Senate to probe 'misuse' of $21.9-M WB loan to SC project

MANILA, Philippines - While the head of the judiciary is fighting his battle to keep his post in an impeachment trial, the Senate is poised to investigate the alleged misuse of funds related to a $21.9-million World Bank loan to the Supreme Court (SC).

Sen. Franklin Drilon is set to file a resolution calling for the probe after an aide memoire from the World Bank to the SC containing the results of the review of the project was released and reported by online social news network Rappler.com the other day.

In the aide memoire dated Dec. 28, 2011 sent by World Bank acting country director Matthew Stephens to Associate Justice Teresita Leonardo de Castro, chairperson of the Judicial Reform Support Project (JRSP) management committee, it was noted that there were ineligible expenditures, including those incurred outside the agreed procurement plan.

After its review of the implementation of the JSRP, the World Bank told the Supreme Court to refund a total of $199,900 (P8.7 million) comprising ineligible expenditures.

The World Bank found that 70 out of the 133 transactions made using the loan for the JRSP were ineligible.

Quoting the report, Rappler.com noted that a sizeable amount went to the purchase of computers, including P2 million worth of laptops for the various SC offices.

Even the airfare of SC officials was paid using funds meant for the JSRP.

However, the World Bank stated that some of the information contained in the document has yet to be confirmed.

It also noted that the Project Management Office has started its refund for the ineligible expenditures.

Drilon said the alleged irregularities, if left unchecked, could "prejudice the standing and credit-worthiness" not only of the SC but also of the entire Philippine government before international financial institutions.

In his proposed Senate Resolution No. 674, Drilon said the probe would be conducted by the Senate Oversight Committee on Public Expenditures, which he chairs, to look into the circumstances surrounding the World Bank loan to the SC.

Drilon said the World Bank's Board of Executive Directors approved the loan on Oct. 2, 2003 to finance the JRSP, which is meant to "support an accessible judicial system that would foster public trust and confidence."

The total project cost was pegged at $24.4 million, out of which $21.9 million represents the loan from the World Bank and the balance being the counterpart of the Philippine government.

According to the World Bank, the project could not be completed by the original closing date of Dec. 31, 2009 so this was extended by 18 months to June 30, 2011.

However, due to several reasons, the closing date was extended by another 12 months to June 30, 2012.

"There are reports that the World Bank recently rendered an opinion to the effect that since the mid-2010, progress in attaining the development objectives of the JRSP and its implementation have been rated unsatisfactory, with the fiduciary environment pertaining to the project deteriorating to a point that the JRSP has been rated high risk on project management, project procurement and financial management decisions," Drilon said in his resolution.

"The World Bank allegedly noted that several procurement of goods were undertaken without prior agreement and in some cases, even against the approval of the Bank, resulting in the present situation wherein further expenditures must be undertaken only with the prior agreement of the Bank, in writing, and reflected in the agreed procurement plan," he added.

Responsible spending

Drilon said the World Bank "reportedly stressed that the lack of appropriate segregation of duties of key Supreme Court officials involved in the project broke the control environment, increased fiduciary and reputational risks and led to irregular or inappropriate procurement and expenditure decisions."

Among the ineligible expenditures were 16 items related to the Office of the Court Administrator.

"The circumstances, if found true, could prejudice the standing and credit-worthiness not only of the Supreme Court, but the national government as a whole, before such international financial institutions like the World Bank and curtail the inflow of much-needed loans and other monetary assistance," Drilon said.

He said financial arrangements like the JRSP loan "constitute a future financial drain on the already limited monetary resources at the disposal of the government."

According to the resolution, there is a need to closely monitor the management and disbursement of such funds and institute improved safeguards in future general appropriation measures to prevent undue dissipation of the already limited government monetary resources.

"The power of the purse as exercised by Congress carries with it the power to institute safeguards to curb wanton and negligent spending on any branch of the government," Drilon said.

"Whether the funding sources come from taxes or foreign loans, it is the duty of Congress to ensure that every centavo is responsibly spent," he added.