EDITORIAL - Foundations for charity or corruption?

It took a scandal for the Securities and Exchange Commission to take a closer look at the Lualhati Foundation, now at the center of a controversy involving First Gentleman Mike Arroyo, Manila Rep. Mark Jimenez and Bulacan Rep. Willie Villarama. A report yesterday said the SEC would slap the foundation with a fine for failure to file its financial statements for the past nine years.

The foundation was headed by Edgar Manda, now general manager of the Ninoy Aquino International Airport, when Jimenez gave P8 million to Lualhati in 1999. Both Manda and the First Gentleman insist the money was a legitimate donation to charity, with no strings attached. Jimenez and his friend Villarama claim the money was meant as a bribe. Lawmakers want an investigation. The way congressional inquiries have been carried out, however, the public may never know the truth if this matter is left to legislators.

Another charitable foundation got Joseph Estrada into trouble during his turbulent presidency. The Erap Muslim Youth Foundation supposedly was used to launder proceeds from jueteng operations. The case is still under investigation.

These scandals should be an eye-opener for the agencies that are supposed to regulate the operations of foundations meant for charitable purposes. While no anomaly has yet been established conclusively in the case of either the Lualhati or the Erap Youth foundation, it is not improbable that such offices are used for money laundering.

In many parts of the globe authorities are also looking closely at the financial transactions of charitable organizations, on suspicion that a number of them have been used to launder money for terrorist groups. In Mindanao, a charitable organization is believed to have been used by Osama bin Laden’s brother-in-law to finance operations in the Philippines of Islamic extremist groups identified with al-Qaeda and the newer group based in Southeast Asia called Jemaah Islamiyah.

Whether the funds are used for terrorism or corruption, national leaders should move to put a tighter rein on the flow of funds ostensibly for charitable purposes. The investigation can start with the Lualhati Foundation.