Tuesday, 1 February 2011

Ban's Peacekeeping Scandal: $5 million missing in Philippines

Former COA exec tells of massive withdrawals

PIECES of the puzzle on alleged military corruption appeared yesterday to be finally falling into place.

Aside from P50 million in AFP funds that disappeared in a single day in 2002 during a series of transactions, $5 million from the United Nations remains unaccounted for, according to former government auditor Heidi Mendoza who testified yesterday before the House committee on justice.

Mendoza said former AFP comptroller Maj. Gen. (ret.) Carlos Garcia and AFP finance officer Col. Fernando Zabat were the ones who signed a voucher to withdraw P200 million from the AFP trust fund at Land Bank in Greenhills on Nov. 28, 2002.

The withdrawal was authorized by Garcia and Zabat through a memorandum dated Nov. 21, 2002.

Mendoza said the P200 million went to UCPB-Alfaro Makati branch where it was broken down into three accounts: P100 million into Premium Savings Deposits (PSD); P50 million deposited into a Savings Account, and P50 million into another PSD supposedly held at the bank’s Tordesillas branch.

However she said the last P50 million was not covered by any deposit slip, unlike the two other accounts.

Mendoza said that despite the three-day bank check clearing rule, the withdrawal and the deposits were all made in the same day which, incidentally, was also the day that then AFP chief Benjamin Defensor retired from the service.

Mendoza, who is now jobless after resigning from the Asian Development Bank, was then the leader of the 11-man Commission on Audit team which was tasked to launch a financial investigation into the AFP on Oct. 29, 2004.

The team was tasked to work with the Office of the Ombudsman then headed by Simeon Marcelo who asked Mendoza to audit the soldiers’ pension fund, the Balikatan fund, UN fund, and the AFP modernization fund in light of the cases to be filed against Garcia who is accused of amassing some P303 million while he was AFP comptroller.

Garcia, on questioning by committee chair Iloilo Rep. Niel Tupas, would not confirm Defensor’s retirement date and insisted that he needed to refer to his records.

Lt. Col. (ret.) George Rabusa, former AFP budget officer, last week told the Senate Blue Ribbon committee that Reyes, when he retired in 2001, was given "send-off money" amounting to P50 million as part of "tradition" in the AFP.

All past AFP chiefs who attended the hearing – Dionisio Santiago, Narciso Abaya, Generoso Senga, Hermogenes Esperon, and Alexander Yano – strongly denied having accepted any kind of "pasalubong or "pabaon."

Esperon and Yano, however, both said the Office of the Chief of Staff was entitled to up to P200,000 as part of its command and management fund by way of monthly cash advances.

Mendoza’s statements before the panel were part of her testimony before the Sandiganbayan’s Second Division’s hearings on Garcia’s plunder case.

The plunder case is now the subject of the controversial plea bargaining agreement with the Office of the Ombudsman which allowed Garcia to escape prosecution.

Mendoza, who repeatedly pleaded for her and her family’s protection, said UCPB Alfaro branch manager Edith Bondoc told her that the other P50 million was with the Tordesillas branch.

"I found it was a lie," the teary-eyed Mendoza told the hearing. "Nag-panic sila (bank) dahil wala sa system nila yung passbook na dala ko (for the Tordesillas account)."

Mendoza also spilled the beans on the missing $5-million UN "reimbursement fund" which was not recorded in the financial books of the AFP. It was not explained what the "reimbursement fund" was for.

"The funds from the United Nations (worth) $5 million did not enter the AFP book of accounts. Kaya lamang po with reservation, as I said, I have not seen my documents for six years. Ito, out of recall lang, but it was not the time of General Garcia. Kasama sa documents na turn-over ko sa Office of the Ombudsman," said Mendoza.

Mendoza said her own sources told her that the check in the amount of $5 million was picked up by an AFP officer. She said her sources did not give her the name of the officer.

She was not asked during the hearing where the check was picked up.


Mendoza said she first heard of the missing fund from legal attaché Jeff Cole of the US Embassy who she said sent her a "strongly-worded" letter about the money’s disappearance.

She said she found out that in 2001, there was a "clearing account" for direct remittances of the UN money at the Land Bank in General Santos City and in Iloilo. Asked why these places, she said the wife of Garcia’s immediate predecessor, AFP comptroller Jacinto Ligot, hails from General Santos.

Garcia denied knowledge of the Iloilo account.

"I’m not sure (under which account name it was). It was only intermediary (bank accounts)," she said, prompting the committee to subpoena records of the Iloilo and General Santos records and concerned personnel.


Former Marines Col. Ariel Querubin, one of the leaders of the failed plot to overthrow the Arroyo government in February 2006, said among the funds diverted to the contingency fund of the AFP chief were United Nations funds.

Querubin said that in 2001, while he was a liaison officer for the Philippine peacekeeping contingent to East Timor, the Filipino peacekeepers did not receive their monthly $60,000 in specialist pay provided by the UN.

"We were told not to touch it, that it is for the contingency fund of the chief of staff…During that time, there was such a special fund that we did not get," said Querubin.

Querubin said the trucks of the Filipino peacekeepers in East Timor at that time were in a sorry state and that their barracks were merely huts that were fire hazards.

"And yet, the UN reimbursed the full amount to the Armed Forces," said Querubin, adding that this can be corroborated by Rabusa.

"The allegation is credible and can be backed up by Col. Rabusa. It has put the institution in a bad light but we believe that steps or measures have been initiated and now in place since Maj. Gen. Garcia was indicted," he said.

Also, Querubin said that during the time of Reyes, field commanders "are like mendicants, going around Camp Aguinaldo asking for funds."

"The funds were not going to where they were supposed to go which is the frontlines. These are managed at the higher ups. Conversion, if used for intended purpose, is okay. But if the commanders (involved in conversion) are greedy, (that’s the problem)," he said.


Mendoza said intermediary accounts could be used to play the foreign exchange market by betting against the dollar.

Mendoza also said she had wanted to go to the United States to work on the matter but then COA chair Guillermo Carague asked her not to pursue it anymore.

This prompted Parañaque Rep. Roilo Golez to conclude that evidence of graft and corruption was obviously being suppressed during the Arroyo administration.

Mendoza said Carague even offered her an international auditing job in New York and local positions, which she said she rejected. She instead resigned from COA after 22 years in service.


Before the audit started, Mendoza said she was told by COA Commissioner Emmanuel Dalman to "go slow."

"Sinabi sa akin na dahan-dahan lang Heids, tinawagan tayo ng Malacañang. I did not ask kung sino pero parang office po ng Executive Secretary," she said.

Ombudsman Ma. Merceditas Gutierrez said she will have to look not just into the statements made by Mendoza and Rabusa but also the documents they presented.

She denied insinuations that bribery led to the plea bargaining agreement. "Wala ayusan dito, wala perahan dito. Kung may kumita dito ay tamaan sana ng kidlat at mamatay na ngayon din."

She defended her decision to approve the panel of prosecutors’ recommendation to enter into a plea bargaining deal after finding out that they had a weak case, something she said they realized after failing to find a contractor or supplier who would testify against Garcia.

"We opted to get all the properties (worth P135 million) of Mr. Garcia because we believe that there was no evidence to convict Mr. Garcia for the case at hand," she said. "Whether we are right, as to whether there is really weak evidence, (it is the Sandiganbayan) that will sustain this plea bargain."


Ombudsman prosecutors have claimed Mendoza failed to testify on any transaction that linked Garcia to any irregularities involving AFP funds.

Gutierrez explained this was the reason the prosecution entered into a plea bargaining agreement with Garcia which allowed the accused to plead guilty to lesser offenses of direct bribery and facilitating money laundering resulting in his release from detention on P60,000 bail.

Marcelo said executives from the two banks should have been included in the plunder investigations although he admitted that the details of Mendoza’s testimony came out only during trial.

"Dapat isama sila particularly (former UCPB-Alfaro branch manager Edith) Bondoc-Loyola who was apparently the one who manipulated the records on the P200 million. Unfortunately, from what we have heard, tumakas na siya at nasa Las Vegas na raw," he said.

The same view was expressed by the Sandiganbayan Second Division in its resolution dated Jan 7, 2010 when it said: "…it does not require any stretch of imagination to envision that the bank maneuver could not have been done without the knowledge and acquiescence of bank officials who, however, have remained unaccountable for their illegal cooperation…"

The Department of Justice has placed Mendoza and Rabusa under the provisional coverage of its witness protection program.

Mendoza went to the DOJ Monday to seek protection prior to her testimony at the House.


Presidential spokesman Edwin Lacierda said Malacañang was "impressed" with Mendoza’s testimony.

Lacierda said President Aquino and the members of the Communications Group watched the live television coverage of the hearing while they were having a meeting. – With Peter Tabingo, Evangeline de Vera, and Victor Reyes

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