How the budget racket operates

Female motorists, beware. Always lock your car doors and keep your windows up. During slow traffic on major roads as early as dusk, hooligans in pairs or more might open your door and snatch your purse, mobile or laptop.

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New Public Works Sec. Rogelio Singson knows it for sure. When he unearthed P934 million in civil works illicitly signed during the last days of the past admin, he actually laid bare a government-wide racket. If President Noynoy Aquino steps in, he’d be able to plug multibillion-peso leaks in the budget system. The savings can be used to fund basic services for the poor. More than that, he’d clean up the bureaucracy’s spending processes.

The P934 million that Singson halted from release in the nick of time covers 19 flood-control projects. Japan had lent P3.5 billion for such works in the wake of devastating storms Ondoy and Pepeng of Sept.-Oct. 2009. Irregularly lacking public bidding, all 19 were negotiated with privileged contractors by Singson’s predecessor. Not only that, they were signed on June 18 ahead of any Dept. of Budget and Management clearance. Such issuance, called special allotment release order (SARO), came only on June 25, five days before the Arroyo admin’s departure. The election ban on government contracting that began on Mar. 26 had just ended on June 10. The contractors were making last-minute deals, through patron-officials out to recoup campaign expenses. One of them, Northern Builders, was awarded the biggest project: P229 million in San Manuel, Pangasinan. The firm got two other deals: P79 million in Candaba, and P28 million in Floridablanca, both in Pampanga. Singson, a big-business exec, apparently has examined how the racket works. His astute conclusion: “In terms of corruption, it could be in the bidding, but to me the bigger leakage is in the project identification; prioritization is also very bad.”

Here’s why. The SARO and its twin DBM document, called notice of cash allotment (NCA), have become legal tender among corrupt contractors and officials. In the waning days of the Arroyo tenure the SARO-NCA chief trader was an influence-peddling lawyer at the DBM. He was just the latest hit man, though. The syndicate is entrenched, involving long-time DBM officials who either corrupt or run circles around the secretaries.

The racket involves legislators, governors and mayors in need of DBM fund, sometimes sourced from Malacañang. They already have identified not only the projects but also the implementing contractors. Biddings have been rigged, and canvasses forged; officials and contractors have agreed on the kickbacks. It’s the turn of other bureaucrats to make hay from the release of project mobilization funds through the SARO. To get the SAROs released, the contractors must advance 10-15 percent of the amount. Sometimes other officials cut in, say, a cabinet secretary, or a presidential assistant for regional development, or a Malacañang aide.

The contractors then commence the projects. To draw progress payments, they must get from the DBM the good-as-cash NCAs. Once more they must advance up to 20 percent of the amount.

The contractors face big risks. The SARO could be unfunded, or revoked as in the case of the 19 flood control works; in which case they lose money. The NCA too can be cancelled, if found accompanied by bribes. But on the whole the dirty scheme works.

All this begins with the annual budget horse-trading in Congress. Legislators’ chiefs of staff haggle with department secretaries’ liaisons for “insertions” to be cashed the following year. On top of that, every year each senator is entitled to P200 million in pork barrel, and each congressman P70 million. Insertions and pork slabs pass through the DBM.

Legislators and local officials choose contractors who are willing and able to advance the money. Otherwise, no fund release. Even admin party mates can be left with no SARO-NCA if their contractors do not fork over the required percentage. On the other hand, second-class party-list reps can get more than the rest if they piggyback their releases with that of friendly district congressmen.

Can P-Noy end this? Yes, but only with the help of his Liberal Party. He can tell his senators and congressmen to deal straight with his cabinet men, and not entertain DBM fixers. He can also tell the Senate and House committees on appropriations to ensure public bidding of all insertions and pork projects. And he can enforce his plan to publish the details of all such projects.

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Will the Supreme Court disqualify Mikey Arroyo as sectoral rep of neglected security guards and tricycle drivers? Unlikely, given its image of being packed with Gloria Arroyo loyalists. So Akbayan party officer Riza Baraquel filed the anti-Mikey rap with the House of Rep Electoral Tribunal. This was after Akbayan head Walden Bello first filed a suit with the SC. Their argument is the same: as attested by no less than the Comelec law division, Mikey and his party did not file any proof of membership.

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“The strong resist God — they think of their power.” Shafts of Light, Fr. Guido Arguelles, SJ

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