Sloppy handling of STL shares revealed

MANILA, Philippines (July 19, 2011) - The Philippine Charity Sweepstakes Office (PCSO) has no way of knowing whether the shares of small town lottery (STL) income it distributes to the localities go to intended beneficiaries.

This was revealed yesterday during the fifth Senate hearing on the PCSO fund anomalies.

Local governments, congressional district and the local police in areas where STL operation exists are entitled to fixed percentage shares of the income. This shares are supposed to go to charity and health related projects of each entity. But PCSO has no airtight mechanism to monitor where the money really goes.

Senator Panfilo Lacson questioned why congressmen should be receiving shares at all.

The reason for the share to the congressmen is that they become the conduit of the PCSO financial support closer to the area of intended recipients, PCSO board member Lawyer Aleta Tolentino, member of the PCSO board, said of 2.25 percent share given to congressional districts.

But under the present scheme, loopholes abound and the share of the congressional district could easily end up in the private pocket of a congressman who is not compelled to submit liquidation report.

“How is it disbursed, to whose bank accounts would 2.25 percent of net receipts go?” Lacson said.

Asked by Sen. Francis Escudero how the funds were given, PCSO general manager Ferdinand Rojas II explained “we (PCSO) do not give it ourselves but the STL operators.”

Escudero noted that the STL was patterned after the illegal numbers game jueteng where the police and local officials, including congressmen, get shares from the proceeds.

Rojas said the PCSO is trying to correct certain procedures on the percentage sharing in the STL operations via the revised Loterya ng Bayan.

Lacson, a former police chief had defended the Philippine National Police (PNP) over its share on STL funds, saying the police are at the forefront of anti-jueteng operations.

“I would understand that the PNP would get their shares because they are part of the campaign against jueteng. The LGUs I can also understand because they are part of the drive. But what role do congressmen play to help flourish STL operations as opposed to jueteng?” Lacson said.

The COA and PCSO have not received any liquidating instruments from congressmen concerned over their disbursements of STL percentage shares since the operation started in 2006.

“From 2006 to the present, have you received any of the liquidating instruments from any of the congressmen concerned?” asked Lacson, to which Tolentino replied in the negative.

Under the STL rules, Tolentino said STL operators are tasked to give the certain percentage to congressional representatives.

“You have no way of monitoring how much in pesos and centavos go to the congressmen concerned,” Lacson said.

Tolentino explained the funds provided to congressmen are the current subject of a COA audit after state auditors observed that the books on STL operators are not in accordance with accounting and auditing principles.

Citing a COA report, Blue Ribbon committee chairman Sen. Teofisto Guingona noted that the PSCO directly remitted the shares to individual members of the House of Representatives from December 2007 to March 2008.

“In view of the remittances of STL operators to PCSO representing the congressional district shares from period 2007 to March 2008 amounting to P7 million showed that PCSO directly remitted to individual members of the House of Representatives instead of releasing them to hospitals and health facilities,” Guingona said.

Rojas said the PCSO will provide the Senate with the list of congressmen-recipients in the next hearing.

In the PCSO website, it was revealed that STL generated revenues totaling to more than P3-billion in its first year of operations from 2006 to 2007.

Under the STL charity fund sharing scheme, revenues accruing to STL will be divided as follows: city or municipality, 10 percent; provincial government, five percent; congressional district, 2.5 percent; and PNP, five percent.

The website also said the PCSO has launched STL in 15 approved test run areas, namely Quezon province, Angeles City, Bataan, Occidental Mindoro, Pampanga, Laguna, Bulacan, Negros Oriental, Iloilo City, Tarlac, Oriental Mindoro, Ilocos Norte, Albay, Olongapo and Batangas.

Nothing wrong

Manila Rep. Amado Bagatsing, chairman of the House committee on games and amusement, said he was not aware of the mechanics to account for the contributions from the STL operations of PCSO to lawmakers but saw nothing wrong in the practice.

Bagatsing said he is not a recipient of contributions from STL operations since the game does not operate in Manila.

“This arose from a circular or directive from the PCSO that LGUs, PNP units and lawmakers will be given a contribution from the STL during its experimental stages,” Bagatsing said in a telephone interview. “I’m not sure exactly how this would be liquidated.”

“But these assistance are very welcome. The poor people in our districts do not distinguish from executive officials and lawmakers. All they know is that ‘we voted for you, so you should help us’,” he said.

PNP’s share

Senators summoned yesterday top officials of the PNP and the PNP’s resident auditor to explain how the PNP utilized the multi-million funds it was receiving purportedly out of its shares from operations of the STL.

Blue Ribbon chairman Guingona said the PNP and COA officials concerned will be invited to the sixth hearing on Tuesday next week or a day after President Aquino’s second State of the Nation Address (SONA).

Guingona also wanted an audit of the authorized STL operators nationwide to determine the process of how much was given to the police.

“The chair would like to direct the COA to conduct an audit of the authorized STL operators to find out if it is true that there were funds given to PNP local accounts. Did these funds go to them? (we want to know) if such were used properly,” Guingona said.

At the start of the hearing, Rojas noted that five percent of the PCSO’s charity fund has been allocated for the PNP, broken down as follows: O.5 percent to the PNP headquarters at Camp Crame, 0.5 percent to the regional PNP offices, one percent to the provincial PNP offices, and three percent divided among the city and municipal PNP.

“They are supposed to get it on a monthly basis,” Rojas told the committee after his brief presentation on how the PCSO under the new leadership of chairman Margarita Juico improved in terms of performance.

Lawyer Fidela Tan, of COA, said the distribution of STL funds to the PNP started in 2007. However, the COA had not given any audit papers regarding these funds.

“We do not know, sir,” Tan said when Guingona asked if COA knew if the PCSO-STL funds go directly to the PNP local offices where there were STL operations.

Rojas said the PCSO also had no way of verifying if the PNP local offices’ share are indeed given by the STL operators.

Run, Gloria Run campaign

Lacson also confronted former PCSO general manager Rosario Uriarte why the agency used funds to campaign for former President Gloria Macapagal-Arroyo in 2004.

The senator said about P2 million in funds were coursed through the so-called Gawin Natin Lakas Pinoy, which was behind the “Run, Gloria Run!” posters prior to the elections.

Uriarte initially did not recall the group but was forced to answer questions when Lacson reminded her that the group’s leader – Raul Nestor Ancheta – was her former chief of staff.

“Don’t you have any due diligence to know if the money was going to charity? No matter how I look at it, it wasn’t used for charitable purposes,” Lacson told Uriarte.

Lacson also asked why funds supposedly requested for purchase of ambulances in 2003 were used for a motorcade.

PR funds

Meanwhile, about P7.2 billion was spent by the PCSO for advertisements and promotions from 2005 to 2010, P1.1 billion of this during last year’s elections.

“The former administration spent P7.2 billion in advertisements and promotion (for) online lottery games from 2005 to 2010. In 2010 alone, the PCSO spent P1.1 billion from January to July and just P115 million (from) in August to December 2010,” PCSO director Tolentino told the Blue Ribbon committee.

Tolentino added that only P540 million of the PR allocations remain unpaid.

Uriarte, who approved the disbursements, invoked her right against self-incrimination.

Tolentino revealed during the Senate hearing that the PCSO also shelled out money to produce “teleseryes,” or television drama series, and the “Dial M” program of the PCSO, aside from TV, radio and print ads.

Rojas assured the senators they were implementing reforms to prevent a repeat of such massive PR spending. (From phistar.com, Vox Bikol)