DOF to PITC: Returns P1 billion in interest on ‘dormant’ funds

Secretary of Finance Carlos G. Dominguez III (Photo of the Department of Finance)

MANILA, Philippines – The Secretary of Finance, Carlos Domínguez III, is pressuring Philippine International Trading Corp. (PITC) so that the volume of business in the national coffers exceeds P1 billion in interest on the P33 billion in money of the inactive taxpayers in the accounts of the state procurement company. , the Inquirer learned Sunday.

In a letter dated November 27, the head of the government’s economic team urged the Secretary of Commerce, Ramón López, president of the PITC, to revert to the treasury P1,151 billion representing the balance of interest accrued on funds held in Trust by PITC for its client agencies to acquire various goods, such as fire trucks, military boots and first aid kits.

“After our discussion, we would like to request the return to the Treasury Office by the PITC, the interest accrued on said funds held in trust,” Domínguez said in the letter, a copy of which was sent to the minority leader. of the Senate, Franklin Drilon, who had denounced the existence of billions of pesos in inactive funds in the trading company supervised by the Department of Commerce and Industry (DTI).

“From 2018 to 2019, the interest earned on these funds totaled P1.151 billion,” said Domínguez, whose letter Drilon shared exclusively with the Inquirer on Sunday.

Parking of unused funds

Domínguez drew López’s attention to the cash and balances held in trust by PITC for various government agencies amounting to P33.3 billion at the end of 2019. That was down slightly to P32.6 billion as of October 31, which which represents completed PITC deliveries. But the remaining balance indicates the huge backlog of acquisition requests.

López declined to comment on Domínguez’s letter. PITC President and CEO Dave Almarinez has not responded to a request for comment from the Inquirer as of press time Sunday.

Earlier, Drilon said it believed that government agencies were choosing to “park” their unspent assets for property acquisition funds with the PITC to circumvent budget and procurement laws that required them to return unspent appropriations to the treasury at the end of the fiscal year.

In a letter to Budget Secretary Wendel Avisado dated November 25, Domínguez asked the Department of Budget and Management (DBM) to recommend to the president that all funds held by the PITC be returned to the treasury.

Lopez, however, insisted that there was nothing wrong with the PITC transactions, arguing that all funds deposited with the corporation were acquisitions in progress or had already been awarded to suppliers.

Domínguez, in his letter to López, cited the Audit Commission’s (COA) 2019 audit report on PITC showing that the company apparently failed to follow procedure in recording interest earnings on fund transfers as income and using money for your operations rather than returning it to the treasury.

“[Interest] Earnings of P581.135 million as of December 31, 2019, in transfers of funds from various (source agencies) invested in money market placements, were recorded as PITC income, instead of being remitted to the National Treasury, which is not do you agree. with the Presidential Decree No. 1445 and the Circular of the Department of Finance No. 01-2017, ”says the COA report.

New sources of financing

In calling for the return of PITC interest earnings, Domínguez pointed to the government’s urgent need for new sources of funding as it grappled with the effects of the coronavirus pandemic and a series of highly destructive natural disasters.

“This is in line with our continued efforts to identify sources of fiscal space and accommodate the diverse medical and social needs of the country as a result of the pandemic, exacerbated by the successive calamities that recently struck the country,” he wrote.

On Saturday, Drilon said that PITC had used “a devious scheme” to illegally keep the P1 billion in interest earnings.

The opposition senator said the PITC had defrauded the government by withholding interest earned on money it had received from various state agencies for purchasing goods and services in violation of the Philippine Government Auditing Code, or Presidential Decree No. 1445 .

“They are taking us for fools. What they are sending to the government are loose change compared to the billions of pesos they can collect, ”he said.

It was the latest disclosure of alleged wrongdoing by the PITC made by Drilon in the course of its scrutiny of the proposed $ 4.5 trillion national budget.

The senator cited documents showing that PITC remitted only P392.6 million of its interest earnings from 2016 to 2019, representing less than a third of the total P1.4 billion.

Duplication of functions

The PITC is mandated to “participate in exports, commercial services, and special trade agreements” while ensuring the “most efficient and cost-effective procurement services for the government.”

Their functions also include helping to stabilize the price and supply of goods and services, and creating “strategic alliances” that promote the sustainability of companies.

In a radio interview also Sunday, Drilon suggested it was time to abolish the PITC as it was only duplicating the functions of DBM’s own Procurement Service, as well as government agency bidding and award committees.

Senator Panfilo Lacson made a similar comment last week, citing the need to “review the functions” of the PITC.

The Governance of Government Owned and Controlled Corporations (GOCC) Act gives the president broad powers to reform, reorganize or abolish GOCCs, such as PITCs.

The law empowers the GOCC’s Governance Council (GCG) to “evaluate the performance and determine the relevance of the GOCCs, to determine whether the GOCCs should be reorganized, merged, simplified, abolished or privatized.”

The GCG can also recommend to the president the abolition or privatization of any GOCC. INQ

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