COA spots 'anomalous payments' made by CAAP

MANILA, Philippines - The Commission on Audit (COA) has spotted what it called “highly anomalous payments” made by the Civil Aviation Authority of the Philippines (CAAP) to a US aviation consultant in the effort to regain the Category I status of the Philippines with the US Federal Aviation Authority (US FAA) in March 2011.

In a COA audit report on CAAP’s disbursements for 2011, it was learned that auditors questioned the CAAP’s payment of $116,500 (P5,080,565) to Tim Neel & Associates (TNA) on March 18, 2011, which it initially interpreted as an advance payment of CAAP to the US consultant.

A check with CAAP on the matter subsequently gathered the amount was a full contract price payment to TNA.

Last year, CAAP claimed the consultancy services of TNA were free, since leading local carrier Philippine Airlines (PAL) had volunteered to pay for the services of the foreign consultant.

CAAP officials earlier raised questions regarding accusations of “regulatory capture” of the agency if it gets the consultancy services of TNA, which reportedly cost the Department of Transportation and Communications (DOTC) as much as $2 million with an escalation provision to bring it up to $6 million, with PAL paying for it.

Since CAAP exercises regulatory functions over PAL, any financial assistance given by the airline to the agency will compromise its regulatory authority and independence, officials said.

The US FAA, in an interim audit of the CAAP systems conducted last January 2012, still found numerous deficiencies, earning then CAAP director general Ramon Gutierrez much displeasure from Transportation Secretary Manuel Roxas II.

Former DOTC undersecretary Glicerio Sicat earlier hailed the tapping of TNA to boost the effort to regain Category 1 status with the US FAA, which will allow the country’s airlines to expand their capacity and increase the frequency of flights to the US and Europe.