Anatomy of public fund abuse and misuse

By Artchil B. Fernandez

Corruption is endemic in poor and underdeveloped countries like the Philippines. Public funds intended for infrastructure, health, education and social services usually end up in the pockets of corrupt politicians. How do these creatures of the dark steal public funds? Usually, people are kept in the dark about the specifics of how corruption is committed.

The veil of secrecy over how public officials commit corruption has been lifted in the ongoing impeachment trial of Vice President Sara Duterte. In a rare moment, Filipinos got a glimpse of how their money is abused and misused. Details of how this is done were exposed through the testimony of Gina Acosta, the former special disbursement officer (SDO) of the Office of the Vice President (OVP). She took the witness stand this week.

Before going into the details of Acosta’s narration on the anatomy of public fund abuse and misuse, her testimony quashed Sen. Imee Marcos’ desperate defense of Sara Duterte. The previous week, Marcos tried to shield and absolve Sara Duterte from culpability and accountability over accusations that she misused and abused the budgets of her offices by laying the blame on her SDOs. The SDOs of the OVP and the Department of Education (DepEd) handled the release of the PHP 612 million in confidential funds — not Sara Duterte. Marcos made it appear that the vice president, who was then also education secretary, had no knowledge of the release and use of these huge public funds.

The OVP Physical and Financial Plan was presented during the trial, showing that the PHP 125 million confidential fund was placed under the Good Governance Program. The document was approved by the head of the agency, Sara Duterte. Her signature appeared on the document. Sara Duterte’s approval through her signature indicates that she not only knew about the release of the funds but also approved it. She was not clueless.

Imee Marcos’ clumsy defense of Sara Duterte only made her appear culpable for what she is accused of — betrayal of public trust through the abuse and misuse of the people’s money. Section 102 of PD 1445 explicitly states that the head of an agency or office is responsible for its funds and property. The law places responsibility for the release and spending of a government agency’s public funds on the agency head.

Returning to Acosta’s testimony, her account gave Filipinos insight into how high-ranking public officials abuse and misuse their money. During a calm and measured cross-examination by private prosecutor Amando Virgil Ligutan, Acosta narrated how the PHP 125 million confidential fund was released and spent.

Acosta admitted that she prepared the OVP Physical and Financial Plan, which contained, among other things, the Good Governance Program funded by a PHP 125 million confidential fund. There were no details or specific activities in the document. It was a lump-sum request with no itemization of where the fund was to be spent. This is strange and highly irregular. A huge amount of public money was being released, yet there were no details about where or how it would be used. This was already a red flag.

Asked whether she knew how the PHP 125 million confidential fund would be used, Acosta admitted that she had no idea. Pressed by Ligutan, Acosta said she relied heavily on the OVP security chief, Col. Raymund Lachica. Lachica, not Acosta, was the one in the field, she told the impeachment court. Despite having no identified surveillance operation — by number, location or cost — involving the PHP 125 million confidential fund, Acosta prepared and signed the document based on Lachica’s input.

What Acosta did was a gross violation of Joint Circular No. 2015-01, which governs the use of confidential and intelligence funds. Section 4.2 requires confidential and intelligence fund allocations to have a proposed amount for each program, activity and project on which disbursements will be based. Section 6.1.1 provides that cash advances must be used for a specific legal purpose related to confidential or intelligence activities.

Upon approval by the head of the agency, Sara Duterte, Acosta, as SDO, processed the release of the money. She prepared the voucher and facilitated the encashment of the check at Land Bank. Upon receiving the PHP 125 million from the bank, Acosta placed it in four oblong traveling bags on Dec. 20, 2022. Acosta called Lachica and handed him the entire PHP 125 million. Upon questioning, Acosta told the impeachment court that Vice President Sara Duterte had instructed her to give the money to Lachica. The fact that Sara Duterte not only approved the release of the PHP 125 million but also ordered who should receive it indicates that she was directly responsible for the release and use, or misuse, of the people’s money.

What is highly questionable is Sara Duterte’s instruction to Acosta to hand over the PHP 125 million to Lachica. Under Section 6.1.2 of Joint Circular No. 2015-01, the SDO has sole responsibility for handling the confidential fund. This responsibility cannot be transferred to another person, in this case Lachica. Sara Duterte’s instruction to Acosta to transfer the fund to Lachica clearly violated Joint Circular No. 2015-01.

What did Lachica do with the money? Based on the COA audit of the fund’s use, it was distributed to at least 1,992 individuals, including the infamous Mary Grace Piatos, Andy Lim and Malou Wang. As indicated in the liquidation report, Lachica claimed that the money was also used for office supplies, tree planting, Christmas parties, medicines, food, and financial and medical assistance. None of the identified undertakings was related to confidential or intelligence activities. Even more incredibly, these purchases and activities occurred in just 11 days — Dec. 21-31, 2022. Filipinos have the right to be suspicious about whether the reported spending actually occurred. It is their money.

In a nutshell, this is how public funds are abused and misused. A public official, despite laws, rules and regulations governing the use of public funds, authorizes their release and decides to whom they should be handed. The recipient then spends the money on things that are inconsistent with the fund’s purpose. Alternatively, it could end up in someone’s pockets.