I normally enjoy reading about government scandals because I always learn something new. Recently, the Chief Justice was at risk of being impeached as he was accused of misusing the Judiciary Development Fund. I needed to learn what JDF was and what the commotion was about. I got the facts from the Commission on Audit’s website – http://www.coa.gov.ph/COA_htm/Whats_New/New.htm.
It was very informative. I learned that the Judiciary should earmark 80 percent of the JDF for personnel benefits and 20 percent for facilities. In other words, the Judiciary needs to spend four pesos on its employees for every peso it spends on facilities. For the past three years, the Judiciary spent 11 pesos on personnel benefits for every peso spent on facilities. Hmmm… I wonder what was wrong? Maybe, the Commission on Audit should also look into the congressmen’s Community Development Fund (pork barbecue, anyone?) and see where that money was spent.
For 2002, the Judiciary’s spending was about four pesos to one peso. It was the year the Judiciary started spending on IT software and equipment of about P99 million from the previous year. This is a lot of money to spend in one year. Close to $2 million can buy you a lot of software and PCs. Let’s say expensive software runs about $500,000, and $1.5 million can buy you at least 1,500 PCs. Hmmm… I wonder where they spent it and for what software. Then again, you also have to wonder where they spent the P6.8-billion budget allocation.
These JDF fees add up to a whole lot of money. It averaged P1.3 billion in the last three years, of which P260 million, or 20 percent, was available for facilities – or in the corporate world, for CAPEX (capital expenditure). I wonder if someone has ever proposed to securitize that P260 million of annual cash flow stream into a major capital project. One way is to do a sale-leaseback of all the Judiciary’s properties for, say, 15 years. Another is to have an investor group do the capital improvements on a BOT basis. In any case, assuming an interest rate of 15 percent, a securitization could give the Judiciary about P1.5 billion worth of new facilities.
Another interesting tidbit is that as of January 2002, they had a New Government Accounting System (NGAS; there must be some gnomes in the back of every government office that try to figure out new acronyms every week). The NGAS translates into business terms the government’s books. For example, the government lost P173 billion last year. If you add back financial expenses of P270 billion, the country actually had a positive operating income of about P97 billion. The optimist in me says there is hope and we just need to improve our operations and restructure our debt. Then again, it’s easier said than done.
My Two Cents: Can you imagine how much better the numbers would be if there is no corruption?