[Exclusive] Ex-Nabcor execs copied Napoles pork barrel scam
MANILA, Philippines – In December 2006, while the Senate was still in the thick of its probe of the P728-million fertilizer scam and Janet Lim Napoles and her staff were reportedly busy forging signatures for the pork barrel scam, the Department of Agriculture (DA) silently downloaded P300 million (roughly $15 million) to the National Agri-Business Corporation (Nabcor), a little known and less monitored government agency.
The P300 million downloaded to Nabcor was taken from the DA’s special fund, dubbed Ginintuang Masaganang Ani (GMA) Fund. It covered rice and corn, livestock, and seeds projects. It was also from GMA that the P728-million fertilizer fund scam was sourced.
A special audit report, covering years 2007-2011, recently showed that some P1.4 billion of pork barrel was downloaded to Nabcor, which was in turn siphoned off to dozens of NGOs, including those that served as fronts for Napoles. (Read: Nabcor execs, 'NGOs' told to refund P1.45B)
The Nabcor president at the time, Alan Javellana, tasked Elvira Castelo, then Nabcor’s vice-president for management and institutional services, “to be the focal person” in one of the components of the P300-million GMA Fund. This was the Technical Studies fund amounting to P105 million (US$5 million).
In her affidavit submitted to the Department of Justice (DOJ), Castelo said Javellana ordered her “to look for NGOs who appear to be capable of conducting the required technical studies.” She did as she was told and came up with 8 supposed non-governmental organizations to carry out the task of implementing the P105-million Technical Studies fund.
But another Nabcor employee, Rhodora Mendoza, in a separate affidavit, claims that these 8 NGOs were actually favored ones. But that's not the reason why the transaction was anomalous.
Apart from the NGOs being already “pre-selected by top Nabcor and DA officials,” Mendoza said the supposed technical studies to be conducted by the NGOs were actually prepared by Nabcor employees, “taken from the Internet in a cut-and-paste manner,” her affidavit said.
Castelo confirmed this. In fact, it was she, on Javellana’s orders, who facilitated the preparation of technical studies, instead of the contracted NGOs. “I did as instructed and submitted to Mr Alan Javellana an output.”
Her report to Javellana would later provide a legal cover in the misuse of the P105-million fund.
President Benigno Aquino III in early 2014 had approved the recommendation to abolish Nabcor, along with two other government-owned and controlled corporations, Philippine Forest Corporation and ZNAC Rubber Estate, which had been tagged as conduits of pork barrel allocations.
Money went to Nabcor chief?
Mendoza worked in Nabcor from 2006 to 2011, and by the time she left the agency, she was the vice president for administration and finance. Castelo, for her part, was vice president for management and institutional services.
Mendoza was among the respondents in the first batch of those charged with plunder in relation to the pork barrel scam. In her affidavit, Mendoza said that the P300-million GMA Fund that was downloaded to Nabcor by the DA was divided into 5 major components.
- Technical Studies, amounting to P105 million
- Complete Rice Meal Package, P99.9 million
- Agri-based Livelihood, P65 million
- Farm Inputs, P15 million
- Nabcor’s Management Fee, P15 million
“The implementation of this GMA fund was anomalous, and the fund was deliberately misused to benefit certain government officials,” she said.
On the misuse of the P105-million Technical Studies fund, Mendoza, in her affidavit, tagged Nabcor Undersecretary Jesus Emmanuel Paras as Javellana’s partner in pulling off the scheme. Paras, she said, “was the one who signed the certificates of acceptance of the several technical studies despite knowledge that these studies were the outputs of Nabcor employees. He was the one providing directives to Castelo in the selection of the NGOs.”
On paper, the release of money to the NGOs appeared above-board, following the usual procedures of payment in tranches. But the anomaly lies in transactions after payments were deposited in the accounts of the NGOs.
Mendoza said after receiving the payments, the supposed NGOs retained 3% of the funds and remitted 97% to Castelo's bank account. “In turn, Castelo would remit to Javellana undetermined amounts she received from the NGOs,” Mendoza said.
Rappler tried to get Javellana's side through a family member, but calls and text messages went unanswered. He has remained at large and out of public view, and has instead assigned a son to represent him in all cases against him.
Castelo echoed Mendoza’s narration. “I was informed by Mr Javellana that the NGOs will remit back a total of 97% of the fund paid out to them, and asked me to use my personal bank account wherein these NGOs can deposit the amount corresponding to the 97%. I reluctantly agreed to this request,” Castelo said in her affidavit.
“Every time an NGO makes a deposit in my account, Mr Javellana would instruct me to withdraw such amount. There were times also that the NGOs would hand to me the amount in cash instead of depositing it in my account and immediately turn over the same to Mr Javellana,” Castelo added.
In total, Castelo said she remitted about P96.6 million to Javellana as part of his share of the P105-million Technical Studies fund.
Portions given to lawmakers?
In her affidavit, Mendoza said that part of the kickbacks received by Javellana were farmed out to several congressmen. She personally handed the money to the legislators' representatives “after the usual telephone conversations to confirm their identities.”
She said Javellana gave her a handwritten list with the names of the congressmen and the corresponding amount they were supposed to get. The list is now with the the DOJ.
Levito Baligod, counsel for some of the whistleblowers in the pork barrel scam case, has submitted Mendoza and Castelo’s affidavits to Justice Secretary Leila de Lima. The NBI is looking into the case.
Baligod said estimates show that more than P10 billion in public funds may have been misused and abused in Nabcor, allegedly perpetrated by its former head.
During a Senate hearing, Javellana confirmed to senators that they failed to vet the NGOs that cornered the pork barrel channeled through Nabcor and at one point, agreed that they were “fooled” all along. (Read: Nabcor, ZREC funded NGOs without vetting)
After that appearance, Javellana skipped a second scheduled hearing in 2013. Senate Blue Ribbon chair TG Guingona said he could not contact Javellana's phone.
Ombudsman records showed that Javellana has authorized his son, Andrew, with a special power of attorney (SPA) to represent him in any criminal, civil or administrative cases against him. It was the younger Javellana who filed his counter-affidavit before the Ombudsman for the plunder charge.
In that counter-affidavit, Javellana maintained that he only signed documents as part of his ministerial duty and was not obligated to examine in detail all the Nabcor transactions. He said he merely signed all documents upon the recommendation of his subordinates.
Javellana said he “did not in any way receive directly or indirectly any commission, gift, share, percentage, kickbacks or any other benefits from any person in connection by reason of his position.” He also argued that his name did not appear in Luy’s ledger.
But the affidavits of Mendoza and Castelo indicate Javellana and other Nabcor officials were not just passive actors in the plunder of the entire P300-million GMA Fund, but may have also learned a trick or two from Napoles herself.
Where did the rest of the P300-million GMA Fund go?
According to Mendoza, the P99.9 million ($5 million) Complete Rice Package component went to a favored supplier, Agri-Component “without the benefit of public bidding and the items were overpriced.”
Javellana allegedly told Mendoza that P50 million ($2.5 million) of this package would be used to help in the confirmation of then Agriculture Secretary Arthur Yap before the Commission on Appointments. “We were pressured to affix our signatures on the disbursement vouchers even without the necessary supporting documents,” she said.
She said one Elmer Baquiran, who is connected with Agri-Component, confirmed to her that P50 million would go to Yap’s confirmation drive. “Mr Baquiran, to my surprise, intimated to me that he had to immediately deposit-encash the check because similar to what Mr Javellana told us, the money was needed for Secretary Yap’s confirmation as Secretary of the DA.”
In previous reports, Yap, now Bohol congressman, strongly denied the allegation. "Nobody asked money from me and I did not also pay anyone any money. I was confirmed as secretary of agriculture. It was a bipartisan act. That means both administration and opposition [officials] — they all voted for my confirmation. So let's be very clear. That is also factual. Nobody asked money from me," Yap told the Freeman newspaper in an earlier interview.
A cursory check of the members of the bipartisan panel that confirmed Yap showed they were the same people tagged in the pork barrel scam. They include former Representative now Court of Appeals justice Danton Bueser, who chaired the CA agriculture panel then, former representative Prospero Pichay, former representative now La Union Governor Manuel Ortega, and Senator Jinggoy Estrada.
Cleared by COA?
In the 2007 Commission on Audit (COA) report on Nabcor, the audit agency raised red flags on the Nabcor consultancy projects. It observed that funds for the technical studies were awarded to the NGOs “without the benefit of a public bidding.”
The NGOs were listed as follows:
- Mindoro Kabuhayan Foundation Inc, for fishery and corn studies, with a total grant of P20 million
- Center for Mindoro Integrated Development Foundation, for dairy and rice studies, P20 million
- Agrinomics Technical Services Inc, for upland and lowland vegetables studies, P10 million
- The Likhaan Group, for processed food studies, P10 million
- Hugpong Kinaiyahan, for plantation crops studies, P10 million
- Sustainable Cooperation for Equitable Enterprise, for cattle studies, P10 million
- Isabela Polytechnique Cooperative, for poultry studies, P17.5 million
- Kabuhayan at Kalusugang Alay sa Masa Foundation Inc (KKAMFI), for agri-development studies, P7.5 million
Of these 8 NGOs, KKAMFI got separate pork barrel releases amounting to P50.44 million in 2007. (A close examination of the incorporators behind KKAMFI showed they were also behind 3 other NGOs that partook of the pork barrel funds in 2007. In all, in 2007, these 4 NGOs with interlocking officers got P113.98 million from the Priority Development Assistance Fund of at least 9 congressional representatives whose pork barrel was coursed through Nabcor.)
According to a COA special audit report for 2007-2009, KKAMFI, which received over P525 million in that 3-year period, gave 3 suspicious addresses, one of which was non-existent. According to the COA special report, 4 of KKAMFI's officers are linked to up to 6 other anomalous NGOs that operated during those years: Marilou Antonio, Godofredo Roque, Myra Villanueva, and Marilou Ferrer.
The Kidapawan City-based Hugpong Kinaiyahan was also a recipient of a separate grant of P10.5 million to conduct a “comprehensive study through the conduct of an in-depth assessment on viable and sustainable business opportunities for white corn products.”
Like the technical studies grant farmed out to the NGOs, the contract was also awarded to Hugpong Kinahiyaan “without the benefit of public bidding,” the COA noted.
On further examination, the COA also observed that Nabcor failed to require the NGOs to submit financial statements for the past 3 years, showing their total and current assets and liabilities. This is required under the implementing rules and regulations of RA 9184 or the Government Procurement Reform Act.
In its reply to the COA observations, Nabcor officials said the technical studies “required a specialized degree of technical expertise,” thus the agency resorted to “alternative method of procuring consultancy services other than public bidding.”
As to the separate consultancy grant of P10.5 million to Hugpong Kinaiyahan, Nabcor justified the rush to award the contract, saying, “There was an urgent need to conduct the study on white corn since this will serve as one of the valuable references in coming up with the 2008 plans and programs for the GMA-Corn.”
Rappler dug into the records of these NGOs and drew some interesting findings:
- Out of the 8 NGOs, only two have submitted their financial statements to the Securities and Exchange Commission. They are KKAMFI and Mindoro Kabuhayan Foundation Inc. This belies the claim of Nabcor that the NGOs had been vetted for their capacity.
- Two NGOs – Agrinomics Technical Services and Hukbong Kinaiyahan – are not registered with the SEC.
- The registration of a third one, Isabela Polytechnique Cooperative, has been revoked by the SEC.
- Only one of the SEC-registered NGOS has a capitalization of P1 million. The rest have capitalizations ranging from P5,600, to P11,000 to P500,000.
- One of the NGOs, Likhaan Group, was incorporated only a few months after bagging the Technical Studies contract. It was registered only in December 2006, with a capitalization of P5,600.
- In 2012, KKAMFI supposedly operated with a loss of P1 million. It cornered P14.1-million worth of projects that year, but posted higher operational and administrative expenses.
- Among the NGOs, only Mindoro Kabuhayan Inc appeared to be in the pink of health. Its retained earnings for 2011 amounted to P23.6 million.
In its 2008 status report on the implementation of its prior year’s recommendation, COA put the issues to rest by saying Nabcor had implemented its recommendation. This, however, only refers to the faulty recording of the Fund in a different account. The COA report said Nabcor had complied with the correction.
The case of the P105-million Technical Studies fund, however, simply wouldn’t die down.
Other GMA Fund components
Meanwhile, referring to the P65-million Agri-based Livelihood component, Mendoza said the money was cornered by 3 favored NGOs – Kaagapay Magpakailanman Foundation (P5 million); Kalinga sa Kapwa at Kalikasan Foundation Inc (P20 million), and Kapuso’t Kapamilya Foundation Inc (P40 million) – without any public bidding.
“The release of the checks was facilitated and without the necessary supporting documents because, according to Nabcor President Alan Javellana, the Secretary (Yap) instructed him to do so,” Mendoza said.
Like in the pork barrel scam perpetrated by other NGOs, the projects involved ghost beneficiaries. Mendoza said this was validated by the special audit conducted by the COA.
The same scheme was perpetrated in the P15-million Farm Input which was cornered by Dayot Plant Nursery, also without the benefit of public bidding, Mendoza said. “The release of the check was facilitated and without the necessary supporting documents.”
The last component of the P300-million GMA Fund, which was Nabcor’s management fee amounting to P15 million, was used to cover up for the “unauthorized reimbursements and expenses” and payment for ghost employees of Nabcor, Mendoza said.
She recounted that when former senator Mar Roxas started questioning the GMA Fund before, she, Castelo and director Ricardo Cachuela were summoned to a meeting in EDSA Shangri-La Hotel by Undersecretary Bernie Fondevilla. There, they were coached “on what answers we will give to the possible questions of Mar Roxas in relation to the legislative inquiry being conducted.” – Rappler.com
*Note: We used the prevailing peso-dollar exchange rate in February 2007, the time the money was downloaded to Nabcor.