Dominguez was not involved in DILG supply contract – DOF

Finance Secretary Carlos Dominguez III was not involved in the controversial supply contract entered into by the Department of Interior and Local Government (DILG) and  questioned by President Rodrigo Duterte during a Cabinet meeting, an official of the Department of Finance (DOF) said on Thursday.

“Dominguez had no recourse but to implement the loan agreement that was sealed by his predecessor, Cesar Purisima, with the UniCredit Bank Austria AG for Phase 2 of the Capability Building Program of the Bureau of Fire Protection (BFP) – an agency attached to the DILG – before President Duterte took over last year," Finance Assistant Secretary Paola Alvarez said in a statement.

Alvarez emphasized that Dominguez only performed a “routine ministerial duty necessitated by the change in administration” in giving the "go-ahead" to the loan agreement for a project that was actually implemented exclusively by the DILG and approved during the Aquino administration.

“However, the supply contract for this project, which involves the acquisition of 76 Rosenbauer fire trucks for deployment by the BFP in priority cities nationwide, is an entirely different thing altogether that was handled solely by then-Secretary Ismael Sueno and two of his subordinates – DILG Head Executive Assistant Josephine Leysa and BFP Officer-in-Charge Chief Superintendent Bobby Baruelo – who had dealt directly and exclusively with the UniCredit Bank,” she said.

“The loan agreement and supply contract are two separate and distinct things,” Alvarez noted.

“Neither Secretary Dominguez nor the DOF had anything to do anymore with the supply contract that Mr. Sueno had approved on his watch, on the basis of the loan agreement that the DOF had authorized because it was already approved in the past by Malacañang, the Monetary Board, the DOJ and DBM,” she added.

Duterte fired Sueno during a Cabinet meeting Monday night for "loss of trust and confidence" regarding the acquisition of fire trucks from Austria, which was approved by the previous administration.

Sueno denied allegations he was corrupt, saying he had no choice but to implement the fire truck deal.

"In the absence of any legal obstacle to its implementation – as the DOF had already secured before the Duterte presidency the mandatory prior approvals of the appropriate government entities – Secretary Dominguez couldn’t just put the loan agreement on hold, let alone void it, without risking punitive legal action from the Austrian bank that could cost the Philippine government billions of pesos," Alvarez said.

She said it was President Duterte who instructed Dominguez to inform Sueno about the loan package for this two-phased project, a carry-over from the past administration.

Phase 1 of the BFP Capability Building Program was actually approved in 2011 by the late DILG Secretary Jesse Robredo and implemented by his successor, Manuel Roxas II.

According to the DOF official, the NEDA Board approved Phase 2 of the BFP’s Capacity Building Program on May 19, 2015, and the DBM issued the Forward Obligational Authority with the DILG as the implementing department on July 20, 2015.

Then-DOF Secretary Purisima was issued a Special Presidential Authority (SPA) to forge the deal with the UniCredit Bank on Feb. 11, 2016, and the loan agreement obtained a clearance from the Inter-Agency Committee for the Review of Foreign Loan Documents (IAC-RFLD) on March 21, 2016, Alvarez said.

The Monetary Board gave its final approval on the terms and conditions on May 5, 2016, while then-Justice Secretary Emmanuel Caparas issued on May 31, 2016 a legal opinion affirming the authority of the DOF, as the borrower, to forge the concessional credit agreement with the UniCredit Bank, as the lender.

In a July 25, 2016 letter, Finance Undersecretary Maria Edita Tan asked then-Secretary Sueno to endorse to Dominguez the list of DILG officials, with their corresponding specimen signatures, authorized to “make, sign and deliver disbursement requests, withdrawal applications and other procurement and project related documents and reports necessary to facilitate the implementation of the said agreement,” for submission to the UniCredit Bank, Alvarez said.

On October 10, 2016, Alvarez said Sueno sent a letter with their specimen signatures to Dominguez, through Tan, informing the DOF that he along with Leysa and Baruelo would be the ones to deal with the Austrian bank.

“The undersigned confirms that all acts and deeds that will be undertaken by the said DILG officials by virtue of the authority granted herein, shall be in accordance with the subject loan agreement and applicable Philippine laws, rules and regulations,” Sueno said in his Oct. 10 letter to Dominguez.

As a result of Sueno’s letter, Dominguez wrote an “Evidence of Authority” letter to the UniCredit Bank on Oct. 26, 2016 informing the bank that Sueno, Leysa and Baruelo would be dealing with the bank with regard to the loan agreement for the BFP Capability Building Program Phase 2.

Section 20 Article VII of the 1987 Constitution authorizes the President to contract or guarantee foreign loans on behalf of the Republic of the Philippines, after consultation and with the prior concurrence of the Monetary Board.

The Monetary Board approved in principle the terms and conditions on Sept. 23, 2015 and then gave its final approval to the loan on May 5, 2016. — Ted Cordero/VDS, GMA News