Loans unpaid; execs paid 35% kickbacks
By Kristine L. Alave
Philippine Daily Inquirer
11:39 pm | Tuesday, September 20th, 2011
It was worse than the fertilizer scam.
A P10-billion fund meant to help small farmers, fisherfolk and
agriculture entrepreneurs raise their skills and production was used as
a cash cow of agriculture officials, politicians and businessmen
"favored" by the Arroyo administration for almost a decade, officials said.
The discovery of irregularities in Acef (Agricultural Competitiveness
Enhancement Fund) has led lawmakers and agriculture officials to suspend
the program in January and to review its implementation.
What they saw, according to officials who checked the Acef records, was
a long list of companies and beneficiaries who failed to pay back their
loans.
The same officials also heard of complaints from borrowers who said that
agriculture officials demanded kickbacks in exchange for loan approvals.
Agriculture Secretary Proceso Alcala said his office had received
complaints from beneficiaries and those who tried to apply for the fund
that former agriculture officials had asked for kickbacks in exchange
for approving their loans.
Legitimate projects were also set aside in favor of proponents who have
questionable projects but are willing to provide kickbacks, officials said.
"As we investigated it, we found out that the majority of those who did
not pay were the ones who were complaining about the kickbacks," Alcala
said. "It was as high as 20 to 35 percent," he noted.
A senior agriculture official also noted that the Acef executive
committee was lax in approving projects. Some proponents, who promised
to give commissions, were not even required to appear at the Department
of Agriculture to explain their projects, the official said.
Alcala said it was the Acef management that was accused of being the
recipients of bribes. "They got money out of proceeds. After the funds
are released, something goes to them," he said.
Although the reports and complaints were numerous, Alcala said it was
difficult to pin down the errant officials. "Of course, these had no
receipts," he said.
Some borrowers were also reluctant to say something on record because
they knew that they got the deal out of bad faith, Alcala said.
The practice of asking for commissions in exchange for loan approval was
confirmed by Gregorio San Diego, president of United Broilers Raisers
Association (Ubra).
Four years ago, Ubra applied as a cooperative for the Acef to build a
broiler breeder facility in Pampanga. San Diego said his group was
encouraged by then Secretary Arthur Yap, but when the application
reached the central office of the agriculture department, it was denied.
"They asked 10 percent from us," he said, noting that it was considered
a discount. "Others were told to give 35 percent," he added.
In the end, Ubra decided not to push through with its application, San
Diego said.
Senator Francis Pangilinan, cochair of the congressional oversight
Committee on Agriculture and Fisheries Modernization, and sources
confirmed that some of those who applied for the fund were personalities
and politicians "favored" by the past administration.
'Lender of last resort'
An industry source and an agriculture official, who reviewed the project
and requested anonymity because of lack of authority to discuss the
matter, described the use of Acef in the last decade as "plunder."
"This was bigger than the fertilizer scam," the industry source said,
referring to the misuse of P728 million in agriculture funds under then
Undersecretary Jocelyn "Joc-Joc" Bolante.
The fund, intended to benefit farmers, was said to have been diverted to
the campaign kitty of then President Gloria Macapagal-Arroyo in 2004.
Bolante and former Agriculture Secretary Cito Lorenzo have been charged
with plunder at the Sandiganbayan.
"This was supposed to be for agricultural enhancement but they have
become the lender of last resort," the source said, referring to Acef.
Acef, established in 1996 and funded by tariffs from agricultural
products, is a funding mechanism aimed at providing financial support to
the agriculture sector to increase their competitiveness in the global
market.
Safety net
The money from the taxes was supposed to be used to establish "safety
nets" for agriculture sectors affected by trade liberalization.
"That was the basic tenet of Acef, but it was not followed. If it was
implemented properly, say the industries were given common services, it
would have made Philippine agriculture competitive. But this was not
followed. Even those projects that were not aimed at competitiveness
were given funding," the industry source noted.
The fund was set up to enable farmers, fisherfolk, and cooperatives to
upgrade their skills and facilities so that they can compete in an
increasingly globalized agriculture market.
Loans up to P30M
Under the program, agricultural workers, cooperatives, nongovernment
organizations, and local government units may take out loans ranging
from P500,000 to P30 million.
Acef was supposed to have a 10-year life-span, but the agriculture
department, during the term of former Secretary Yap, issued several
memoranda extending the program and its scope.
Collateral-, interest-free
The program was especially designed to encourage small and medium
agricultural enterprises to borrow from it as it does not demand a
collateral from them and is interest-free. The lack of these
requirements opened the fund to abuse and was the main reason for the
low-repayment rate, officials said.
Acef contained P10.73 billion accumulated from collected tariffs from
1990 to 2010, according to the Department of Agriculture's preliminary
report as of February 2011.
During that period, the fund used P8.85 billion, mostly for grants and
loans.
As of February, the agriculture department said P2.57 billion went to
grants, while P5.82 billion went to loans to 299 accounts. Included in
the loan portfolio was a P1-billion grant to the bankrupt Quedancor,
which was supposed to be used for the agency's training program. At
about P372.78 million was used to fund scholarship programs.
Quedancor did not remit a single centavo to Acef and even borrowers who
failed to pay were allowed to borrow huge sums again, officials said.
As of early 2011, only about P1.8 billion remained in Acef coffers as
many of the creditors failed to pay back their loans over the years, the
Department of Agriculture said.
Failure
Despite the huge amounts of money that were funneled into the fund since
its creation, the credit mechanism that was supposed to improve
Philippine agriculture, provide employment in the countryside and raise
the income of farmers and fisherfolk failed in its vision.
In March, the technical working group on Acef said: "Available data
indicate that the Acef has not been able to provide loans to the
marginalized farmers and fisherfolk; but mostly to small and medium
enterprises."
In a report, the Commission on Audit (COA) said Acef was a failure. "The
purpose of the program to raise farm productivity by extending credit to
small farmers, fisherfolk and agricultural entrepreneurs was not
achieved as manifested by the low collection rate of amortization due
from the proponents. The inability of the proponents to pay the
amortization is an indication that their livelihood agricultural
activities did not succeed," the report said.
Yap's friend
One of the borrowers who was not punctual in paying his loan was Lyndon
Tan, owner of Basic Necessity, a vegetable farm in Cavite, and a friend
of former Secretary Yap.
Yap, project head of the book, "The Art of Agribusiness: 111 and More
Success Stories in Agri-Entrepreneurship," cited Tan as an example of a
successful Filipino farm entrepreneur.
Tan, according to a recent agriculture department audit, sells his
greens to supermarkets and restaurants. He borrowed P38 million from the
fund for his farm in the mid-2000s. He only paid P4 million of it.
The COA also noted that Acef was inefficient and questioned why certain
companies that did not remit were still given a chance to borrow
millions of pesos.
In its 2010 report, the COA said five proponents with Acef loans of
P72.245 million were given additional loans of P35.659 million for the
same project, even if previous loans were not yet paid.
Gemsum Marketing
The companies were identified by CAA as C and L Farms, Hi-Las Marketing
Corp., Moraleda Farms, Queen's Agro-Industrial Farms Inc. and Gemsum
Marketing.
But that was just the tip of the iceberg. There were 46 proponents who
got loans from 2000 to 2008 but "have not paid a single installment,"
the agriculture department said. Their loans from Acef totaled P802.95
million.
Baler-Casiguran road
Senator Edgardo Angara, a former agriculture secretary who authored the
law that established the Acef, has been identified as one of the
beneficiaries.
Angara's home province Aurora received P300 million from the fund,
according to an audit by the agriculture department.
Angara was cited by two sources as the one who recommended projects to
the Acef committee.
The audit by the agriculture department found out that Aurora, Angara's
home province, benefited from two grants.
In 2008, the local government of Aurora received P200 million for the
concreting of the Baler-Casiguran Highway.
Kilusang Magbubukid ng Pilipinas said the Baler-Casiguran Road was built
to serve Angara's Aurora Pacific Economic Zone and Freeport project.
In 2007, Aurora State University received P100 million for a project
called Enhancement of Technology-Based Agribusiness Industry.
In a phone interview, Angara said he could not recall recommending the
grant of P200 million for the concreting of the Baler-Casiguran road.
"Who is the source of that report? I do not recall … Why would they even
use the word competitiveness for that? And why would I recommend it," he
told the Inquirer Tuesday night.
Angara said it was more likely that the P200 million came from his pork
barrel.
"And if it indeed came from my pork barrel, that would not be considered
irregular since it came from my (Priority Development Assistance Fund),"
the senator added. With a report from Cathy Yamsuan
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