PNoy to have P1.2-B in unaudited intel funds

Leading an administration championing transparency and austerity, President Benigno Aquino III has authorized at least P1.2 billion in unaudited confidential and intelligence expenses (CIE) in his government’s first national budget, which he signed on Monday morning. CIE is the term now given for discretionary funds over which the President has full discretion in using for whatever lawful purpose but which the Commission on Audit does not audit, thus making it nearly impossible to determine if the purpose was actually lawful. Shining a light on the use of CIE was an advocacy of the President himself when he was still in Congress. As Tarlac representative, Aquino filed resolutions at the House of Representatives seeking the creation of a congressional oversight committee on intelligence funds to study the use of CIE and ensure that the allocated funds are used for the purposes they are intended for. Aquino filed the resolution in 1998, 2001, and 2005 but these were never adopted. When he got elected Senator, Aquino filed the Budget Impoundment Control bill, which sought to strengthen legislative oversight over executive spending. Now by an ironic twist of fate, Aquino can spend the same substantial amount of government funds beyond the controls and oversight that he had demanded as a congressman. More intel funds for justice department and BIR Aquino initially asked for P1.425 billion in CIE in the 2011 national budget. Senator Franklin Drilon pointed out, however, that that amount was bigger than what his predecessor former President Gloria Macapagal Arroyo got, which was P1.346 billion. Aquino then slashed P250-million in CIE from the Office of the President. The President seems to be putting the nation's money where his mouth is, by ensuring significant changes in CIE allocations based on his avowed priorities. (See Chart 1a.) Chart 1a. (Blue bars represent items in Aquino's 2011 budget, while red bars represent items in Arroyo's 2010 budget.) One notable change is the doubling of the amount of CIE for the Bureau of Internal Revenue — pursuant to the Aquino administration’s tax collection campaign. Aquino also took away entirely the CIE given to state universities and colleges which used to receive those under Arroyo’s administration, but gave the Public Attorneys Office almost three times that amount unlike under Arroyo’s regime when the PAO got none at all. The CIE of the Department of Justice also got increased considerably. Up by a third of its budget in 2010, the CIE of the Witness Protection, Security and Other Benefit Program will be P150.7 million next year. In all, 22 departments, agencies, and offices got the President’s go-signal to dispense with at least P1.2 billion in confidential funds in the coming year. The total amount is actually bigger, considering that some CIE also go to government-owned and controlled corporations (GOCCs) and local government units (LGUs). Besides national agencies, LGUs also receive CIE for “peace and order efforts" but these should not exceed 30 percent of the total annual amount allocated for such efforts or 3 percent of the total annual appropriation, whichever is lower. GOCCs also get a yet-to-be-determined amount of CIE. For surveillance and intelligence gathering Apart from the seven major items, however, Aquino’s general set of CIE priorities remains not much different from the CIE beneficiaries of Arroyo’s last national budget. (See Chart 1b.) Interestingly, the largest CIE allocation remains that of the Office of the President. The next biggest CIE funds belong to agencies with clearly basic intelligence functions, such as those that administer the armed forces, the police, drug operations, and investigative bodies. Chart 1b. Compared to the P1.6-trillion national budget next year, Aquino’s P1.2 billion in confidential and intelligence funds allocation — less than 1 percent of the budget — may seem paltry. Still, the amount is bigger than the P1.1-billion budget for 2011 of the Office of the Ombudsman — an office designated under the 1987 Constitution as “protectors of the people." The combined budget for CIE is also higher than those allotted for the Department of Education School Building Fund, for the Civil Service Commission, and for the Commission on Human Rights. The beef on the CIE is not that it overshadows the allocations given to these government agencies, but rather that CIE are the “VIPs" of government funds; CIE do not pass the scrutiny of regular auditing by the Commission on Audit. The Department of Budget and Management (DBM) defines intelligence expenses as “expenses related to intelligence information-gathering activities of uniformed personnel and intelligence practitioners that have direct impact on national security." On the other hand, DBM’s National Budget Memorandum No. 105 — which outlines policy guidelines and procedures in the preparation of 2011 budget proposals — defines confidential expenses as “expenses related to surveillance activities in civilian department/agencies that are intended to support the mandate/operations of the agency." The secrecy attending the management and use of CIE is complemented by the fact that the President has the sole prerogative on the release of the funds. Despite allegations of misuse, there has yet to be a proven case of CIE abuse, probably because its use and liquidation are shrouded in secrecy. Presidential prerogative University of the Philippines economics professor Benjamin Diokno says the President “is involved every step of the way" where confidential and intelligence funds are concerned. Diokno served as the budget secretary of then President Joseph Estrada. “The President’s power to reject requests for the use of the CIE funds is absolute. His power to authorize the use and release of savings to augment CIE funds is specific," Diokno says. He cites as an example the special provisions in the General Appropriations Act (GAA) applicable to the AFP, which state that “use and release of savings to augment said [CIE] funds are subject to prior approval of the President of the Philippines upon recommendation of the Secretary of National Defense." “As a matter of policy, the agency head will not submit a request for the use of the CIE funds without clearing it with the Office of the President," Diokno says. “An agency head would normally clear the use of the CIE with the President before a formal request is submitted." More than a decade had passed since the 10th Congress created in 1997 the Senate Select Oversight Committee on Intelligence Funds, Programs and Activities. This committee continues to function up to the present Congress, looking into the use, disbursement, and expenditures of CIE. But during deliberations in the 13th Congress in 2005, then Senator Richard Gordon, who sponsored the resolution creating the committee, admitted to Senator Juan Ponce Enrile that the committee had yet to produce any report. DBM records, however, could have provided the committee with plenty of material for discussion and scrutiny. Former President Arroyo had allowed agencies to spend more CIE than what had been budgeted during most of her nine-year term. This means that the actual amount spent had always exceeded the amount authorized by the General Appropriations Act. (See Chart 2.) Chart 2. “Actual expenses may exceed budgeted amount for CIE. This is not surprising. That the actual exceeds the program in all cases is surprising, however," Diokno says. “It suggests that agency heads are not spending within their budget. Or that agency heads find the use of CIE more convenient than the use of other items in the budget." Actual figures found in the Budget of Expenditures and Sources of Financing (BESF) are based on the agency report given to the DBM as part of the budget preparation process. The numbers are assumed to be consistent with the financial report for the agency as prepared by the Commission on Audit. In at least two years, 2007 and 2008, the Arroyo administration exceeded the GAA-allowed CIE by more than 90 percent — equivalent to a more than P1.2-billion increase for each year. The biggest increase took place in 2007, an election year when CIE soared by 98 percent. From the proposed P1.2 billion in the 2007 GAA, the actual amount spent went up to P2.5 billion. ‘Liquidation by certification’ Under COA Circular 2003-02, all cash advances chargeable against the CIE of all departments, bureaus, and offices of the national government, as well as GOCCs and self-governing bodies, should be liquidated by the accountable officer concerned. The liquidation report should not be coursed through the agency’s auditor. It should be submitted in a sealed envelope with a visible label “CONFIDENTIAL - For COA Chairman Only" directly to the COA chairman’s office. The liquidation vouchers should be supported by a photocopy of the paid disbursement voucher of the cash advance being liquidated and a certification of the agency head concerned for the use of the CIE. The certification, signed by the project/accountable officer and attested by the head of the agency, must state that the amount was incurred for that project, and that the project was a “highly confidential operation/mission, the details of which cannot be divulged without posing a threat to national security." It notes that details and supporting documents are in the agencies’ custody, kept in their confidential file, and “may be audited if the circumstances so demand." The certification also affirms that the funds were not used to pay salaries and wages of employees or any elected official and for the purchase of equipment. Senator Drilon calls this “liquidation by certification," noting that COA can examine the documents but cannot question it. He suspects this system is often abused. But Diokno pointed out that this is not exclusive to CIE; noting that even some committee funds in the Senate and the House get liquidated by mere certification. Augmented CIE BESF records show that for the year 2007 Arroyo augmented the CIE allocated for the Armed Forces General Headquarters by more than P1 billion, the Philippine Drug Enforcement Agency by P51 million, the National Security Council by P49 million, the Air Force by P41.6 million, and the Office of the President by almost P30 million. CIE was also increased by P10 million each for the Department of Justice – Office of the Secretary, the Department of National Defense – Office of the Secretary, and the Army. The Office of the Ombudsman’s CIE was raised by P5 million, while those of the Office of the Vice President and the National Police got an additional P3 million each. Also in 2007, Arroyo gave CIE to eight agencies that were not among the original recipients in the 2007 GAA. These included the Philippine Information Agency with P25.4 million, the Commission on Elections with P10 million, and the Optical Media Board with P5 million. But four agencies authorized to get CIE were however not given the amount. The Presidential Commission on Good Government, for one, did not get its P5 million in 2007. Five other agencies had their CIE reduced. The Department of Transportation and Communication (DOTC) Office for Transportation Security suffered a P5-million cut, while the Bureau of Immigration’s CIE shrunk by P3 million. CIE increased in 2008 due to a significant rise in those used by the PNP (more than P200 million added); the Office of the President (P167 million added) and the AFP General Headquarters (almost P111 million added). CIE-loaded agencies Since 2001, the CIE for the Office of the President was pegged at P650 million, with P500 million going to the Presidential Anti-Organized Crime Commission. In 2001 and from 2004 to 2009, the actual amount spent by the Office of the President was more than what was appropriated for it. The Office of the President spent P595 million in 2002. The figure for 2003 was not considered because the CIE was lumped with extraordinary and miscellaneous Expenses. In 2004, an election year when Arroyo ran to remain President, a total of P930.2 million in CIE was spent by the Office of the President. The P400 million given to the President’s offices was the biggest CIE allocation, bigger than that of the Armed Forces and the National Police. Of the amount, P300 million went to the Presidential Anti-Organized Crime Task Force. The AFP — consisting of the General Headquarters, Army, Air Force, and Navy — got its biggest CIE in 2007 with almost P1.2 billion and its lowest in 2001 at P52.5 million. The National Police got its highest CIE in 2005 at P827.9 million and its lowest in 2001 with P61 million. The National Bureau of Investigation, another agency involved with intelligence-gathering has been getting P18 million since 2002. The National Intelligence Coordinating Agency got P443.544 million in 2009, nearly half a billion. But in 2007 and 2005, NICA got only P31.244 million. The Philippine Drug Enforcement Agency got P54 million in CIE in 2009. Senate President Juan Ponce Enrile and Sen. Franklin Drilon have proposed that Congress allocate intelligence funds only to the military, the police, the NBI, the Bureau of Immigration, and the NICA since these are all engaged specifically in intelligence activities. They said civilian offices such as the Office of the Vice President, the DILG, GOCCs, and government financial institutions should not get CIE. Diokno shares this sentiment, saying agencies that do not have any security or intelligence-gathering functions should not be given CIE. “The proliferation of confidential and intelligence funds should be discouraged. A government that is committed to transparency and fiscal accountability should have specific and well-defined use for intelligence funds," he said. Still, Diokno said he is indifferent on CIE of the Office of the President: “Under a benevolent, well-meaning President, a limited amount of CIE may be justified. But under a tyrant and corrupt President, it is ill-advised." SUCs with CIE Arroyo, during her term as President, had granted confidential and intelligence funds to entities which clearly have nothing to do with intelligence-gathering or surveillance. She gave CIE to 19 state universities and colleges, many from Western Visayas. All of them were not included in the GAA. While the amounts run mostly to tens or hundreds of thousands of pesos, in 2008 the CIE given to 11 SUCs totaled P1.6 million. The bulk of this went to Carlos C. Hilado Memorial State College, P338,000; Iloilo State College of Fisheries, P262,000; Negros State College of Agriculture, P239,000; and Northern Iloilo Polytechnic State College, P208,000. Arroyo also provided multimillion-peso CIE to the Philippine Information Agency (PIA): P25.4 million in election year 2007 and P10 million in 2008. These were not allocated in the original national budgets of those years. Also missing proper allocation was the P6-million CIE given to the Philippine Racing Commission in 2006. On the other hand, Arroyo had rejected the Commission on Audit’s request for P5 million in CIE that would enable state auditors to properly investigate government spending. BESF records show COA received its last CIE in 2002, worth P4.658 million. BESF data also show that the Bureau of Fire Protection got its last CIE, worth P3 million, in 2001 despite it having fire intelligence and investigation activities. Drilon, a member of the Senate oversight committee, wants to realign the CIE as regular items in the budget instead of lump sums so these can be subject to audit. “With this, we can properly monitor if the intelligence funds were actually used for security purposes," he said in a statement last November. But Diokno said doing so would go against the nature of confidential and intelligence funds. What he instead favors is limiting the existence of CIE for agencies that “truly need the use of CIE funds." Malacañang itself has announced that it will review the use of confidential and intelligence funds, as well as determine whether the Office of the President should give up its CIE. It is, after all, a practice the present administration inherited from previous ones. But as of the last budget process, CIE allocations look like a legacy that the new resident of the Palace intends to keep, for now. – With data by GMA News Research and graphics by Mark D. Merueñas, MRT/JV/HS, GMANews.TV