Rio: ₱300-M of DICT's confidential funds released as cash advances to Honasan

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Metro Manila (CNN Philippines, February 3) — Cash advances worth ₱300 million have been reportedly released to Secretary Gringo Honasan in late 2019, charged against the confidential funds under the Department of Information and Communications Technology (DICT), an official said.

Undersecretary Eliseo Rio, Jr., who quit his post last week amid internal issues in the agency, said the former senator now DICT chief had secured cash advances charged against the agency's "confidential, intelligence and extraordinary expenses" worth a total of ₱400 million for 2019.

A document obtained by CNN Philippines showed that a unit of the Commission on Audit (COA) assigned at the DICT flagged these transactions through Audit Observation Memorandum 2020-001 issued January 20. The eight-page memorandum addressed to Honasan flagged the irregular release of funds from confidential expenses.

The amounts were released in three tranches worth ₱100 million each on November 8, December 3, and December 17 last year as "cash advance for confidential expenses in connection with cybersecurity activities." Only the first disbursement has been liquidated, the documents showed.

CNN Philippines cannot independently verify the issued memorandum, which was identified as "highly classified" and confidential.

The audit team also pointed out the delayed processing of the cash advance. These were squeezed into the last few weeks of 2019 and left "very little time" for the agency to meet its targets for cybersecurity programs.

Based on the COA memorandum, state auditors said the second tranche of cash advances did not come with a notice of cash allocation (NCA) — a document that must be specifically requested from the Department of Budget and Management (DBM) before the money can be released. However, DBM set a November 15 deadline for all requests for fund releases needing an NCA for the fiscal year.

This, COA said, "cast doubts on the regularity, validity and propriety of the disbursement." Veering away from the agency's physical and financial plan in implementing projects with the prescribed budgets has also been flagged as "counter-beneficial" to DICT's mandate for cybersecurity policy and program coordination, COA added.

CNN Philippines has reached out to Honasan for comment.

In explaining his decision to leave his post, Rio questioned the need for a confidential fund for the agency — an amount which Honasan included in the DICT's budget when he was still a senator, he said. The confidential funds are parked under the Office of the Secretary.

"It is another agency who will find out if may irregularities, like COA," Rio said in a phone interview. "Merong procedure on how to spend the confidential fund, 'yun ang susundin [There's a procedure on how to spend the confidential fund, that should be followed]."

Confidential funds are given in lump-sum to agencies for expenses which cannot be itemized under the national spending plan, such as surveillance activities done by government units other than the military.

DICT saw its confidential funds double to ₱800 million under this year's national budget, according to the budget bill.

Auditors acknowledged that the Honasan's office submitted supporting documents for one of the transactions on January 15, which include a copy of the check, obligation request status, a special allotment release order, and 17 other requirements. However, COA said this was still questionable.

"There must be a previously incurred but not yet paid expenditures, in the form of delivered/rendered goods and services or completed projects, in order to validly utilize and disburse cash authorized by a prior-issued NCA," auditors said.

COA added that existing rules prohibits cash advances to reimburse expenses supposedly charged to the confidential fund.

Auditors also pointed out that the root cause of the issue is DICT's inability to spend and roll out its programs and projects, thus the low utilization of their annual funding.

DICT is the agency tasked to craft and promote the national development agenda on telecommunications and information technology, taking the function away from the older Department of Transportation and Communications. It is in charge of the rollout of the third telecommunications player, the free public wifi project, and fiber optic cable networks for communications infrastructure.