A maze of good, bad, open, opaque projects
First of Three Parts
“Good intentions are not good enough.”
That, according to Public Works and Highways Secretary Rogelio ‘Babes’ Singson, is the lesson from the sorry episode that was the Disbursement Acceleration Program or DAP.
The Supreme Court on July 1 voted 13-0 to declare DAP unconstitutional in part because of the amounts that crossed over to other branches of government, the withdrawal of funding for items enrolled in the national budget and the transfer of funding to items not enrolled in the national budget.
Until a fortnight ago, DAP was a concept not quite clear to even some Cabinet members themselves.
Half a dozen interviewed by PCIJ agreed unanimously, too, that the High Court’s ruling raised valid points but should not have crossed over also to questioning “good faith” on the part of the executive.
What apparently started as a mere budget management tool soon evolved into “a big pool of funds” or a virtual special purpose fund that did not exist as a line item in the General Appropriations Acts for 2011, 2012 and 2013.
Under DAP, the Department of Budget and Management (DBM) under Secretary Florencio ‘Butch’ Abad released a supposed total of P144.38 billion in taxpayers’ money for supposedly 116 projects from October 2011 to December 2013.
DBM itself could not seem to get its numbers right, however. Various official DBM statements place the DAP funds that had been disbursed to be anywhere from P136 billion to P144 billion to P149 billion, for a significant variance of P5 billion to P13 billion.
In truth, DBM’s list of “DAP-funded projects” is a virtual smorgasbord of specific projects to be implemented by single agencies allotted relatively smaller amounts, as well as unspecified “various priority local projects” or “various priority infrastructure projects” given billions of DAP pesos.
Two to four agencies were assigned to implement the latter through transfers or sub-allotment of funds covered by a web of inter-agency memoranda of agreement. In these cases, accountability for fund spending and project implementation had been shared, and thus diffused, among the agencies.
This vague category of DAP “projects” include those that DBM said had been “requested by legislators, local officials and national agencies.”
But 10 months after the DAP row broke in September 2013, DBM is yet to disclose the full details of which lawmaker or agency had proposed what types of projects, where and for how much, with lump-sum fund cover under DAP.
(Since October 16, 2013 or nine months ago, PCIJ has filed repeated requests with DBM sets of data and documents relevant to an inquiry into DAP. Last week, all that DBM did was give PCIJ copies of documents about DAP that it had actually released and published earlier.)
A third or about P40 billion of the P144.3-billion total DAP kitty went to equity infusion and payment of insurance claims—including P30 billion for the Bangko Sentral, P8.6 billion for the Bureau of Customs and the rest for the Metropolitan Manila Development Authority, Philippine Health Insurance Corporation, Department of Education and Philippine Postal Corporation.
This amount, the apparent “fat” in DAP, could likely have only low and slow potential to instantaneously trigger what DBM said was DAP’s raison d’etre: “high-impact, quick-disbursing, socially-responsive” projects.
DAP fat and meat
Net of the P40 billion, the P144.3-billion DAP monies would be reduced to P104 billion in real spending on programs, activities and projects.
To be sure, a few, small DAP projects are simple, urgent interventions with apparently clear and immediate public-service impact, such as the acquisition of medical equipment and the renovation of public hospitals, as well as the purchase of equipment for weather-forecasting and flood control.
Yet still, about a third or P35.54 billion of what might be called the meaty part of DAP went to broad and vague “various priority projects” that entailed retail, scattered and possibly inefficient, spending of tax monies.
For instance, farm-to-market roads, flood-control projects, capacity-building and skills training activities, and a “Registry of Basic Sectors in Agriculture,” among other projects funded by DAP, have met with mediocre to bad results, as well as qualified and adverse observations from the Commission on Audit (COA).
Some DAP projects had not been implemented or bidded out at all over a year after DBM had released the funds, remain only partially implemented, had supposedly been attended by “ghost” beneficiaries, are locked in agency disputes over actual amounts of fund transfers, or because the yearend had passed, the funds had to be reverted to the National Treasury.
Cabinet officials interviewed by PCIJ are unanimous: The pooling of savings under DAP for realignment or augmentation of funds for certain agencies and projects had always been de rigeur practice of all past administrations.
What went wrong only was that DBM turned it into a pool of funds and christened with a name that is almost in perfect rhyme with the much-maligned PDAF (Priority Development Assistance Fund) or pork barrel.
The confusion continued when, in the view of certain agencies, what they got in fact were internally generated savings that they had surrendered to the Treasury and for which they had sought authority to realign or use to augment internal agency activities.
This much was the case with the Department of Public Works and Highways (DPWH) and the Bureau of Internal Revenue (BIR), according to their agency heads.
Singson and four other Cabinet officials said they belatedly realized that the additional funds they got from the DBM came under the umbrella of DAP, and had been sourced not just from their own agencies’ savings.
By his estimate, Singson said his department received at most P33 billion in additional funds from October 2011 to mid-2013 but stressed that this represented savings that DPWH had generated through competitive bidding of projects and from funds allotted to slow-moving projects that he had proposed to be “deobligated” or suspended.
He adds that until recently, he had no inkling that his department’s savings from its own budget allocation had been pooled under DAP.
“May dumating from savings namin [We received some from our savings],” Singson says. Galing sa savings namin ’yun. Nagulat din ako, DAP pala [We assumed it was from our savings. I was also surprised that it was DAP].”
“DAP, PDAF, nakakalito [it’s confusing],” Singson continues. “Until the end, I was arguing with Butch [Abad]. He says the DPWH received P39 billion in DAP funds. I said only P29 billion. We agreed on P33 billion.”
A Cabinet undersecretary posted in Malacañang says he was just as surprised that DAP had evolved into a big kitty of funds, even if it was not enrolled as a distinct expenditure item in the GAA. “Two things went wrong,” says the undersecretary. “The funds that crossed over and they gave [them]a name.”
Another undersecretary echoes this, replying when asked what he thought went wrong with DAP: “The cross-over funds and the name.” A third undersecretary also comments that naming the pool of funds DAP was a big mistake. “They did not have to call it DAP,” says the official. “All Presidents had done that, realign and augment budgets for certain agencies or projects.”
Commissioner Kim Jacinto Henares of the Bureau of Internal Revenue (BIR), though, remarks, “Masyadong obsessed tayo sa name [We are too obsessed with a name].”
Although she also says two things might have gone wrong with DAP, her version differs slightly with that of the undersecretaries: “The withdrawal of allotment [for items enrolled in the national budget]and cross-border funding.”
The latter, she adds, includes the P143.7 million that the Commission on Audit received for its IT project and the hiring of additional lawyers, as well as the P200 million that Speaker Feliciano Belmonte Jr. sought and secured for the completion of the Legislative Library and Archives Building of the House of Representatives.
The BIR itself was a DAP beneficiary, supposedly receiving P758.4 million in DAP monies for its information technology project under the “National Program Support for Tax Administration Reform (NPSTAR), Centralization of Data Processing and Others [To be Synchronized with GIFMIS Activities].”
But Henares says what she knew was that she had generated savings in her own agency budget. “Alam ko, savings ng agency ko ’yun [To my knowledge, those were my agency’s savings],”she said. “I requested a realignment.”
Whether what BIR received was DAP money matters less, she adds.
How COA met DAP
COA Chairperson Maria Gracia M. Pulido-Tan, for her part, told the PCIJ that soon after she was appointed in April 2011, she saw the need to hire new lawyers and assist COA field auditors with IT equipment. This prompted her, she says, to seek Malacañang’s assistance. “I did not know it was DAP,” Pulido-Tan says of the amount COA received.
She says COA auditors came to know about DAP only in mid-2012 after seeing Special Allotment Release Orders (SAROs) listing DAP as fund source for certain projects. In several audit reports for 2011 and 2012 on agencies like the DBM, Department of Agriculture, Department of the Interior and Local Government, Technical Education and Skills Development Authority (Tesda), the Autonomous Region in Muslim Mindanao (ARMM) and government-owned and –controlled corporations, COA had actually raised red flags about DAP spending patterns.
“It was in mid-2012 when we started seeing SAROs bearing DAP,” Pulido-Tan says. “There are so many lump-sum funds already and then DAP comes in. They seem to want to make life harder for auditors.”
Apart from PDAF and DAP, COA undertakes annual financial audit of sundry lump-sum “Special Purpose Funds” that are lodged with DBM and the Office of the President.
The Budget department disburses “Special Purpose Funds for LGUs” that include, among others, the Internal Revenue Allotments (IRA), “Shares in the Utilization and Development of the National Wealth”; Gross Income Taxes paid by businesses and enterprises within the ECOZONES; Tobacco Excise Taxes; Value-Added Taxes; Calamity Fund; Pension Gratuity Fund, etcetera. “All of these funds are administered by the DBM,” COA reports state.
The Office of the President, meanwhile, administers and authorizes the release of other lump-sum funds, including the multi-billion-peso President’s Social Fund and Contingency Fund.
How much really?
Across a 26-month period from October 2011 to December 2013, Abad released “DAP” monies in six tranches for projects listed in five memoranda that he asked President Benigno S. Aquino 3rd to sign and approve.
The President did as requested, allowing Abad to release supposedly P144.3 billion in DAP funds for a supposed list of “116 projects.”
But the unsolved puzzle is exactly how much in total DAP monies had been actually disbursed or released by DBM from October 2011 to December 2013.
To be continued