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MANILA, Philippines – State trading company Philippine International Trading Corp. (PITC) is using “a devious scheme” to illegally hold at least P1 billion in government funds instead of remitting the money to the country’s coffers for possible spending in the event of a pandemic or urgent disaster. answer, according to Senate Minority Leader Franklin Drilon.
In a statement on Saturday, Drilon 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 P4.5 trillion national budget.
Interest income
The senator previously questioned the P33.3 billion that the PITC also had. That is money earmarked for various purchases the trading company was supposed to make on behalf of government agencies, he said.
Drilon said it had documents showing that the PITC remitted only P392,575,316.00 for interest income that it had derived from multi-agency fund transfers from 2016 to 2019.
That amount equals just 28 percent of total interest earnings of P1,406,727,544.00, he said.
According to Drilon, the Audit Commission (COA) said that these funds were placed in the PITC consumer deposits, held in various trusts and money market instruments.
The COA said interest earnings were recorded by the PITC as its income, it said.
According to its website, the PITC has a mandate 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.
Audit code violation
When asked for a comment on Drilon’s statement, Commerce Secretary Ramón López, who is also the president of the PITC, said that he had “asked the PITC to present the necessary reports to the senator.” He declined to comment further.
Drilon said the PITC’s failure to remit its interest income to government coffers violated Section 55 of the Auditing Code, which requires all interest earnings from fund transfers to be remitted to the national treasury.
Reporting interest income as your earnings rather than remitting it also violated a Department of Finance (DOF) circular, he said.
“The PITC, out of sheer greed or negligence, is holding on to the huge sum of public funds that the government could use for more urgent needs, such as [coronavirus] and response to calamity, ”he said.
“It is a devious scheme. They remit funds to make it look like they are eligible, but in reality what they send is loose change compared to how much they are withholding from the government, ”Drilon said.
‘Only in trust’
According to the senator, the PITC is now acting “more like a network marketing and money remittance agency, taking money from the entire bureaucracy rather than a commercial corporation, which is its primary mandate.”
Drilon said the recording of PITC interest earnings as corporate income was “illegal” and “detrimental to the national coffers” and “must stop.”
While the opposition senator admitted that the PITC statute allowed the business company to invest its own corporate funds, interest income from money from other agencies was a different matter as these were not corporate funds.
“These are source agency deposits, transferred to her for a very specific purpose, for the sole purpose of purchasing various products authorized under the appropriations law,” Drilon said.
The COA has also stated that these funds from other agencies “are only held in trust” by the PITC, he said.
Any benefits derived from holding the funds or any interest from placements and investments in the money market “technically accrues to the owners of the fund,” or interested agencies, Drilon said.
“PITC does not have the authority or the right or the power to withhold any portion of the interest income,” he said.
—With a report by Roy Stephen C. Canivel
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