chairman of the federation unless appointed and/or elected
for an official function or position if eligible or qualified,”
the certificate reads.
The federation has an authorized
capital stock of P200 million, of which P50 million has been
subscribed and P15.9 million paid up.
Kaisa, on the other hand, was
organized by Buenaflor and Quedancor Vice Presidents Delano Anover
Jr., Alberto Guevarra, Rodelio Bathan and Armando Crobalde Jr.,
Chief of Staff Edelyn Cadapan, and Cherrelyn Barrameda, then a staff
member at Buenaflor’s office.
Its registration papers with the
Securities and Exchange Commission list Buenaflor’s home address
as its address and show a P1.54-million capital, mostly from
members’ contributions.
The Commission on Audit and
internal auditors found a November 2005 memorandum signed by Senior
Vice President Niels Patrick Riconalla that required, “without
legal basis,” the self-reliant teams in agri-fisheries to each pay
SRT Philippines P500,000 as capital buildup and contribute P25,000
to Kaisa.
Another memorandum issued the
same month required Quedancor borrowers to become members of the
cooperatives and compulsorily deducted from each of them P200 for
membership fee and at least P2,500 for the capital buildup. The memo
was later amended to make membership in self-reliant teams
cooperatives optional.
“SRT-AFBOs or cooperatives are
private entities; thus, Quedancor has no legal personality to
collect [capital buildup] and membership fees for and in behalf of
these private cooperatives,” the internal auditors said.
Many cooperatives complied with
the Quedancor directive, remitting the specified sums to SRT
Philippines and the federation in checks that were mostly “paid to
cash,” the Commission on Audit and the internal audit found.
“Since all the SRT municipal
cooperatives were established and financed by Quendancor through
deductions of [capital buildup] from Quedancor borrowers, obviously
the funds paid by the municipal cooperatives of the SRT Federation
are funds that came from Quedancor,” the internal auditors
concluded.
Buenaflor has been charged before
the Office of the Ombudsman for his alleged involvement in the
anomalous swine programs of the self-reliant teams in agri-fisheries.
To be concluded
VERA Files is put out by
veteran journalists taking a deeper look into current issues. Vera
is Latin for “true.”
|
