-1Morales, Diane Mae P.

AC09401
The Armed Forces of the Philippines Plunder Case
Overview:
The controversy was introduced by senator t no when she
reiterated the need to probe the alleged misuse of the P46 million fund for the 2007
joint US-RP Balikatan military exercises on the 10th anniversary of the Senate's
ratification of the V s t n or s r m nt on 27
May 2009.
Embattled navy officer Mary Nancy Gadian claimed that part of the PHP 46 million
2007 Balikatan budget went into the pockets of certain military officers. She said that
out of the PHP 46 million, only PHP 2.3 million was actually spent for soldiers who
participated in the war games. She said that she has enough pieces of evidence to
prove her claim but will only disclose everything she knows at the proper forum.
Sources from the COA disclosed that the annual audit reports made by the agency for
2001, 2002, and 2003 did not reflect the AFP modernization funds, which was held
under the term of then AFP chief-of-staff n lo R s .
The COA official, however, said that the funds are not actually missing although he is
unsure whether the said funds are still with the ur u o t
Tr sur .Then congresswoman m r os demanded
COA to come up with its liquidation report on the modernization funds.
Former AFP comptroller retired Major General Carlos Garcia, his wife, and his three
sons were charged with plunder, violation of Section 4-A of the Anti-Money
Laundering Act, and perjury by the t
m u sm n . The probe by the Ombudsman revealed that he has nine vehicles
registered in his name, his wife Clarita, and his son Ian Carl. However, he
disproportionately declared in his latest Statement of Assets and Liabilities and Net
Worth (SALN) that the total cost of all his vehicles amounted only to PHP
1,150,000.00. He did not declare in any of his 1993-2003 SALN his properties in
Ohio and New York, USA. He also failed to declare in his 2000-2003 SALN his
investments with the Armed Forces and Police Savings and Loan Association
(AFPSLAI) and the dividends he received as well as money in dollar currencies
amounting to almost PHP 8,432,141.37 (USD193,400.00), which was transported by
him, his wife, and son Juan Paulo to the USA.
In May 2005, Garcia appeared before the n n n after a
warrant of arrest was issued against him. He was transferred to mp
r m . On December 2, the general court martial convicted Garcia of
undeclared wealth, dishonorably dismissed him from the military and sentenced him
to two years of hard labor.
Garcia was acquitted in one of his perjury cases due to the failure of the prosecution
to present evidence that would overcome the requirement of proof beyond reasonable
doubt by the Sandiganbayan Third Division on May 22, 2006.
Two witnesses, former military budget officer or R us and
COA auditor n o , claimed that the military had diverted
million of dollars that was part of a grant from the United Nations (UN). It was said
that the money, used as pabaon (sendoff) for retiring AFP officials, came from that
fund. Major General Pedro Soria, chief of the military's Resources Management
Office, said that their records on UN grants only go as far as 2005 when his office
was created in light of the controversy caused by Garcia's plunder case that year.
Retired Major General Jacinto Ligot, who served as military comptroller from 1999
to 2001, allegedly amassed PHP 740 million, PHP 666 million of which have been
already withdrawn before the Anti-Money Laundering Council would freeze his
accounts.
Analysis
The following problems on AFP internal control:
1. No proper liquidation of funds and expenditures.
2. Persons involved took advantage of their official positions, authority, and influence to
unjustly enrich themselves.
3. The use of fake passbook, no bank reconciliation, delayed accounting - This was a
perfect menu for a crime.
4.Local bank United Coconut Planters Bank (UCPB) for perpetuating the military
financial malpractices when they failed to observe mandated procedures in banking
transactions.
5. AFP's financial records were not updated making the process of documenting the audit
trail a painstaking work.
6. Bank officials allowed the withdrawal of P 22.8 million, which was 3 months before
the bank was informed of the transaction, without any written instruction from the AFP or
the government.
7. Protection for witnesses and whistleblowers must be given. This is to promote
transparency and justice.
Recommendations:
1. Funds and expenditures must be liquidated properly. Preferably, a reasonable amount
of time be given to account for all the expenditures to avoid fraud.
2. Persons holding key positions must be carefully screened especially their backgrounds.
During their tenure, they must also be investigated so as to monitor their behavoir.
3. Passbooks must be examined thoroughly. Accounting practices be done in accordance
with the standards and done on time. Periodic bank reconciliations should also be done.
4. Penalties and sanctions be done in order to punish banking malpractices. Banks should
also be monitored closely with an appropriate regulatory body.
5. Financial records should be updated. Timeliness is a key factor in determining the
relevance of the information. Financial information which are outdated serves no
purpose.
6. Written records must be kept in all the transactions entered into. This will help keep
track of the records as well as evidence of that the economic event happened.