Ex-Philippine Veterans Affairs Office chief denies link to P43.7-million fund loss

MANILA, Philippines - Former Philippine Veterans Affairs Office administrator Artemio Arugay has denied he had anything to do with the P43.7 million pension funds missing from the PVAO.

In a letter to The STAR, he said the unauthorized bank withdrawals happened after his term. He also cleared PVAO comptroller Heriberto Ruanto and data center chief Yvonne Agbayani of any wrongdoing.

The Ombudsman earlier said it is conducting a preliminary investigation against Arugay, administrator Wilfredo Pabalan, chief accountant Leovigildo Santos, consultant Enrique Sintos, Ruanto, and Agbayani for allegedly conspiring to defraud the government of millions of pesos in pension funds using a “kiting system” that involves writing a check on one bank account and depositing it in another just before the end of the accounting period.

Assistant Ombudsman Mark Jalandoni said such a transaction means that no entry is made in the company’s records on the fund transfer until the next accounting period.

Arugay said that on Dec. 5, 2002, prior to his resignation effective Jan. 9, 2003, he signed a letter of authorization, duly endorsed and countersigned by Santos, authorizing the Philippine Veterans Bank (PVB) to debit P9,831,330 from a PVAO account and issue a manager’s check in favor of PVAO.

He said the PVB account contains accumulated funds recovered from checks addressed to veterans who had already died. The amount to be withdrawn was to pay another set of veterans, Arugay said.

He said in December 2003, a year after he was relieved as PVAO chief, the PVB – upon an inquiry made by Ruanto – said the authorization letter was used to withdraw the manager’s check dated Jan. 14, 2003.

The money was deposited at the Centennial Savings Bank (CSB), “which is a private commercial bank not accredited by the Bangko Sentral ng Pilipinas as PVAO’s authorized depository bank,” Arugay said.

He said the discovery of the anomaly led to probes by different government agencies. PBAO and CSB officials also discovered that there were additional deposits of manager’s checks worth P33,454,152 withdrawn from PVAO funds from May 14, 2003 to Aug. 1, 2003.

The total amount that had been withdrawn from PVAO funds and deposited at CSB was P43,730,912, he said.

“I was not the one who implemented the withdrawal for I was already relieved by then,” Arugay said.

He said he was never given a copy of the Commission on Audit report on the alleged anomalies, and was never interviewed or investigated about them by Congress or the different agencies that conducted the probes.

He said he did not “have a chance to explain my side, an injustice, which has prejudiced me and emotionally affected my family.”                 – Michael Punongbayan