Fertilizer fund scam

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The Fertilizer Fund Scam is a political scandal involving the officials of the Department of Agriculture (DA) and a number of other local and national government officials during the Arroyo administration regarding the misuse of agricultural funds amounting to P728 million and P1.1 billion, which were released in February 3, 2004 and February 11, 2004 respectively. Said funds were allegedly utilized to finance former President Gloria Macapagal-Arroyo’s campaign before the May 2004 presidential elections.

Contents

Origin

In 2003, Marlene Esperat, an employee of the Department of Agriculture’s resident ombudsman in Central Mindanao filed a graft complaint against then agriculture secretary Arthur Yap, then Undersecretary Jocelyn Bolante, and several others in connection with alleged irregularities in a P432-million fertilizer deal.

Esperat who later became a columnist of a provincial newspaper, was shot dead in her home in Sultan Kudarat on March 24, 2005. The suspected masterminds, alleged to be officials of the agriculture department office in Central Mindanao, remain at large. Likewise, Teofilo Mojica, a member of the board of directors of the DA employees association then, and his wife and daughter were killed inside their house in San Jose del Monte, Bulacan, on September12, 2008.

Mojica allegedly had in his possession disbursement documents that would link two Agriculture finance officers in Region 12 to a P168-million anomaly in that regional office. In addition, KMP-Panay leader Nilo Arado was abducted in April 2007 while KMP-Pampanga leader Ofelia “NanayPerla” Rodriguez was shot to death in front of her family in January 2006.

Background of the Case

Two months before the May 2004 presidential election, Arroyo, who was running for election, was accused by several politicians of “virtual vote-buying” by approving the release of P728 million to favored officials to buy farm inputs like fertilizer and pesticide for their constituents, as part of the Ginintuang Masaganang Ani project thru a Special Allotment Release Order (SARO) in February 3, 2004.

Another component of the GMA Project is the P1.1 billion, released on February 11, 2004 supposedly for “maintenance and operating expenses.” However, farmers from Central Luzon and all over Mindanao attested in consequent investigations that they did not receive a single centavo from the fertilizer fund. Instead, both of these funds, according to former Solicitor General Fancisco Chavez, went to legislators, governors and mayors to support the president’s election. He said while referring to a list obtained from the Department of Budget and Management (DBM), that the P728 million, in the form of actual cash or farm inputs, was disbursed to 105 congressmen, 53 governors, and 23 city and municipal mayors.

Results of Investigations

DA insiders, Commission on Audit investigators, and farmers’ groups found out that a part of the P1 billion from the Marcos fund confiscated by the government was transferred from the Department of Agrarian Reform (DAR) to the DA in April 2004. The Philippine Center for Investigative Journalism (PCIJ) research also shows that as much as P5 billion from the government treasury is said to have been used to promote Arroyo’s candidacy. Other sources included the Overseas Workers Welfare Administration (OWWA) Fund and the Motor Vehicles User’s Charge.

The Ombudsman and the COA have so far discovered that at least P120 million found its way to 15 obscure or nonexistent private foundations that had nothing to do with agriculture. Other findings of the COA and the Ombudsman on these disbursements reveal that in Metro Manila and Southern Luzon, the P31 million that was supposed to go to 23 towns and two provinces in chunks of P500,000 or P5 million each was not received by the local government units, even if these local governments were listed as beneficiaries of the fund in the SAROs and Advise of Sub-allotment (ASA) of the DA central office. The COA was not able to trace where most of this money went. Furthermore, seven towns in Bohol supposedly got P10.5 million, except that the entire amount was paid to the Philippine Social Development Foundation. Similarly, P3.8 million intended for two towns in Surigao del Norte, two in Agusan del Sur, and one in Agusan del Norte went through the foundation.

The first district of Surigao del Norte also got P4.3 million while the province of Agusan del Norte got P5 million. Both amounts, which were coursed from the same foundation, remain unliquidated. In areas that were known to be supportive of Arroyo, the allocations for local officials were given in cash. This violates DA procurement procedures that state that disbursements from the GMA Project should not be in cash, but in farm inputs or implements. DA Assistant Secretary Felix Jose Montes insisted no cash disbursements were made from the GMA Project. But COA records show that several provinces, including [[Rizal], Laguna and Batangas received cash transfers of P3 million to P5 million each during the campaign. Former Pampanga Gov. and now Senator Lito Lapid also admitted getting P5 million in cash, which he said was put by the provincial government in a trust fund that was used to buy fertilizers and other farm inputs. A Pampanga farmers’ group, however, denied ever getting any support from the provincial government.

Role of Jocelyn Bolante

Crucial to the Ginintuang Masaganang Ani project was Jocelyn “Joc-joc” Bolante, a close friend of First Gentleman Mike Arroyo and his fellow Makati Rotarian. Bolante was named DA undersecretary for finance and administration shortly after Arroyo took over the presidency from Joseph Estrada in 2001. He was the first Arroyo appointee to the department and was already put in charge before the agriculture secretary, Leonardo Montemayor, was named. In 2004, just before the start of the campaign, it was Bolante who sent letters to various congressmen and local officials informing them of the availability of funds under the DA’s GMA Project. Bolante’s letter is dated February 3, 2004, the same day that the Special Allotment Release Order (SARO) for the fund was made available by the budget department. A copy of Bolante’s letter was part of the documents submitted by Chavez to back up his plunder charge. A similar case was filed by the Kilusang Magbubukid ng Pilipinas and other farmers’ groups. In addition, former DA Undersecretary Ibarra Poliquit admitted Bolante had a hand in determining how the GMA Project funds were spent, and that former DA chief Luis Lorenzo “authorized Bolante to decide on the realignment of funds.”

Hearings

Former Agriculture Secretary Luis “Cito” Lorenzo Jr. and Jocelyn Bolante snubbed the first hearing scheduled October 6, 2005. In October 26, 2005, Lorenzo Jr. flew to Hong Kong hours before the said Senate hearing on the purported mismanagement of a multimillion-peso fertilizer fund during the 2004 presidential election. Lorenzo was appointed agriculture secretary by then Arroyo in 2002 and left the Cabinet in 2004. Bolante also flew out to Los Angeles, California. Nonetheless, at the Senate’s request, the US Embassy canceled Bolante’s US visa. He was subsequently arrested in the United States and jailed there. Through the years, his petition for asylum was rejected by the US courts, and he was deported to the Philippines in 2008. Bolante finally appeared before the Senate on Nov. 13, 2008 but denied all allegations against him.

Statements of Jose Barredo

Senate whistleblower Jose “Boy” Barredo said that Ombudsman Merceditas Gutierrez and Arroyo should be held accountable for their roles in the P728 million fertilizer fund scandal. Barredo, a self-confessed, low-level runner in the scandal, told the Senate that he helped facilitate the release of millions of pesos in fertilizer funds to Arroyo's allies in Central Luzon and Western Visayas.

He said he haggled with various politicians in the two regions about their proposed commissions in the fertilizer funds, and commissions ranged from 25 to 40 percent of the allocations, with the lowest commission amounting to P3 million.

Senate Blue Ribbon Committee decision

In February 2009, the Senate blue ribbon committee chaired by then Sen. Richard Gordon concluded its investigation and recommended the filing of plunder, and other criminal charges against Lorenzo, Bolante, former DA Assistant Secretary Ibarra Poliquit, DA Undersecretary Belinda Gonzales, DA Assistant Secretary Jose Felix Montes and all regional directors of the Department of Agriculture who participated illegally in all the transactions related to the P728-million fertilizer scam.

Delayed signing of Plunder Resolution and “Tatad Doctrine”

The original resolution to charge Lorenzo, Bolante, and Poliquit with plunder "in conspiracy with each other" was signed by Ombudsman Merceditas Gutierrez only in April 15, 2011. Her alleged inaction on the fertilizer fund scam was one of the articles of impeachment she was to face at an impeachment trial in May 2011. However, she resigned in late April and designated Casimiro as acting ombudsman until President Benigno Aquino III appoints her replacement. Looking at the delayed action of Gutierrez, former Akbayan Rep. Risa Hontiveros said the timing of the plunder recommendation came almost six years after the Ombudsman investigated on the controversy, and convinced them that it was actually part of a “grand design to clear the names of allies of Arroyo."

Lawyer Mauro Reyes, a private legal counsel tapped to join the prosecution team in the impeachment case against Gutierrez, said that respondents in the case are most likely to elevate the cases filed by the Ombudsman to the higher court and use the “Tatad doctrine" to provide a backdoor exit for Arroyo allies. The so-called Tatad doctrine is based on a March 1988 doctrine laid down by the Supreme Court to dismiss a case against former Public Information Secretary Francisco Tatad, who was charged before the Legal Panel of the Presidential Security Command (PSC) on October 1974 for graft and corruption.

The Ombudsman, which handled the case in 1979, did not file charges with the Sandiganbayan until June 1985, or almost 11 years after the filing of the original complaint. Reyes added that the case was ultimately dismissed because the "undue delay on the part of the Ombudsman to resolve a case violates the constitutional right to speedy disposition of cases". Thus, he continued, “…Bolante et al will surely elevate the case to the Supreme Court, where it'll be dismissed, and those who illegally enriched themselves from the multi-million project will go scot-free".

Criminal charges against Merci Gutierrez

In May 9, 2011, leaders of the farmers group Kilusang Magbubukid ng Pilipinas (KMP) filed criminal charges against resigned Gutierrez at the Department of Justice in connection with the P728-million fertilizer fund scam. According to the complainants, Gutierrez junked at least 40 reports filed by Task Force Abono, a special probe body the Office of the Ombudsman formed to investigate controversies connected to the fertilizer scam.

In their 10-page joint complaint-affidavit, Gutierrez, accordingly did not act on any of the recommendations of Task Force Abono made in the report it submitted to her office on June 20, 2006. Among the recommendations they made were the filing of criminal complaints against public officials among them Jocelyn Bolante and congressional representatives Nanette Daza, Federico Sandoval, Oscar Gozos and Governor Carmencita Reyes.

Pamalakaya’s Hicap added that from February to March 2007, Task Force Abono issued subpoena ducestecum to the the Land Bank Department of Agriculture Extension Branch office in Quezon city to provide records of a particular bank account where the money disbursed through checks in the fertilizer fund scam were allegedly deposited. Gutierrez, however, issued a memorandum order stating that all requests or referrals to the Anti-Money Laundering Council (AMLC) for documents, information or bank account examination of subjects of investigation must go through her office first. According to Hicap, all of Task Force Abono’s reports and findings were not acted upon during the height of the controversy. Instead, Gutierrez took action only on March 11, 2011 when her office issued a joint resolution for the filing of plunder and other criminal and administrative cases against several government officials involved in the fertilizer fund scam.

Investigation ordered on GMA’s participation

In July 4, 2011, Acting Ombudsman Orlando Casimiro ordered a fact-finding investigation on the participation of former President and Pampanga Representative Gloria Arroyo in the P728-million fertilizer fund scam. He emphasized that there is a need to conduct investigation as to the complicity and liability of former President Arroyo with respect to the allocation, release, and expenditure of the fertilizer funds. Casimiro reversed an earlier recommendation under the command of former Ombudsman Merceditas Gutierrez to junk charges against Arroyo. He has also ordered the dismissal from government service of Poliquit and other DA officials ordered charged in April.

He likewise ordered the creation of a “special team” that will conduct a “proactive stance in bidding activities conducted by the local agencies” involved in the controversy. Malacañang the following day expressed its support for the Office of the Ombudsman’s decision to investigate Arroyo’s involvement in the fertilizer scam.

In July 25, 2011, President Benigno Aquino III, announced in his second State of the Nation Addressthat he is appointing retired Supreme Court Associate Justice Conchita Carpio-Morales as the new Ombudsman. Malacañang now expects the newly-appointed Ombudsman to go hard on the corrupt government officials and aggressively pursue the cases against them.

References

Citation

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