In its final audit report submitted at the end of last month, the COA checked on the 13 NGOs and found that only five of these actually had business establishments at their stated addresses.
The National Organization for Agricultural Enhancement and Productivity Inc. (NOAEPI); Aaron Foundation Phil. Inc.; and the People’s Organization for Progress and Development Foundation Inc. were found to have equipment and personnel in place at their listed business addresses.
The Philippine Social Development Foundation Inc. and the Masaganang Ani Para sa Magsasaka Foundation Inc. were also found operating at their stated addresses but were closed at the time of the COA inspection, despite it being a workday.
These addresses were either residences or offices shared with other entities.
Five of the NGOs — the Gabaymasa Development Foundation Inc., Las Marias Foundation Inc., Sikap Yaman Foundation, Philippine Environment & Ecological Development Association Inc. (PEEDAI) and the Bukid Tanglaw Livelihood Foundation Inc. — were nowhere to be found at their given addresses.
Four of the NGOs — the Ikaw at Ako Foundation, Kabus nga Mag-uuma ng Managat Foundation Inc., The Workers Cooperative of the Philippines and the NOAEPI — were not registered with the Securities and Exchange Commission (SEC).
According to the COA, the DA-regional field units (RFUs) transferred a total of P150.6 million to the 13 NGOs, not including the funds coming from the LGUs.
"We recommend that management perform a careful screening of the NGOs and suppliers to whom government funds are entrusted to ensure that only those with legitimate existence and relevant purpose are selected," the COA stated.
The COA also found that the NGOs complied with only 56 percent of the conditions prescribed by COA Circular 96-003 regarding the qualifications for NGO beneficiaries.
The circular specified that NGOs should be registered with the SEC with complete financial statements for at least three years; should have previously undertaken projects similar to the ones they were contracted to perform; and must have experience and expertise in such projects.
In terms of compliance with the provisions of the Memorandum of Agreements signed between the NGOs and the DA, the COA found that only 42 percent were compliant.
A review of the farm implements purchased by the DA-RFU of Southern Tagalog for the GMA program revealed that the items were not among the list of equipment specified by Dr. Frisco Malabanan, the program’s national coordinator.
Malabanan listed 11 farm implements and facilities under the program, which did not include solid waste management equipment purchased by the DA-RFU IV.
The 14 pieces of fabricated mechanical equipment in question were meant for conversion of biodegradable waste materials into compost and therefore were not included on the list.
Proponents refer to the public officials such as the congressmen, governors or mayors who identified the NGOs or LGUs that would receive the funding from the fertilizer fund.
The DA-RFU IV also said that conversion of biodegradable materials into organic fertilizers costs less than purchasing non-organic fertilizers.
Total cost of the purchases was P14 million and this was established through negotiation, without the benefit of public bidding.
The COA inspected and accounted for the 14 units, which were found in Navotas, Marinduque, Payatas and Batangas but only eight of these were operational.
The COA canvassed several metal fabricators and found the amount paid by the DA-RFU IV to be overpriced by P2.75 million.
The supplier of the equipment was identified as LCV Design and Fabrication Corp.
According to the COA, there were no approved patents for the equipment in order to allow direct contracting under RA 9184. Only an application for patent was filed with the Bureau of Patents.
The COA admitted that no equipment with the exact same specifications could be found on the market but it found two items of similar function or use with vastly lower prices.
"The items therefore could be available from other sources and thus their acquisition was subject to the requirement of public bidding," the COA said.
The COA also discovered that 169 vouchers for disbursements totaling P487 million were approved by regional executive directors and other DA-RFU signing officials despite the fact that the individual amounts disbursed exceeded their signing authority.
Under DA General Memorandum Order No. 2, the signing authority for disbursement vouchers of the RFUs involving amounts of P1 million to P5 million should be the undersecretary for administration and finance, which at that time was Jocelyn Bolante, the official who reportedly masterminded the fertilizer fund scam.
Some 149 check payments appeared to be split into smaller amounts in order to keep the amounts within the signing authority of the directors and other DA-RFU signing officials, thereby avoiding action by a higher authority.
The COA also issued Circular No. 76-41, which prohibits splitting of vouchers and payments and provides that all transactions violating the rule should be disallowed under audit.
The idea behind the order and the circular was to ensure that a higher official was accountable or responsible for the disbursement of large amounts of funds.
Several of the RFUs concerned based their special authority to sign or approve vouchers above the P1 million ceiling for the transfer of funds to the LGUs and NGOs on a memorandum issued by Bolante on March 17, 2004 and another memorandum issued by then Agriculture Secretary Luis Lorenzo to Bolante dated March 16, 2004.
A review conducted by the COA of the procurement records of the RFUs on the fertilizer fund also revealed an 81-percent compliance with the required documents in government procurement.
"We recommend that management exact full compliance with the procurement law and rules, considering the scarcity of government resources," the COA noted.