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At the National Museum, COA puts P300-M endowment fund under scrutiny


Are the funds missing, or is it simply a case of poor bookkeeping?

These are among the questions the Commission on Audit (COA) has raised regarding the transfer of more than P300 million of the National Museum's endowment fund from its official depository bank to two private banks, and the lack of records showing the income from the investments for the past two years.

Aside from displaying Juan Luna's masterpiece Spoliarium along with other national treasures, the National Museum is involved in a wide range of research, from sunken ships to the archipelago's oldest human remains. Museum authorities also regulate the gathering of cultural artifacts, and even the bones of Japanese soldiers from World War II.



To help finance its activities, the museum is the beneficiary of a special law that allocates P500 million from the Philippine Amusements and Gaming Corporation (Pagcor) and the Philippine Charity Sweepstakes Office (PCSO) for an endowment fund, more than P300 million of which has already been turned over to museum administrators.

The COA is now questioning how this windfall has been managed.

Two accounts, two museum names

Documents obtained by GMA News Online show that the money was taken from the museum’s Land Back account in increments, through Manager’s Checks, starting November 2011. These were subsequently deposited into investment accounts, in two variations of the museum's name, at the Banco de Oro and Bank of the Philippine Islands.

COA auditor Victoria Yumang had asked museum officials to produce the investment certificates and properly account for the money as early as March this year, citing “lack of controls in the handling of the funds.”

She also noted a “failure to secure authority from the Department of Finance” on the investment of the Museum Endowment Fund (MEF) in private banks.

“Due to the failure to comply with the written and oral demands made by this Office, we now declare you liable for the unaccounted P306,926,248.99,” Yumang wrote in a letter to National Museum Director Jeremy Barns last June 7. “We therefore demand from you the restitution of the amount.”

In response, Barns acknowledged that the museum's record-keeping has been hampered by the resignation of its accountants, but assured COA that the museum has been taking steps to rectify its books. He also appealed to the auditing agency to “withdraw your declaration” regarding his personal liability for the funds.

“The principal reason for this is that the Museum Endowment Fund clearly exists and is wholly intact, and has never for a single moment existed in anything other than the name of this agency,” Barns wrote in a letter dated June 17, 2013.

The COA, however, has pointed out that the endowment funds were deposited in two separate accounts with different names for the museum, one account named “National Museum,” and the other erroneously labeled “National Museum of the Philippines.”

In her latest memo dated June 18, 2013, Yumang said using the name National Museum of the Philippines for the investment funds deposited with BPI “may result in loss of the investments made under that name and consequently the criminal liabilities of those involved.”

In a telephone interview on Tuesday with GMA News Online, Barns described the two different names for the same agency as “a complete oversight,” and said he has given instructions to amend the erroneous name.

“We never stopped to think about it,” he said. “We have used the two names interchangeably.”

In his June 17 letter, he told Yumang, "Surely there is no genuine basis for the belief, conclusive or otherwise, that there has been any misappropriation or improper use of funds, which is implied by the term 'restitution.'”

Irregular transactions with banks?

Under Section 23 of the National Museum Act of 1998, the agency is mandated to raise a P500-M endowment fund, with interest earned to be earmarked for special projects.

According to documents from both COA and the National Museum, the endowment fund was distributed in 2011 and 2012 in the following accounts:

  • BPI as Trustee FAO National Museum of the Philippines – P118 million
  • BDO Private Bank FAO National Museum – P188,926,248.99


Most of the money came from mandatory contributions from Pagcor and the PCSO. In her audit reports, Yumang said additional funds representing more than P11 million in interest earnings from previous investments with the LBP were transferred to the endowment fund, instead of the special projects funds as required by law.

In May this year, two more checks amounting to P25 million were added to the accounts, raising the principal to more than P331 million.

“The funds were withdrawn, transacted, and handled by the same person,” Yumang reported, citing rules that the agency's official cashier must do the bank transactions.

Barns admitted to GMA News Online that he deposited the checks himself in the two private banks. “No one told me it was improper. I live in Makati so it was just more efficient for me to deposit them myself,” he said, adding that from now on the museum's cashier would be the one dealing with the banks.

On the transfer of the funds from the government's Land Bank of the Philippines, Barns explained: "The Board of Trustees identified BDO and BPI as the top two performing investment banks, that's why we deposited the funds there.”

In her audit reports, Yumang noted that the investments and the income from these deposits were not recorded in the museum's books, and its Land Bank account balance does not match its bank statements.

“The Cash-in-Bank account of the National Museum continues to reflect a balance of P314,349,780.91 as of December 31, 2012 which balance does not reconcile with the Bank Statements which only carry a total of P272,316.16,” the letter said.

Endowment fund increased fivefold

In his reply, Barns said the National Museum's record-keeping was “hampered by the unanticipated resignations” of its two accountants early last year. He said the agency only managed to hire a new junior accountant in March this year, and efforts are underway to update the museum's accounts.

Barns said his office is also in the process of transferring the documents regarding the fund – including the income earned – to the cashier, as recommended by COA, and that “appropriate internal controls will be established” to ensure proper checks and balance in transactions involving the endowment fund.

On the utilization of the interest from the funds for special projects, Barns said the Board of Trustees is still aiming to reach their mandated level of P500 million, and that the museum was getting “strong budgetary support” for its activities.

He said board chairman Ramon del Rosario had sought a meeting, tentatively scheduled on July 4, with the COA chair to discuss firm guidelines that will ensure the museum's compliance with auditing rules.

“The Fund has increased almost five times over during the three years of my tenure to date as Director,” wrote Barns. “We believe that the present status of the Fund should be regarded as a historic milestone and deserved source of pride and accomplishment for this agency.”

Barns said that from 1998 to 2010, the museum's endowment fund never exceeded P77 million. It now stands at P350 million, most of it generated during the Aquino administration. – Howie Severino/YA, GMA News

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