"What this Country needs is not a change OF men but a change IN men" March 1980

Monday, February 23, 2009

EXECUTIVE SUMMARY OF THE COMMITTEE REPORT RE FERTILIZER FUND SCAM

THE REPORT

This report can be characterized as part of a very long voyage that commenced four or so years ago. During the 13th Congress, P.S. Res. 327 was filed by Senator Ramon B. Magsaysay entitled, "RESOLUTION TO CONDUCT AN INQUIRY ON THE ALLEGED MISMANAGEMENT AND USE OF THE FERTILIZER FUND OF THE DEPARTMENT OF AGRICULTURE'S MASAGANANG ANI PROGRAM TO THE DETRIMENT OF FILIPINO FARMERS WITH THE END IN VIEW OF CHARTING EFFECTIVE POLICIES AND PROGRAMS FOR THE AGRICULTURE SECTOR."

The Resolution sought to have the Senate conduct an inquiry in order to look into the alleged misuse and misapplication of government funds, i.e., the purchase of fertilizers that not only were overpriced but inappropriate for the intended purpose as well.

After a series of numerous hearings (six in all), and dialogues with farmer organizations, the Committee on Agriculture and Food and the Committee on Accountability of Public Officers and Investigations (Blue Ribbon) under Senators Ramon B. Magsaysay and Joker P. Arroyo, respectively, issued Committee Report No. 54 (CR 54).

Among many of their findings, they discovered that massive corruption accompanied the procurement and distribution of fertilizers all over the country. Commissions were offered to some, demanded by, and given allegedly to, elected and appointed government officials. There were supposed recipients who did not receive a drop of the liquid fertilizers. The P728M in funds purportedly used for the purchase and distribution of fertilizers to farmer beneficiaries were used instead primarily for the re-election efforts of administration candidates.

As the door was closing on the 13th Congress, the Senate approved CR54, which found, among others, that:

1) Some politicians' names were used to legitimize the operations; 1

2) The fertilizer project was a scam; and 2

3) There was massive overpricing in the fertilizer costs.3

Through CR 54, the Senate also recommended and approved the following, inter alia:

1) The filing of criminal charges against Sec. Luis Lorenzo, Usec. Jocelyn I. Bolante, Usec. Ibarra Poliquit, Usec. Belinda Gonzales, Asec. Jose Felix Montes and all Regional Directors of the DA who participated illegally in all the transactions related to the P728M fertilizer scam;4 and

2) Citing for Contempt of the Senate Sec. Luis Lorenzo and Usec. Ibarra Poliquit, as well as ordering the enforcement of the contempt citation against Usec. Jocelyn I Bolante.5

Normally, the work of a Committee is done after it has made its recommendations through its Committee Report and having it approved by the Senate in plenary session. But this work was not yet over; it could not have been finished because the architect of the whole scheme had not appeared to testify in the Senate. Despite numerous invitations to and subpoenas issued against Mr. Jocelyn I. Bolante, he did not honor nor heed any of them. He was cited for contempt for his repeated insolence. He was never around during any of the hearings. Finally, he fled to the United States (US) where he sought asylum. There were disturbing developments that led many, especially the previous Congress, to believe that there was an active attempt to obscure the trail left by the co-conspirators. There was an invocation of Executive Order 464 (EO 464) by officials, e.g., Undersecretary Ibarra Poliquit, in order not to testify. The Supreme Court, however, subsequently declared Sections 2(b) and 3 of EO 464 unconstitutional insofar as covered officials were concerned. The Supreme Court was clear that executive privilege does not refer to categories of persons but refers instead to categories of information. Mr. Bolante's sojourn to the US was deemed to be a deliberate attempt to escape the jurisdiction of the Senate. His flight was a clear indication of guilt.

The 14th Congress and the Blue Ribbon Committee Hearings

During the 14th Congress, two proposed resolutions were filed: Proposed Senate Resolution No. 637 and Proposed Senate Resolution No. 702, both authored by Senator Mar Roxas. A privilege speech was delivered by Sen. Jinggoy Ejercito Estrada entitled, "A Clarion Call to Conscience". All three were related to the P728M alleged fertilizer scam and the role/status of Mr. Bolante.

In the meantime, Mr. Bolante's petition for asylum in the United States was denied after a protracted process. He was finally deported back to the Philippines. It was not until November 13, 2008 that Mr. Bolante, at last, appeared in the Senate.

Eight (8) public hearings have been conducted.

RECOMMENDATIONS

I. We recommend that the following be further investigated and /or charged: A. Former Undersecretary Jocelyn I. Bolante 1. Plunder 2. Technical Malversation 3. Money Laundering 4. False Testimony/Perjury

B. Former Assistant Secretary Ibarra Poliquit 1. Plunder 2. Technical malversation

C. Ms. Leonicia Marco-Llarena 1. Plunder 2. Money Laundering 3. False Testimony/Perjury In Solemn Affirmation

D. Ms. Deonilla "Julie" Misola-Gregorio 1. Plunder 2. Money Laundering 3. Tax Evasion 4. Disobedience To Summons Issued By The National Assembly

E. Mr. Redentor Antolin 1. Plunder 2. Money Laundering

F. Ms. Marilyn Araos 1. Plunder 2. Money Laundering

G. Ms. Maritess Aytona 1. Plunder 2. Money Laundering 3. Tax Evasion 4. False Testimony/Perjury In Solemn Affirmation 5. Disobedience to Summons Issued By The National Assembly

H. Mr. Jaime Paule 1. Plunder 2. Money Laundering 3. False Testimony/Perjury In Solemn Affirmation

I. Undersecretary Belinda Gonzales 1. Plunder 2. Technical Malversation

J. Joselito Flordeliza 1. Money Laundering

II. We recommend the passage of the following proposed measures: A. AMLA amendments Amendment: Extend the extension period of the freeze order from an additional six months to two years. The two year freeze should be applied for every six months to show that there is no grave abuse of discretion on the part of AMLC.

B. Procurement Act amendment Amendment: Include private institutions, NGOs, people's organizations and other private entities that receive government monies in the coverage of the Procurement Act.

C. AMLA Rules revision Amendment: Revise the Rules, as written by the Congressional Oversight Committee on the Anti-Money Laundering Law, to reinstate the provision allowing Congress some powers of inquiry relevant to its investigations.

D. Amendment to the Bank Secrecy Act Amendment: Amending the Bank Secrecy Act to include in the exception public officers charged before the Courts for violations of Sections 3(b) and (c), under Corrupt Practices of Public Officers.

E. Amendment to the Rules of Procedure Governing inquiries in Aid of Legislation re Direct Contempt Amendment: Include the provision on Direct Contempt, Indirect Contempt and Arrest in the Rules of Procedure Governing Inquiries in Aid of Legislation.

F. Suggested standard provision to be added to the GAA every year Amendment: Include a provision in the GAA that will penalize officials and employees for failure to submit quarterly financial and narrative accomplishment reports.

III. We urge the Ombudsman to decide on the cases which have been pending with them for nearly 1,300 days. The Ombudsman has motu proprio powers to conduct an investigation into wrongdoings of government officers. Had it exercised its powers more aggressively, the resolution of the Fertilizer scam and other issues related to it could have been yesterday's news. Alas, such is not the case here. And so now is the time for the law enforcement agencies and the prosecution arms of government to perform what it was originally tasked to do. IV. We recommend that an amendment to the Constitution be made making the Ombudsman an elective rather than an appointive position. We can, by making the position elective, ensure more its independence from the Executive than what we have now. We need an Ombudsman beholden only to the people. The mode of election, and or nomination of candidates for this position, e.g., candidates who may be vetted first by the Supreme Court before they are allowed to run, need not be decided right now. But this issue has to be discussed and there is no better time than today. Needles to say, any changes to our existing Charter must be made only after the 2010 elections.

CONCLUSION

Insofar as this aspect of the Bolante case and his ilk are concerned our task has ended. We thank the Magsaysay and Arroyo Committees for starting the work that led to this current effort towards uncovering more personalities, and more acts - no less egregious, no less criminal. We are confident that our efforts have revealed many pieces of this fertilizer puzzle. But while this report is complete and this closure final insofar as this (Bolante) aspect of the case is concerned, we do not discount that there might still be out there things that remain for us to ascertain, e.g., former DA Sec. Luis P. Lorenzo Jr. has not testified yet. Has he stayed abroad to hide or has he resided overseas because he could not stomach what was happening in his department?

Agencies of the Executive Department, such as the DBM, including then Secretary Emilia Boncodin were so grossly remiss in their duties. That P728M was released without their knowledge is difficult to believe. At the very least, it could have exercised enough supervision over such a gargantuan amount to ensure that it was not wasted or stolen.

The Executive Department should have supervised its agents and subordinates well, rewarding those who do good work and punishing those who do badly, rather than, for example, allowing the appointment of Poliquit in December 2005 to a cushy position as GSIS Vice President even as the controversy remained unresolved. It should first have ensured that the investigation was concluded before such promotion was made. And for promoting Belinda Gonzales to the post of DA Undersecretary, without a very thorough vetting process that could have bared the scam, the Executive here committed twice the sin of omission. As early as the 13th Congress, the Senate had found that the President herself "must be held accountable in the mismanagement of the fertilizer fund and take it upon herself to institute measures to correct the flaws in her administration.6

The President is the Chief Administrative Officer of the Government. While the Constitution is not explicit about this position, by reason of her being the Chief Executive and the head of government, she exercises and wields all administrative powers inherent in her position.

A corollary rule to the control powers of the President is the "Doctrine of Qualified Political Agency." As the President cannot be expected to exercise all her control powers at all times and in person, she will have to delegate some of them to her Cabinet members. The Doctrine of Qualified Political Agency provides that all executive and administrative organizations are adjuncts of the Executive Department. The heads of the various executive departments are assistants and agents of the Chief Executive. Except in cases where the Chief Executive is required by the Constitution or law to act in person or the exigencies of the situation demand that she acts personally, the multifarious executive and administrative functions of the Chief Executive are performed by and through the executive departments. Thus, the acts of the Secretaries of such departments, performed and promulgated in the regular course of business, unless disapproved or reprobated by the Chief Executive, are presumptively the acts of the Chief Executive.7

Thus, while the Committee found no evidence directly linking the President to the fertlizer scam, the acts of the former Undersecretary of the DA, Mr. Jocelyn Isada Bolante and his cohorts, now Undersecretary Belinda Gonzales and now GSIS Vice President Ibarra Poliquit, are deemed acts of the President since they acted within the scope of their authorities given to them by then Secretary Luis Lorenzo, Jr. Since there was no reprobation or disapproval coming from President Gloria Macapagal-Arroyo regarding their actions, it can easily be inferred that the President acquiesced to such acts. Does anyone really believe that Bolante, et. al., would have been able to malverse such a gargantuan amount and continue to evade all sorts of liability without the acquiesence of Malacanang?

The President's knowledge as to the fertilizer fund scam controversy had, in fact, been alluded to by former DBM Secretary Emilia Boncodin in her testimony during the 13th Congress: "When asked if the fertilizer fund request made by Usec. Bolante for the Department of Agriculture was upon the instruction of the President, Secretary Boncodin replied with, 'I would imagine so.'"8

Inspite of that knowledge, there was no close monitoring of how the money was spent, and, more importantly, whether the funds were spent wisely and well. The omission was so appalling that the people involved were allowed to get away with it. Despite storm clouds appearing in the horizon, promotions and new appointments were instead made. The gathering storm should have been a warning that something was amiss. The exposure that first appeared in the media should have been impetus enough to act, to investigate, to correct, to punish. None was done even after the Senate during the 13th Congress issued its findings in CR 54.

The AMLC was slow, the Bureau of Internal Revenue was absent, the DBM allowed it, the President and the DA Secretary did not move.

What we have heard instead from the administration is deafening silence. No investigation, no condemnation, not a whisper, not a whimper, nary a sound - not even a slap on the wrist. This lack of supervision, this negligence in monitoring, this lack of accountability, this omission was so gross; it was tantamount to bad faith, even criminal neglect.

This is not the first corrupt operation that has been committed and, if the leaders in the Executive Department are not careful and more circumspect, more deliberate, and more judicious in the release of funds, this will not be the last. This lack of monitoring by officials in the administration resulted in such wastage of vast amount of funds- akin to a faucet leak which every one notices but which no one bothers to report for repairs- with the water continually running until the water runs out.

This dearth of monitoring efforts led to a maldistribution of resources: favored (or priority) ones getting more than others. While many government agencies have to wrestle with others to get their fair share of inadequate resources, here the favorites get the lion's share without even having to go through the bureaucratic maze all in the name of greed and re-election. Worse, the absence of close supervision facilitated the malversation of public funds and allowed the conspirators to divert funds that had been allocated for, and should have otherwise gone to the benefit of, the farmers-constituents of the different LGUs and congressional districts. Upon the release of a huge amount of money, bells and whistles should have gone off in the DBM, warning them, telling them to monitor closely the manner by which the funds were to be distributed. They should have required regular reporting of how the money was spent, even before the COA came in. It was just but responsible. This way, no releases should have been allowed without first accounting for the past expense. The DBM, in this case, has underserved the people.

Particularly egregious are the acts of Jocelyn Bolante. He claimed to have exerted efforts to stamp out corruption at the DA by drafting a memo to Sec. Lorenzo to report allegations of corruption. However, no copy of any such memo was ever presented to us, and Sec. Lorenzo, in a phone call, even denies having ever received such a memo. At the same time, even assuming the truth of Bolante's claim, he should not have stopped at just drafting a memo for Sec. Lorenzo, after he was informed of the existence of a syndicate in the DA, if he was true to his duty. He should have filed and pursued a case with the Ombudsman or investigated until all people in the group were exposed and punished. The allegations of bribery, told to him, were so serious and so grave, that he should have acted with great dispatch. By his inaction, he failed to live up to the precepts of the Code of Conduct and Ethical standards for Public Officials and Employees, that "they shall enter public service with utmost devotion and dedication to duty. (Section 4(b), RA 6713) Worse, our hearings have established that Bolante, far from crusading against corruption, was instead himself engaged in a systematic scheme of corruption. By his acts he failed to live up, nay he violated his Rotary creed: what he said was not the TRUTH, what he did was not FAIR to the Filipino, what he did was not BENEFICIAL to all. He must have been able to rise up the Rotary International hierarchy by masquerading himself as a person who believed in its tenets, but in reality was violating them. He has brought shame to himself, to his family, and to his organization. He has done disservice to the nation, and has wronged his country.

We dread to see again the unleashing of packs of wolves feasting upon already-scarce resources of government. In all probability, there were other wolf packs involved in the disposition of the remaining P535M in fertilizer funds that have yet to be traced. The practice of allowing the appearance/insertion of "lump sums" in budget, especially in re-enacted ones; the non-transparency of these items' usage especially as they refer to projects already completed during the year previous, will give a free rein to these sharks, sensing blood, turning into a feeding frenzy- especially during times of elections and natural disasters. How many times have we seen this? How many times do we still have to suffer for this?

The Ombudsman failed to do its duty when no resolution was made on this case even after more than a thousand days. We denounce its inaction in the strongest possible terms. Instead of being part of the solution to corruption and justiying the existence of its office, it has instead become part of the problem, worsened the climate of corruption, and given cause for its abolition. By its blatant inaction and callous behaviour, it would seem as if it has been coopted by the corrupt. It seems that instead of apprehending the caravans of thieves, the Ombudsman has turned a blind eye and has allowed them to go on their merry way.

The gross inaction by the Ombudsman is one that must not be allowed or tolerated by the people and by the leaders of this country. Certainly, and at the very least, the Senate will not tolerate the Ombudsman's criminal negligence. The Senate's primary constitutional function is to pass laws; surely we can concentrate on that. We cannot punish corrupt officials, we cannot send them to jail. However, when the people's cry for justice and resolution to these problems remain unheeded, unanswered, and unaddressed by the Ombudsman, we will cast shame on the shameful, step up to the plate, and act.

To be sure, there are already serious and mounting calls for her resignation, and we support them. This Committee and this Senate are done repeatedly reminding her to act and discharge her duty. The Senate will not hesitate to exercise its power of the purse as well as other legislative and constitutional powers to enact wholesale reforms in the Office of the Ombudsman and remove its occupants, if not effect its de facto abolition. The Ombudsman must be held accountable for allowing people to get away with crime.

Our people are losing their patience. One time on a street of Tagaytay, a farmer, selling her produce, approached the Committee Chairman to tell him "sir napapanood namin kayo, ipakulong nyo yang Bolante na yan. Hirap na hirap na kami dito, at yang mga taong yan ay nagpapasasa lang pala sa kaban ng bayan," and that the Senate dispense with the formalities and just send the scoundrels straight to jail. Who can fault her? Our farmers and other needy sectors are being used by the corrupt as cover for their crimes. Our farmers are already on the streets. We must not stand idle. As if stealing from government wasn't bad enough, the nefarious acts of these corrupt people ended up victimizing the farmers: the real, direct and true victims of this scam. Again and again we read or hear of reports of graft here and corruption there - the recent World Bank report on collusion in the bidding process has again put our country's integrity in question. The Philippines has also been rated the most corrupt Asian economy by the Political and Economic Risk Consultancy (PERC). If we do not put a stop to corruption, we will be doomed to perpetual notoriety - a reputation most unfair to our people, millions of whom will be forced to find their future in foreign shores.

The anger of the people is palpable in the streets and in the fields. A social volcano is smouldering and unless we do something soon, it is bound to explode. It is hoped that we do not come to that - we still are a country of laws and not of men. But we must heed the voice of our people if we are to remain a Republic of the people.

Although it is our devout wish that there be less investigations by the Senate, there remains a duty to look at, and pursue the truth about serious allegations of many irregularities in government: the collusion among contractors and government officials in World Bank-financed infrastructure projects, the bribery allegations surrounding our drug enforcement agencies, the ZTE broadband scandal, and procurement anomalies in the Armed Forces of the Philippines, to name a few. We must get the rascals out of government.

We must stop the "coarsening of our political culture" that is facilitated by those who choose to be "silent witnesses to evil deeds." We will not accept scandalous behavior in government and in society. We will, instead, raise the standard of duty and accountabilty in our country.

The Blue Ribbon Committee will not hesitate to exercise political will in investigating and exposing malfeasance, misfeasance and nonfeasance. Those who are summoned must be forewarned that no one should trifle with the Senate and the Blue Ribbon Committee lest they be cited for contempt and get their just deserts. Fiat justitia ruat coelum.

Moreover, because of continued Ombudsman inaction, the Committee has been forced to break ground and file cases (and when justified, will continue to file cases) against corrupt government officials, as it has done against Bolante. The Committee Chairman is rather surprised that the case the Committee filed with the DOJ against the fertilizer fund conspirators has yet to proceed. If the information we have is correct, they are awaiting our Committee Report. Why they have to wait, why they cannot investigate on their own utilizing our leads or the information we have discovered, escapes us.

Why have there been so many brazen shootings and murders within the DA over the years? We, therefore, find it a moral imperative to call on the appropriate agencies to resolve and to report on the slayings of Marlyn Esperat and Teofilo Mojica and the shooting of Estelita Jardino. Ms. Esperat filed a case against officials of the DA regarding the P544M allegedly scammed out of government. It is reported that because of this, she was murdered in front of her children in cold blood. Mr. Mojica, was shot in the head, as were his wife, child, and niece in the early morning of last September 13. His murder has been connected with another anomaly in the DA, involving the misuse of P168M for fertilizers. They would have died in vain if we do not investigate, in aid of legislation, these tragedies, and what led to the murders.

The public, for a long time, has demanded closure to this issue. We have done our part. Now, let the prosecution arm of government do theirs. Lest this be misconstrued as passing the buck, we do this only because the Constitution and our laws, through the principle of separation of powers, have assigned the subsequent function of prosecution to other agencies of government.

In conclusion, the totality of what we have seen, heard, read and ferreted out in the Committee's inquiry provides us not just details of specific wrongs and mistakes committed by certain persons in the fertilizer fund mess. They also point to the bigger picture of corruption and greed that is so prevalent in national life not only today, but which has been intensifying over decades.

The bigger picture shows us the distressing spectacle of veritable wolfpacks preying with impunity on government projects, having access to colossal sums of public money, using power and influence without compunction, and perverting public office into an opportunity for abuse and gain. A host of individuals endeavour to gain at all costs: through lying, cheating, killing, and stealing. Many more are voting for the wrong people and for the wrong reasons.

These irregularities uncovered at the DA have been painful and costly to the nation. But they do not stop there. Indeed, at the very same time that we were conducting our Blue Ribbon inquiry, other Congressional committees were similarly engaged by scandals and irregularities in other agencies and sectors of public life. Since the object of our inquiry is to come up with legislation that can effectively combat the menace of graft and corruption in our country, we feel the need to say something here about the formidable challenge we face.

Let us not pretend that when the international media tags the Philippines as one of the most corrupt countries in the world, it's only the grafters among us who are under indictment. The label shames us all.

Nor is our problem only the way that others see us. Our people are coming dangerously close to believing that nothing can be done about corruption and greed in our country, that everyone's on the take, that it permeates all branches of government, and that working for a larger common good is impossible - and that Senate inquiries like ours will come to nothing.

We can no longer be silent and callous witnesses to rampant acts of corruption and remain blas´┐Ż and unaffected by the many storms of scandals that continually pummel our body politic. We can no longer tolerate the practice of the art of equivocation and pretense that breeds only suspicion and lies. Constant conflicts continue to sap our moral stamina and instigate our cynicism. A significant number believe the worst: that we have a flawed socio-political culture where judges and justices toe the administration line, where military officials will always say yes to those in power to ensure future employment in government. Independence of thought, belief, and judgment has become a rarity. Everyone is cowed by power, money, pelf, and influence.

The Senate must not allow this public cynicism to have the last word. But if we are to combat this culture of corruption and dispel this cynicism, we have to develop what one writer has called "a concept of enough." We have to say that this menace must be stopped for the sake of our own survival as a nation.

Change cannot be done overnight, or from a single inquiry, or a piece of legislation. But we believe that every step we take in the fight for integrity in government is a step forward to better governance. We believe that when we succeed in one resolute action to stop graft, we could set off or and inspire others to do the same. And sooner or later the time will come when all these efforts will gather together to become an irresistible force that will shatter the wall of graft and corruption in our country.

To this work and this goal, we in the Blue Ribbon Committee are committed!

Respectfully submitted:

Chairman:

RICHARD J. GORDON
Committee on Accountability of Public Officers
and Investigations (Blue Ribbon)

________________


1CR54, page 31
2CR 54, page 26
3CR 54, pp. 28-29
4CR54, page 33
5CR54, page35
6Committee Report No. 54, 13th Congress, p. 36
7Agpalo, Ruben E., Administrative Law, Law on Public Officers and Election Law, p.28, Rex Bookstore, 2005 citing Juat v. Land Tenure Administration, 1 SCRA 361 (1961) and Carpio v. Executive Secretary, 206 SCRA 290 (1992)
8Committee Report No. 54, 1 March 2006, 13th Congress of the Senate, p. 13

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