COA discovers irregularities in P17 B worth of infra projects

MANILA, Philippines - The Commission on Audit (COA) has unearthed various irregularities in nearly P17 billion worth of infrastructure projects undertaken in 2009-2010 during the Arroyo administration.

COA Chairman Grace Pulido-Tan told the House committee on good government yesterday that she ordered a special audit of 13 big construction companies that bagged the projects’ contracts.

Tan said Public Works Secretary Rogelio Singson requested the audit.

“We have submitted our findings to him and because of the red flags that we have seen, we will now subject these to a thorough fraud audit and submit our report to the Office of the Ombudsman,” Pulido-Tan said.

The COA chief said part of the funding for the projects came from P10.2 billion in last-minute pork barrel fund releases made by then President Gloria Macapagal-Arroyo less than three months before the May 2010 presidential elections.

She said that other funding sources were the regular infrastructure program of the Department of Public Works and Highways and the Malampaya Fund.

“You are looking into P10.2 billion. Our report covers a much bigger amount, some P16.9 billion,” she told the committee chaired by Pampanga Rep. Oscar Rodriguez.

She said notices of disallowance have been issued to the contractors covering P184.7 million.

“They have so far refunded P17.8 million,” she said.

Among the 13 contractors covered by the special audit was E. Gardiola Construction with contracts amounting to P3.6 billion.

Gardiola Construction and a sister company have earlier been identified by the Philippine Center for Investigative Journalism as having cornered about P6 billion worth of DPWH projects.

Briefing the Rodriguez committee on her auditors’ findings, Tan said Gardiola Construction or Readycon Trading undertook the C-5 Road extension project covering South Luzon Expressway or the West Service Road-Sucat worth P578.527 million without funding cover, notice of award and contract.

She said five projects in Eastern Visayas amounting to P63.3 million were financed from the energy development fund, otherwise known as the Malampaya Fund.

“We all know that the Supreme Court has ruled that the Malampaya Fund could not be used for non-energy-related projects,” she said.

She said auditors could not ascertain if the P1.82 billion in Leyte and Samar was “duly appropriated and whether the SAROs (special allotment release orders) were in accordance with the GAA (General Appropriations Act) or the national budget.”

Tan said that P6.37 billion of the nearly P17 billion was not in the DPWH’s regular program and procurement plan.

“They only thought of the projects when the SAROs were released and received by the department and the engineering districts,” she said.

The COA chief said that in the fourth district of Isabela, Ritz Commercial was given contracts amounting to P24.1 million for three projects five days before the DPWH engineer’s office received the SARO covering the funds.

A SARO is a document from the Department of Budget and Management (DBM) informing an agency that certain amount of funds is available for specified projects.

Tan said her auditors discovered that Gardiola Construction, Ferdstar and Three W Builders used a common set of equipment and workers for their projects.

“Many of the contracts were signed by the BAC (bids and awards committee) chairman, who was usually the DPWH assistant regional director or assistant district engineer, in violation of the Procurement Law, because here, the issue of conflict of interest arises.”

She said BAC chairmen signed contracts worth at least P843 million.

She pointed out that the district engineers split the contracts so the price would fall within their signing authority.

“In some dredging projects, the dredged material was dumped on riverbanks. I suppose that when it rained, this material found its way again into the rivers,” Tan said.

Other irregularities included the payment of bid documents after bidding has taken place, submission of fake financial documents (one bank denied issuing such document) and project costs varied.

In Northern Luzon for instance, Tan said the project cost in Pangasinan was 62 percent higher than those in other provinces in the region.

Several committee members, including Al Francis Bichara of Albay and Philip Pichay of Surigao del Sur, blamed DPWH engineers and resident auditors for the irregularities.