Friday, January 14, 2005

Get Real : A Perfect Place to Start Anti-Graft Drive

By: Solita Collas- Monsod
Inquirer News Service Editor's

Note: Published on page A12 of the January 8, 2005 issue of the Philippine Daily Inquirer

THE CHAIRMAN of the Board of Trustees of the corporation gets a P100,000 monthly "allowance." The Treasurer of the Board and the Chairman of the Management Committee each get P70,000 a month, also in "allowances." These, aside from their per diems of P20,000 per board meeting, and all fixed by various resolutions of the board.

Must be a pretty profitable, private corporation, yes? Well, we're talking about the APO Production Unit Inc., which does printing for government offices, particularly security printing. But whether APO is a private corporation or a government-owned or -controlled one depends on whom you are asking, and for what purpose.

Gerry Sicat, one of the original incorporators of APO (it used to be called APO-Neda) says that it is a government instrumentality. So does the Department of Justice in an opinion (No. 52, S.1975) rendered by the late Catalino "Mac" Macaraig when he was acting justice secretary. So does the1997 Manual of Procurement of the Commission on Audit ("the APO is not aprivate entity but a government instrumentality").

The chairman of the board of trustees was the National Economic and Development Authority (Neda) Director General for many years, until Neda asked that APO be either attached to another agency or privatized. Since then, the chairman and members of the board have been chosen by the President of the Philippines (not a direct appointment but expressed in an "It is my desire..." letter that is carried out).

On the other hand, when he was the Ombudsman, Aniano Desierto dismissed a case brought against some APO officials by the labor union on grounds thatthe Ombudsman had no authority to rule since APO was a private entity. He apparently changed his mind later and considered it a government instrumentality, but I'm not clear on this.

More recently, I have been given to understand that the Privatization Management Office assumes that it is a private corporation that was taken over by government (based on the fact that it was under the AssetPrivatization Trust, or APT) because it was unable to pay its debts to the Philippine National Bank. Which brings us to the second issue. Is APO so profitable that it can afford such largesse to its board of trustees? And there, the answer is unambiguous. It has been losing heavily (although its labor union says it would be profiting, if it were run properly instead of being treated as a milking cow).

I asked Budget Secretary Emilia Boncodin what she knew about APO, and she told me that: the latest APO financial statements she saw showed heavy losses and an industry study shows that APO is one of the highest-cost printing enterprises. Not to make too fine a point about it, APO is in deep s__t financially. And this has been going on for a long time. It borrowed heavily to buy new machines and equipment (importing them tax free, as a government entity), and as early as 1987, was already deep in arrears, and was never able to get out of it, in spite of the heavy demand for its services. By the time it was transferred to the APT in 1996, its accumulated unpaid loan account amountedto P210.896 million.

Why has it not been able to turn itself around?

An example, taken from the findings of a Commission on Audit (COA) special audit, makes the answer obvious (one has to read all the COA special audit reports to fully appreciate the extent of mismanagement): checks amounting to P16.6 million were issued to two non-employees who were allegedly close relatives of the APO internal auditor as payment for their "fair incentive" commissions for 1996 to 1998. That's a lot of money.

However, the commissions were paid for sales to government agencies (e.g.,Philippine Postal Corp., Bureau of Internal Revenue, National Statistics Office, Department of Trade and Industry), which are really captive markets. No special effort is required to get these orders, particularly because the National Printing Office doesn't have comparable equipment. But guess what? The board of trustees at the time apparently allowed commissions to be paid anyway.

There were additional complications. It seems these two relatives who earned the P16.6 million over a three-year period were full-time employees in a private company and had separately applied for and received from the Social Security System salary loans for P9,000, duly deposited in their savings accounts, during the period when they were supposedly earning all those millions. Neither of their bank accounts showed any deposits of the checks they supposedly received as commissions.

Pretty damning evidence, if you ask me. Yet, the internal auditor involved still holds the same position up to now. As a matter of fact, all but one ofthe seven APO officials charged long ago with irregularities are still very much in power and holding the most crucial positions: general manager, accounting, auditing, sales.

Just last year, the general manager was again the subject of the same kind of complaint by the labor union, a complaint which, it seems, was dismissed by the Board of Trustees, even as some members of the board were not furnished a copy of the reply of the general manager.

Is it any wonder that the company is in a deep financial mess?

Yet in spite of this, the Board of Trustees gives itself allowances that would make a private corporation envious.

President Gloria Macapagal-Arroyo has called for "urgent change." She has also pledged to "take executive action to break the culture of corruption. " Well, APO is a perfect place for her to start.

No comments: