MANILA, Philippines – Bringing scissors, scotch tapes, and pens, they went to “class” on Saturdays.

This class was held, students claimed, within the gated compound of the Visayan Forum (VF), an internationally acclaimed anti-trafficking organization based in Cubao, Quezon City. Their instructor? No less than VF’s multi-awarded founder and executive director, Cecilia Flores-Oebanda, said the “students” – former VF employees – before the National Bureau of Investigation (NBI).

Saturday for them was their “doctorate day” – but they didn’t mean the academic degree. The former VF employees, who are now NBI’s witnesses, said they devoted Saturday to doctoring receipts – to justify up to P210-M (US$5.1-M) in allegedly misused donations from the United States Agency for International Development (USAID).

While an audit went on from March to July, witnesses said VF employees used adhesives, such as scotch tapes, and other materials to tamper with receipts. The weekly “doctorate days” allegedly produced around 35,000 falsified documents in 35 boxes that the NBI seized in a raid last August 31.

“According to the employees whom we talked to in the office, as well as the witnesses, they had a day designated to make the receipts, to fabricate the receipts, that they called ‘doctorate day.’ Doctoring of documents, that was every weekend, to comply with the requirements of the auditors, because the auditors would come on weekdays,” said NBI anti-graft chief Rachel Marfil Angeles in an interview with Rappler. (Editor’s note: Angeles is now on study leave.)

Rappler also spoke with people from VF who said “doctorate days” indeed took place. One of them said at least 10 employees doctored receipts every Saturday.

In a historic case, VF now faces a fraud accusation by USAID, a leading development agency of the US government that funds a global campaign against prostitution, forced labor, and other forms of modern-day slavery. Once hailed as one of the US government’s “heroes” against human trafficking, VF is the Philippines’ leading non-government organization (NGO) against the $32-B dollar global and illegal trade.

VF, for its part, has denied the fraud accusation. The group has insisted that the former bookkeeper, Maria Analie Villacorte, appeared to have falsified receipts, and wanted to escape prosecution by pinning down her former boss.

Sources said the controversy has triggered various resignations. Disillusioned about the multi-awarded organization, up to 11 staff members have resigned upon learning of these anomalies.

Oebanda’s instructions?

The atmosphere in VF reportedly changed weeks before March, when a USAID-commissioned auditor began to probe the NGO’s expenses from 2005 to 2011.

The NBI said that based on witnesses’ testimonies, Oebanda called 5 bookkeepers to “fill in the gaps” from funds unaccounted for. This startled VF officials, according to Angeles, because some funds remained unliquidated even as the auditing period drew near.

“Nu’ng alam ngayon nila na mag-o-audit na, nagmamadali ngayong silang i-liquidate ‘yung mga gap ng budgeting,” Angeles said. (When they learned that auditing was about to happen, they rushed to liquidate the gaps in budgeting.)

Rappler sources said that at a strategic planning session, VF officers announced that they needed to liquidate expenses. They said for this, some employees had to be pulled out from their everyday duties.

USAID is known to be strict in accounting for funds, but in VF’s case, Angeles said the aid agency did not ask too many questions in releasing donations. VF was sometimes even late in reporting its yearly expenses, Angeles said.

“Hindi na naghintay ang USAID na ‘yung past year ay magbigay ka ng liquidation. Hindi na. Dire-diretso ang dating ng pera, kasi every year naman nagbibigay sila ng proposal sa activities nila, at taun-taon, tumataas ang cash requirement nila. Binibigay naman ng USAID ‘yon,” Angeles said.

(USAID did not wait for a liquidation of expenses for the past year. It didn’t. The flow of money was unrestricted, because every year, they gave proposals of their activities, and every year, they had a higher cash requirement. And USAID gave it all.)

USAID’s donations amounted to P300-M (US$7.3-M). “Napakalaki ng tiwala na binigay sa kanila,” Angeles said of USAID’s attitude toward VF. (They trusted them a lot.)

But she said VF broke this when it instructed some employees, including Villacorte, to falsify receipts to justify VF’s expenses.

The falsification of around 35,000 documents, said Angeles, required a team effort. She said Villacorte could not have done it alone.

“Una, saan siya kukuha ng pambili ng mga resibo? Kasi bumili ng old receipts, used receipts… At saka sa dami ng mga dokumentong ‘yon, hindi niya kayang gawin mag-isa ‘yon,” Angeles explained. (First, where will she get money to buy the receipts? Because they bought old receipts, used receipts… And with the huge number of documents, she could not have done that alone.)

Also, what did the bookkeeper stand to gain from faking receipts, according to Angeles?

The NBI official said Villacorte was merely a bookkeeper, not a custodian of funds. It was the finance officer and finance manager who handled the money, said Angeles. Villacorte supposedly handled only the paper work.

“Wala namang binibigay sa kanya ang USAID. Wala,” Angeles said. (USAID gave her no money. Nothing.)

Bookkeeper’s ‘cover-up’

But VF tells another story. In an interview with Rappler, VF lawyer Laurence Arroyo said USAID was stricter than the way NBI’s witnesses portrayed it to be.

Arroyo said USAID gave its donations monthly, “and USAID would not release the funding for the next month unless you liquidate your report for the previous month.”

He said it was the job of the bookkeeper, Villacorte, to prepare a liquidation report that specifies how money was spent, based on official receipts. The liquidation was supposed to go through the finance manager, then through Oebanda for final signing.

He noted that USAID required only a monthly liquidation, not audits, until late 2010. That was when “USAID said that since our funding has exceeded a certain amount, we will require an audit.” Arroyo said this could have alarmed the bookkeeper.

“It seems now, based on her own testimony, that there were some lacking receipts, and that she had to falsify them to cover up for the previous years,” Arroyo said.

But could Oebanda not have known about the missing receipts? She is, after all, the VF president.

Arroyo said no, because it was not Oebanda’s job to scrutinize receipts one by one. “That’s how the process is. You just trust that in this instance, the bookkeeper has been doing her job, because she’s been preparing a monthly report.”

He stressed that Oebanda never instructed Villacorte to falsify receipts. “She was never told to fake anything. That’s against the law. She faked it on her own to cover up her failure,” said Arroyo, adding that Villacorte could have refused if Oebanda ordered her to fake financial documents.

And what about the 35 boxes that the NBI confiscated during the raid? When the NBI found these boxes, agents saw them stacked in a work area inside the VF compound.

Arroyo said VF never knew about these boxes allegedly containing faked receipts, until the NBI seized these. If the foundation did, “wouldn’t they destroy those?”

It was Villacorte who knew about these, said Arroyo. But he questioned why the NBI did not sue the bookkeeper. He said even if the person was meant to to be made a state witness, prosecutors should “charge that person first.”

Arroyo also said VF was never informed about the final audit report on VF, on which USAID based its request to seize the VF office.

He said the auditor, the Cavite-based firm BF Medina, “had an obligation to inform Visayan Forum about their findings, and again to give Visayan Forum the opportunity to explain whatever findings they thought were irregular or improper.”

“That never happened,” Arroyo noted, even as it was VF that picked BF Medina from USAID’s list of proposed auditors. Angeles, however, said VF received a copy of the final audit report. 

Arroyo also said it was “un-American” for USAID not to ask the side of VF first; he said Americans commonly appeal to “a sense of fair play.”

“You’ve been partners for 6 years in this fight against trafficking, and then wala ka man lang pasabi na pinaiimbestigahan n’yo na pala ang partner ninyo. Hindi n’yo man lang tinanong kung totoo ba ‘tong nangyari,” Arroyo explained.

(You’ve been partners for 6 years in this fight against trafficking, and then without any warning, you had your partner investigated. You didn’t even ask them if the allegation was true.)

More witnesses

A first in Philippine history, the case is now under preliminary investigation before the Department of Justice.

The NBI said more witnesses will surface in the coming days, with 10 more people having filed affidavits to support Villacorte’s statements.

The VF camp, on the other hand, said it is first bent to challenge the search warrant that led to the August 31 raid. On September 28, the NGO filed a motion to quash the search warrant and, consequently, to return the confiscated items to VF’s custody.

Angeles said the case has a negative effect on the Philippines’ relations with USAID.

“Nahihiya rin tayo, kasi tinulungan na nga tayo eh. Tapos ang return natin, panloloko. Eh ‘di parang nakakahiya, being Filipino. Ito ngayon ang chance naman natin, tulungan naman silang magkaroon ng justice, na ‘yung may kasalanan, maging liable naman,” Angeles said.

(We feel embarrassed, because they’ve been helping us. Then what we give in return is fraud. That’s embarrassing, being Filipino. This is now our chance to help them achieve justice, that those at fault would be held liable.)

Arroyo, on the other hand, lamented the case’s impact on VF’s beneficiaries. “The sad part is, with all these allegations, the work at Visayan Forum has been affected, and together with that would be the beneficiaries, the victims of trafficking,” he said.

Did VF order its employees to falsify receipts? Did “doctorate days” really happen on Saturdays? Both sides brace for a prolonged court battle. – Rappler.com

For related stories, read:

• Visayan Forum: From U.S. ‘hero’ to foe
• Battle over Visayan Forum’s 35 boxes
• UN envoy warns about human trafficking in PH
• USAID sues PH’s top trafficking fighter
• NGO could face more charges, say probers
• Visayan Forum and NGO ‘corruption’