Loopholes

There’s a James Bond-type “007” fund and a “return-to-sender” or RTS scheme. And “with due respect” means “my lips are sealed.”

Like “tong-pats” and “bubu-kol” in the biggest corruption scandal of the Arroyo administration, a new vocabulary is emerging from the investigation of corruption in the Armed Forces of the Philippines (AFP).

If the players weren’t talking about taxpayers’ money, watching the congressional probes could be fun. The sessions are certainly informative. How else can us working stiffs learn that P5 million in cash, at the hands of an expert, can fit into a long expandable envelope if, in the words of retired AFP budget officer George Rabusa, magaling ang kamada, but with less expertise, only P4 million can be crammed in?

Cash can be bulky, Rabusa testified, which was why when the huge pile of bills could no longer be crammed, even by an expert at kamada, into the four vaults in his office, the excess had to be deposited into private bank accounts.

We’re eager to find out how P10 million per transaction could be done with banks, over several months, without the anti-money laundering police being alerted. The reporting threshold for suspicious transactions is only P500,000, but perhaps the banks thought the AFP and military budget officers are beyond suspicion. Our anti-money laundering laws need tightening.

It would also be interesting to find out who originally developed those fund juggling schemes, which evolved into a tradition in the AFP. I would imagine the typical military officer to be just a few notches above journalists when it comes to number crunching. Beyond basic ’rithmetic, we flunked our math lessons – one of the reasons we became writers.

I would also imagine that we, the math-challenged, make up the majority of the population, which is why public servants in all branches of government, including Congress which is investigating corruption in the AFP, can get away with fund juggling by exploiting loopholes in the budget process.

When the parallel probes being conducted by the Senate and the House of Representatives are over, we hope to see legislation that will plug those loopholes.

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Defense Secretary Voltaire Gazmin told me that the biggest loopholes had in fact been plugged several years ago, when the AFP chief at the time, Gen. Narciso Abaya, abolished the PCDA or Provision for Command-Directed Activities and released funds directly to field commanders.

Abaya was AFP chief of staff from October 2004 to August 2005. His successor, Efren Abu, abolished J-6 or the office of the AFP comptroller.

Gazmin told me that J-6 has been broken up and new ones created, which are still in existence: the Office of the Internal Auditor, Resource Management Office, Management and Finance Office, and the Accounting Office. The four, all under the office of the chief of staff, countercheck each other’s fund utilization and other activities, Gazmin told me.

AFP funds are now released through checks instead of in cash, for better accountability and a clear money trail in case of problems, Gazmin said. Only minor exceptions for cash transactions are allowed, such as for emergencies in conflict areas or for buying snacks for dignitaries who visit military installations.

I’ve written about the AFP reforms implemented starting in 2006 under a so-called Planning, Programming and Budgeting System. A key feature of this system is the removal of lump sum appropriations released directly to the office of the chief of staff, who used to enjoy full discretion over its disbursement.

In its place, fund discretion was brought down from AFP General Headquarters to field commanders, who were required to submit a detailed program of expenditures and prepare cashbooks where items could be checked by auditors and foot soldiers. Gazmin told me that the reforms have been maintained.

The problem could continue, of course, if the auditor is also in cahoots with corrupt officers. We eagerly await the story of Divina Cabrera, now auditor of the Philippine Navy, who was the resident auditor of the military’s Intelligence Service or ISAFP at the time of the 007 fund juggling.

Rabusa and the new witness, Air Force Col. Antonio Ramon “Sonny” Lim, testified that the 007 scheme was used for intelligence projects of J-2 and ISAFP as well as J-7 (Civil-Military Operations Office), where auditing rules are lax.

Of the funds used for these intelligence projects, 10 percent allegedly constituted the “conversion cost,” of which one percent went to the resident auditor and another one percent to accounting.

Gazmin was with someone in civilian clothes whose face I recalled from Cory Aquino’s presidency. Only later at home did I realize that I was chatting with P-Noy’s first AFP chief of staff, Ricardo David.

If I were a member of the military’s top brass, I would avoid wearing my uniform these days, too. It’s an uphill struggle for Gazmin and David to convince the public (including certain business groups) that the 007 and return-to-sender fund juggling schemes have been eliminated for good in the AFP.

A more immediate mission for Gazmin and David is to reassure the troops – the foot soldiers and middle-level officers – that funds meant for their needs are being used for the intended purposes, instead of going to AFP generals’ private bank accounts, kids’ Manhattan condo units, or their wives’ botox operations. 

Gazmin admitted that certain groups are trying to exploit the scandal to foment unrest within the ranks. But he expressed confidence that the agitators will get no support because the necessary reforms have been implemented.

He and David nevertheless are meeting with commanders, who in turn are meeting with their troops to explain that reforms are in place and the days of fund diversions are over.

Congress and the Department of Budget and Management should also approve the necessary measures to plug other loopholes and ensure that the reforms will not be reversed.