Ombudsman Charges 25 for P900 Million Malampaya Fund Scam

The Office of the Ombudsman has ordered the filing of two counts of Plunder, 97 counts of violation of Section 3(e) of the Anti-Graft and Corrupt Practices Act (Republic Act No. 3019) and 97 counts of Malversation thru Falsification of Public Documents against 25 respondents from the Department of Budget and Management (DBM), Department of Agrarian Reform (DAR), and NGO representatives in connection with the illegal diversion in 2009 of P900 million from the Malampaya fund.

Facing two counts of Plunder and multiple charges of graft and Malversation thru Falsification are former DBM officials Secretary Rolando Aureo Andaya, Jr., and Undersecretary Mario Relampagos; DAR officials former Secretary Nasser Pangandaman, Undersecretary Narciso Nieto and Director Teresita Panlilio; former Candaba Mayor Rene Maglanque; Ruby Tuason, Janet Lim Napoles, Jo Christine Napoles, James Christopher Napoles, Reynald Lim, Evelyn De Leon, Ronald Francisco Lim, Ronald John Lim, Eulogio Rodriguez, Simplicio Gumafelix, John Raymund De Asis, Rodrigo Galay, Alejandro Garro, Paquito Dinso, Jr., Gerald Apuang, Napoleon Sibayan, Winnie Villanueva, Angelita Cacananta, and Ronald Venancio. The respondents are found to have acted in concert to divert the fund releases drawn from the P900 million Malampaya fund allocated by the DBM to the DAR in 2009, which was malversed and coursed through the NGOs controlled by Napoles and for which huge kickbacks and commissions were paid.

Records further show that on 08 October 2009, then Secretary Andaya submitted to the Office of the President, a request for authority to use the Malampaya fund for relief operations, rehabilitation, and reconstruction of areas affected by typhoons “Ondoy” and “Pepeng.” Five days later, or on 13 October 2009, former President Gloria Macapagal-Arroyo issued Executive Order 848 authorizing the DBM to release the funds to the DAR as implementing agency. On 22 October 2009, Undersecretary Nieto requested Andaya for the release of P900 million to provide direct assistance to farmer-beneficiaries affected by the two typhoons. The request for fund release was based on 97 purported letter-requests made by the mayors of various local government units.

The fund was then downloaded by the DAR to the following NGOs:

To facilitate the scam, Napoles instructed Galay to scan the letterheads of the 97 identified LGU-beneficiaries with Evelyn De Leon, Ronald John Lim, Jo Christine and James Christopher Napoles drafting the letters to make it appear that the mayors were requesting financial assistance. The DAR officials then prepared and issued 97 checks payable to the 12 NGOs corresponding to the amounts indicated in the letters and Memoranda of Agreement. DAR officials thereafter informed Napoles that the checks were ready for pick-up. Andaya, et. al. released the checks in four batches: (1) P200 million deposited on 27 November 2009; (2) P100 million deposited on 03 December 2009; (3) P200 million deposited on 23 December 2009; and (4) P400 million deposited 29 December 2009.

After the receipt of the checks, the NGO representatives issued official receipts and fake liquidation documents such as reports of disbursements, delivery reports, certificates of acceptance, certificates of project completion, inspection and acceptance reports, fund utilization reports, independent auditor’s reports, reports of disbursements by external accountant and lists of beneficiaries.

Ombudsman investigators found that the documents were all fictitious as there were no deliveries of agricultural kits or packages. Respondents also manufactured the lists of farmer-beneficiaries and forged the signatures of the recipients.

According to the testimony of whistleblower Benhur Luy, the following respondents received kickbacks for facilitating the release and the illegal diversion of the Malampaya fund:

* Pangandaman received his kickbacks through Maglanque.

In 2013, a team from the Special Audits Office (SAO) and Technical Services Office of the Commission on Audit (COA) issued a SAO Report after conducting a performance audit of the fund. It uncovered the anomalies in the fund use such as: (1) The requests for fund release were made by the NGOs and not by the mayors which was made possible by the lack of validation of the requests and actual needs of the 97 LGUs; (2) The respondents entered into Memoranda of Agreement with the 12 NGOs even before the approval of the Special Allotment Release Order; (3) the MOAs did not provide for time schedules for periodic inspection and evaluation, monitoring requirements and date of program completion; (4) No portion of the Malampaya Fund was earmarked for implementation by the NGO; (5) The 12 NGOs were selected without compliance with procurement regulations; (6) Funds were transferred to the NGOs even before the release of the Notice of Cash Allocation; (7) The existence of the NGOs were highly questionable; (8) DAR failed to monitor the implementation of the multi-million peso projects; and (9) The implementation of the projects was highly irregular as 67 mayors categorically denied their signatures on alleged letter-requests and they also denied participation in the project implementation.

According to Ombudsman Conchita Carpio Morales, “the respondents’ intent and purpose show cohesion and interconnection, demonstrating the attainment of the same objective through their separate acts as each contributed in the end result of defrauding the government of the P900million Malampaya fund.”

In the approved 134-page Joint Resolution, the Ombudsman ruled that “by respondents’ own overt acts, they showed their undue interest in the immediate release of the funds…regardless of whether there was compliance with applicable laws or rules governing such disbursements.”

Ombudsman Morales added that the siphoning of the fund by Napoles “was facilitated by Winnie Villanueva who, as Branch Management of Metrobank Magdalena Branch in Binondo, Manila, allowed the opening of and withdrawals and transfers from the NGOs’ bank accounts despite incomplete and questionable requirements and circumstances.”

The charges against Ruby Tuason were upheld as she admitted her involvement in cooperating with Napoles to facilitate the fund release through her brother Remy, a contact in Malacañang, and for having received kickbacks totaling P242.775 million at her house. Thus, the Ombudsman resolved that “the Office is not inclined to grant her request for immunity considering that her declarations could only point to the probable liability of Napoles in the illegal fund diversion.” The primary participation of Napoles in the complex and well-orchestrated scheme, however, is already established and highlighted by the whistleblowers’ statements, COA report, Anti-Money Laundering Council (AMLC) Inquiry Report, sworn statements of mayors, municipal agricultural officers and purported farmer-beneficiaries.

Ombudsman Morales also furnished the AMLC with a copy of the Joint Resolution for immediate action on possible violations by the respondents, including Edgar Valdez, Erwin Dangwa, Rodolfo Plaza, Rene Villa, Cynthia Dequiña, Roselle Kind, William Lim, Hector Ang, Francis Palmones, Jr., Flordeliz Galido, Liza Maclang Ong, Corazon Dizon and Cecilia Caballero. According to the whistleblowers, Valdez, et. al., also received multi-million peso kickbacks from the fund.

The charges against former President Arroyo, Executive Secretary Eduardo Ermita, Dominador Sison, Jr. and Nilda Baui, both from DAR, were dismissed due to insufficiency of evidence. The Joint Resolution explained that “complainants failed to prove that they conspired with their co-respondents in the illegal diversion of the P900 million Malampaya fund or that they deviated from the regular procedure.

Background Information on Malampaya Fund

By virtue of Presidential Decree (PD) 910, a Special Fund to finance the government’s energy resource exploration, development and exploitation programs and projects and such other purpose as may be directed by the President. The funds are collected through the Department of Energy (DOE) from the government’s share in royalties, rentals, production share on service contracts and other payments on the exploration, development and exploitation of energy resources.

Plunder is committed by the a public officer who acts by himself or in connivance with members of his family, relatives by affinity or consanguinity, business associates, subordinates or other persons, by amassing, accumulating or acquiring ill-gotten wealth through a combination or series of the following overt criminal acts: (a) Through misappropriation, conversion, misuse, or malversation of public funds; (b) By receiving, directly or indirectly, any commission, gift, share, percentage, kickback, or any other form of pecuniary benefits, in connection with any government contract or project or by reason of office or position of the public officer; (c) By the illegal or fraudulent conveyance or disposition of assets belonging to the government; (d) By obtaining, receiving or accepting directly or indirectly any shares of stock, equity or any other form of interest of participation including the promise of future employment in any business enterprise; (e) By establishing agricultural, industrial or commercial monopolies; (f) By taking advantage of official position, authority, relationship, connection or influence to unjustly enrich himself or themselves at the expense and to the damage and prejudice of the Republic. The aggregate amount or total values of the ill-gotten wealth must be at least P50 million.

Section 3(e) of Anti-Graft and Corrupt Practices Act (Republic Act No. 3019) prohibits public officials from causing undue to any party, including the Government, or giving any private party any unwarranted benefits, advantage or preference in the discharge of his official administrative or judicial functions through manifest partiality, evident bad faith or gross inexcusable negligence. ●