CoA questions P10-M BoI services fund

MANILA, Philippines - The Commission Audit (CoA) has identified millions of pesos in funds that were improperly granted to officials and employees of the Board of Investments (BoI). Released in 2007, CoA said P10 million was said to have paid for unqualified honoraria, private security services and excessive miscellaneous expenses. It further found BoI accounting errors worth around P186 million, as these expenses were undocumented or misclassified. However, Trade Undersecretary and BoI managing head Elmer C. Hernandez said in a telephone interview that the honoraria and representation expenses were allowed by law. "We’re one of the cleanest [government] institutions," Mr. Hernandez said in Filipino. "We have the authority from the DBM (Department of Budget and Management) to grant honoraria I do not know why CoA keeps saying that it is disallowed when there is legal basis [for the expenses]," Mr. Hernandez said. "[Meanwhile,] representation expenses are provided for in the GAA (General Appropriations Act). We have not exceeded," he added. CoA said that the P3.43 million BoI used to pay for staff meetings and meetings with clients applying for incentives were "improper" and did not have sufficient records. "Despite the government’s continued adoption of austerity measures, the actual representation expenses increased by 36% as compared with the 2006 charges of P2.67 million," CoA said in the report, recommending that BoI be more prudent in spending for meetings. CoA also ordered the refund of P2.76 million spent for honoraria, which is compensation work performed beyond regular duties. The report noted that officials and employees from BoI, the Trade department and other government agencies had received P500 to P15,000 each. Personnel should not receive honoraria for performing regular tasks inherent to their offices, CoA noted. BoI was quoted in the report as saying that the personnel deserved the grants as they were doing work outside regular functions. But CoA refused to accept the explanation. CoA also ordered that an unnamed BoI official refund an additional P1.512 million of BoI funds, which were used to pay for bodyguard services from 2004 to 2007. "No allotment was made for the purpose and there was no written contract between BoI and the security service provider," CoA said. CoA added that the budget allotment for security services should only be used to protect government property. If the BoI official needs protection, the request should be coursed through the Philippine National Police, CoA said. CoA also demanded that roughly P721,000 of miscellaneous payments be refunded to the National Government as the amount was wrongly used. Around a third was used to purchase personal items such as chocolates and clothing from imported brands. The rest of the amount was either in excess of the allotment for miscellaneous payments or wrongly charged against BoI funds when they should have been charged against the Department of Trade and Industry. BoI was quoted in the report as saying that the personal items were given as tokens to officials in other countries and leaders of investment missions. "These gifts represent the Philippine government’s token of appreciation for recognizing and including the Philippines as one of the investment target areas," BoI was quoted as saying. CoA said, however, that such tokens should have been cheaper, locally produced goods. The report also found that P1.41 million worth of cash advances loaned to BoI’s officials and employees had not been repaid. CoA observed that there was lack of control to ensure repayment. In a separate report, CoA noted that the Trade department also improperly granted P1.72 million worth of funds to its officials and employees. It also found roughly P186 million worth of expenses and inventory that were misclassified, insufficiently documented or unreconciled between book and bank balances. For the Trade department, CoA found P1.393 billion worth of similar accounting errors. The report quoted the department saying that it will prepare the needed documents. — Jessica Anne D. Hermosa, BusinessWorld