BuCor: Graft possibly committed under Bantag’s leadership through loan agreement with bank
Metro Manila (CNN Philippines, November 24) — A possible violation of the anti-graft and corruption law may have been committed when the Bureau of Corrections (BuCor) under suspended Director General Gerald Bantag signed an agreement to allow its employees to borrow money from a bank.
BuCor officer-in-charge Greg Catapang Jr. said the agency is looking into the financial transactions related to the agreement.
“May isang [There is a] financial institution that came in. We would like to know if these transactions are valid. Because in as much as we don't want the inmates to be milking cow, likewise, we do not intend to make our people, the BuCor family, employees to be made as milking cows when it comes to loans,” Catapang said.
Justice Secretary Boying Remulla said he is awaiting a formal communication with the BuCor in relation to the possible anomalous contract.
“Kung ito ay binid-out din, ay hindi natin alam kung bakit pumirma ng ganitong kontrata [We don’t know why they signed the contract or if it was bidded out even]. But I told him (Catapang) to write the DOJ so we can examine the contract that was arrived at with City Savings Bank,” Remulla told CNN Philippines’ The Source.
In a document dated April 27, Bantag gave former BuCor Director for Administration CT/CSupt. John Paul Santos the special authority to enter into an agreement with a private bank.
“You are hereby authorized to sign for this specific purpose only, the Memorandum of Agreement (MOA) regarding buy out of Government Service Insurance System (GSIS) Loan incurred as personal loans of BuCor Personnel and Employee Multi- Purpose Salary Loan between Bureau of Corrections (BuCor) and the City Savings Bank,” the document said.
On May 10, Santos, on behalf of BuCor, signed a MOA with City Savings Bank that offers multi-purpose loans to employees.
The payment will be through salary deduction from BuCor’s payroll, according to the agreed loan amortization schedule.
“Nakita nila na can help talaga si City Savings kaya nag-MOA tayo kay City Savings as approved. Then in-acquire niya ang loans, parang sinalo niya ang ₱35-million ata 'yun, parang ₱300-million pala 'yun. Ang laki ng loan sa GSIS pero sinalo ni City Savings. Nagpa-loan siya kay personnel at winelcome pa niya ang ibang personnel na gusto mag-loan,” Santos told CNN Philippines.
[Translation: They saw that City Savings (Bank) may help which is why we signed a MOA with them. They acquired the loan balance which was maybe ₱35 million, or probably ₱300 million. The total loan was huge but City Savings assumed it. They offered loans to our personnel.]
In the contract, there is also a commitment from City Savings Bank to pay BuCor one percent of the total collection as “administration and service fee.”
Santos explained the amount will be used to pay for office equipment, maintenance, and allowance for employees who are in charge of the loan applications.
When asked if it is a possible violation of the anti-graft and corrupt practices law, Catapang said: “Pwede [Possible].”
BuCor has temporarily stopped the remittance of the collected loan payments to City Savings Bank pending a review of the contract.
City Savings Bank confirmed to CNN Philippines its agreement with BuCor to lend money to the employees of the agency.
“We do have an agreement with the Bureau of Corrections to lend to employees. To date, their employees have already availed of the services based on the signed MOA. As of today, payments of employee loans from BuCor are updated,” the bank said in a statement.
The bank also explained that the administration fee is paid to BuCor for the services rendered in facilitating the payroll deductions.
“Any administration fee is for services rendered by the Bureau of Corrections. BuCor helps with the processing of loan payments by deducting the amount due from the borrower's payroll account and remitting the same to City Savings Bank,” the bank said.
To pay GSIS loans
Uniformed personnel of the BuCor were forced to pay their outstanding loan balance with the GSIS as their membership to the insurer was terminated January this year.
With the passage of Republic Act 10575 or the Bureau of Corrections Modernization Act in 2013 and the enforcement of its Implementing Rules and Regulations in 2018, majority of BuCor employees were reclassified as uniformed personnel.
Based on the GSIS’s policies, uniformed personnel like soldiers, policemen, jail and fire officers, and corrections personnel are exempt from the mandatory membership to the insurer.
In a letter sent to GSIS on Nov. 28, 2021, the Department of Budget and Management (DBM) said it would stop paying for its share to the premium of BuCor’s uniformed personnel beginning Jan. 1, 2022.
Based on GSIS records, the total loan balance of over 1,247 BuCor employees reached over P387 million as of July 2021.
During the discussions among BuCor employees, GSIS, and the DBM on July 28, 2021, Santos suggested that BuCor and GSIS sign an agreement wherein uniformed personnel may still be allowed to pay for their loan amortization even after the termination of their membership from GSIS.
But this did not push through as GSIS insists that it is against their policies.
“Pinaliwanag namin hindi porke kayo ay nasa active service pa, hindi ito (non-payment of premium) mako-consider as separation. Ang term na separation is construed to refer to the effectivity of the cessation of GSIS coverage…Our hands are tied doon sa mga policies existing na talagang dapat sundin namin,” GSIS Vice President for NCR Area 1 Rodrigo Manuel explained.
[Translation: We explained to them that even if they are still in active service, it doesn’t mean that their non-payment of premium will not be considered as separation. The term separation is construed to refer to the effectivity of the cessation of GSIS coverage…Our hands are tied to the existing policies that we need to follow.]
GSIS said they looked for other ways to help the affected employees like offering a condonation and restructuring program wherein all penalties will be waived and they will be allowed to pay the balance for up to three years. But there is a 10 percent annual interest in this program, the reason why employees did not avail the staggered option offered by GSIS.
This was also the reason why employees looked for other financial institutions that may lend them money or buy-out their existing loan balance to GSIS.
