A GOOD governance advocate-lawyer filed criminal charges against the head of a government agency for swindling (estafa) and malversation of public funds and other acts of corruption in government service.
Atty. Lorenzo Gadon formally charged before the Office of the Ombudsman (OMB), Dave Almarinez in the latter’s capacity as President and Chief Executive Officer of the Philippine International Trading Corporation (PITC), for crimes related to graft in public office.
COA report
Gadon based his complaint on a Commission on Audit (COA) report of May 2, 2019 which revealed that the PITC entered into several memorandum of agreements (MOA) with at least 17 government agencies for the procurement of goods and services, including infrastructure projects.
He explained that the mandate of the PITC is to ensure the most efficient and cost-effective procurement services.
In exercising this mandate, PITC was to receive funds of other government agencies for the procurement of their needs, the latter hoping to have faster delivery and better cost as it was the reason PITC existed.
PITC mandate
The reason for PITC’s existence hinged on the need of the government to have an “organized body that can take advantage of economies of scale in bulk purchases, wide scale shipping and marketing, centralized financing assistance and other export promotion services”
This need for organized body to do procurement was brought about by the fact that “developing economies, especially within the neighboring Southeast Asian region that have established government trade companies, have acquired a significant advantage over the Philippines in the world market.”
Mishandled funds
The COA, however, found out in an audit that the PITC stepped out of the regular government procedures in the exercise of its functions, resulting in delays in service delivery and accumulation of billions of pesos in unused funds.
The COA report points to mishandling of entrusted funds amounting to over P7 billion by the PITC headed by Almarinez.
Gadon asserted in his complaint that delays in delivery of agreed services were deliberate to allow the PITC to “gamble” with parked funds.
His assertion came from reports in the Senate investigation on billions of parked and unused funds in the PITC at a period when the country was scrounging for funds to finance Covid-19 vaccine purchases and other costs related to the pandemic.
SRA example
He cited the case of the Sugar Regulatory Administration (SRA).
According to Gadon, the SRA was in urgent need to comply with requirements mandated under the Sugarcane Industry Development Act of 2015, where agri- machines were to be bought for use by the sugarcane farmers.
The procurement of these machines had been stalled for unreasonable time that SRA was looking for solutions to their procurement problems.
Came the PITC solution, the agency tasked to exactly do what SRA needed done.
SRA leadership met with Almarinez and was assured PITC was the solution.
P206-M SRA money
With that assurance, a MOA was crafted and P206 million was transferred by SRA to PITC, and the disappointment began.
Meetings necessary for the procurement process to roll were scheduled but got cancelled, resulting in months of delay.
A persistent SRA and a Senate investigation led to an admission by Almarinez the “PITC had invested moneys held by it in trust for clients’ source agencies (SA) and national government agencies (NGA) in money market placement.”
Misappropriated funds
Gadon said that by investing funds of their clients in money market placements, “Almarinez misappropriated the funds of PITC’s clients, the money market placement had absolutely no relation to procurement outsourcing services, the very reason PITC exists.
The money market placements “which respondent himself admits were made by PITC - involve transactions of speculations, at the very least”.
Almarinez, however, claims that PITC is allowed in its mandate to invest its funds, vested with broad powers, including to invest and deal with the funds of the corporation (Section 6p of PD1071)
Wrong interpretation
This was shot down by Gadon, sharply explaining that the funds referred in the law was PITC’s own funds and not funds it held in trust for their clients.
“Nowhere in the MOA was PITC referenced as an investment broker or agent, instead it is referred to as procuring agent,” Gadon said.
“By making money market placements, which intrinsically involved risk - Respondent has effectively gambled with the funds of PITC’s client SAs and/NGAs.
Gadon explained the crime committed by Almarinez as CEO of PITC was “attended by aggravating circumstances, like abuse of authority, evident premeditation, employing graft, fraud, or disguise.”