COMMENT: GAA In; SARO Out

GENERAL SANTOS CITY, January 6, 2014 – The abolition of the SARO (Special Allotment Release Order by the DBM (Department of Budget Management) seems most commendable: to accelerate releases so that they can properly fund our key programs and project. (Philippine Daily Inquirer, January 3, 2014: DBM scraps Saro system). This, the follow up reports in the January 4, 2014  Philippine Daily Inquirer (Less Saro, less red tape’) and The Philippine Star (‘Abolition of SARO to reduce red tape) explained.

1. Eliminating the need for Saros—the specific authority from the budget department that allows for the release of funds to government agencies—for all government disbursements, except for lump-sum funds in the national budget, would drastically lessen government red tape.

2. It will prevent the congressional and local officials from intervening in the identification and implementation of projects that are funded under the P2.265-trillion national budget for 2014, the biggest budget ever enacted by Congress.

3. The simultaneous bidding of national government-funded projects across the country can start as soon as possible. The pre-bidding (or) the pre-procurement activities for the projects of the incoming fiscal year can be conducted before the current fiscal year ends. By the first week of January of the new fiscal year, the notices of award can be issued.

4. It will reduce red tape — shortening the time and simplifying the process to implement projects — as less paper works have to be accomplished and submitted. That will lessen opportunities for corruption.

However, what appears to be most commendable elicits naughty questions.

Damage Control

Is this not a clever or ingenious way of doing damage control – doing without admitting the damage? The Aquino III’s daang matuwid (straight path) posture or policy – particularly against corrupt practices — was badly damaged by the PDAF (Priority Development Assistance Fund) scandal and more so when the Supreme Court declared the PDAF unconstitutional unanimously (14-0 vote) on November 19, 2013.

Aquino III had obviously abetted the scandal that erupted three years into his presidency. That he blamed it on President Gloria Macapagal-Arroyo and washed his hands clean while justifying the PDAF as political patronage and declaring its abolition only after the scandal had become too hot to handle did more damage.

 

Subsequent events worsened the damage. The COA (Commission on Audit) reports confirmed the unconscionable extent of the PDAF scandal; the discovery in November of fake SAROs for farm-to-market roads in twelve regions and local water treatment projects in 15 towns of Laguna – all amounting to close to P1.8 billion – exposed the existence of a fake SARO syndicate right inside the DBM. That explained how the PDAF scandal had easily thrived since 2006 and mocked the daang matuwid.

In his New Year’s Message, the President stated: “It is clear: because of efficient and principled leadership—because of good governance, we are destroying the last bastions of corruption, and at the same time, creating more opportunities for our countrymen” (bold text supplied), which Philippine Daily Inquirer (December 31, 2013) interpreted to mean that to President Aquino III “We’re winning battle vs corruption’.  The claim is hollow; after three years, if the daang matuwid (good governance) were real, we should have already won the battle, not just winning.

Indispensability Exploited

Is the SARO that dispensable? The SARO system was instituted by the Department of Budget and Management and the Commission on Audit in their Joint Circular No. 99-6 of November 13, 1999. As a safeguard system in the disbursement of government funds, the SARO papers include the ABM (Agency Budget Matrices) and other requirements as the basis for the issuance of the NCA (Notice of Cash Allotment) authorizing the withdrawal of the money.

The COA, in its Circular 96-002, defines SARO as “a specific authority issued to one or more identified agencies to incur obligations not exceeding a given amount during a specified period for the purpose indicated. It shall cover expenditures, the release of which is subject to compliance with specific laws or regulations or are subject to separate approval or clearance by competent authority.” It is the “most important document in the government because it serves as the bible of all payments to be made by the State”.

This indispensability or importance of the SARO top officials in the executive departments, members of the Congress and local government officials in conspiracy with syndicates in the private sectors have exploited to rob the government of billions of pesos in development funds. That a “SARO Xerox Gang” has been entrenched inside the DBM explained the ease by which the conspirators had operated.

Good Tool Misused

As a tool to safeguard the release of government funds, the SARO system is good; but it has been misused. It locked well. However, members of the theft gang inside the DBM opened the lock to let their cohorts come it. Like a tennis racket, it’s good; it’s the player who has not used it well. Now, it is being smashed and thrown away – blamed by the tennis player for losing his game. Both ridiculous and funny!

By the COA report, the use of bogus SAROs in the grand corruption of government funds started in 2006. That means it took seven years for corrupt government officials and their partners in the private sector to figure out how to use the SAROs to steal public money.

The DBM has been sleeping. Secretary Abad admitted the DBM was made only aware in 2013 “of a well-established and highly coordinated racket that centered on the dissemination of fake Saros. Altogether, however, it appears that unscrupulous individuals have taken advantage of the necessity of release documents so that these parties were able to profit from the distribution of fake Saros.” Has the Aquino III government been serious in its fight against corruption?  (The Philippine Star, January 4, 2014: ‘Abolition of SARO to reduce red tape)

Last November 15, the COA, cited in its annual audit report the DBM’s haphazard inventory of Saros, notices of cash allotments (NCAs) and other security papers – serious deficiencies and discrepancies it had brought to the attention of the DBM since 2011, the first full year of the Aquino administration. These the DBM admitted, explained and reported to have corrected. (Philippine Daily Inquirer, November 25, 2013: P879-M fund release by DBM investigated; Signatures on Saro for mayors dubious)

Let it be clear at this point. The Aquino III government is not being blamed for the PDAF scam and other big-scale corruptions like that in the Bureau of Customs passed on to it by the Arroyo and other previous governments. It is being blamed for its obvious insincerity in eradicating them – abetting them, justifying the PDAF, and issuing bold statements to dissemble weakness.

Just a Rehash

Communications Secretary Herminio Coloma said President Aquino is proud of this particular budgetary reform, referring to the abolition of the SARO system, since it will eliminate the unnecessary intervention of officials in the identification and implementation of the projects – emphasizing that the President wants budgetary reforms to speed up the implementation of priority programs in the “last two minutes” of his tenure. (Philippine Daily Inquirer, January 4, 2014: Less Saro, less red tape’)

It appears that the DBM order scooped by Philippine Daily Inquirer last January 3 was a new measure. No, it was not but a rehash of a similar press statement of the DBM secretary published by InterAksyon.com, the Philippine News Agency on Line, on January 26, 2012 (DBM to phase out SAROs, ABMs from 2013 national budget) which Leyte-Samar Daily Express published on February 22, 2012 (M-8 to scrap release of SARO, ABMs to hasten disbursement of funds).

The January 26, 2012 InterAksyon report quoted Abad: “The Aquino administration continues to aim for faster budget execution so that we can facilitate the efficient delivery of public services. We are now moving toward eliminating SAROs and ABMs as a rule, with the ultimate aim of using the approved national budget as a comprehensive release order come 2013.”

Abad clarified what would happen in 2013 and after and the reason for the change:

First: Under current rules, agencies are required (1) to secure ABMs—a disaggregated record of an agency’s programmed funds—before they can receive their respective fund releases. (2) For projects that require further clearance, the agency must submit a Special Budget Request to the DBM. Once the project and its required funding are approved, the DBM issues a SARO to the implementing agency.

Second: Under the proposed expenditure plan for 2013, only a few budgetary items will require the clearance of the DBM before the corresponding releases can be made.

Third: Release documents like the SARO and ABM are supposed to aid in record-keeping and budget transparency. We noted, however, that fulfilling these documentary requirements can take considerable time for agencies, time that could otherwise have been spent in implementing crucial project.

Fourth: The elimination of SAROs and ABMs will begin on fiscal year 2013 and completed in 2014.  This will depend on the full disaggregation of agency lump sums being discussed in the deliberation of the 2013 budget. Lump sum funds would be stricken off the 2013 budget to improve transparency.

Fifth: The General Appropriations Act can act as the release document; appropriations for all departments and agencies will have a one-year validity period. Lapsed allotments will not automatically carry over into the next fiscal year.

Obviously, the Leyte-Samar Express report was based on the same the press statement that Abad had given InterAksyon when he visited Tacloban City on the following February 22. The same was recycled for the January 3, 2014 report scooped by Philippine Daily Inquirer. In fact, the same can be lifted in toto from Abad’s statement in The Official Gazette, August 7, 2013, DBM: 2014 General Appropriations Act to serve as release document that the Philippine Information Agency published on the following but apparently ignored by other media.

Questions

Why did the change not take effect in 2013? Philippine Daily Inquirer noted in its January 5, 2014 editorial, “A bold move”: President Aquino III enunciated this as a policy in his July 24 2012 State of the Nation Address, “We want to establish a policy regime where the General Appropriations Act (GAA) serves as the release document. This will greatly minimize the tedious and repetitive process of releasing allotments, and avoid the delays due to bottlenecks from the back-and-forth movement of release requests.”  He reiterated it in his July 23, 2013 SONA.

Had the PDAF scam not exploded in its face, could the Aquino III have put into effect the new system this year?

It should be noted that the misuse of the SARO system is associated with the release of lump sum appropriations. The abolition of the system would do away with red tape in the release of funds for itemized appropriations which are not known to be sources of corruption. A system by a new name, perhaps, will still control the releases of lump sum appropriations. Even with the removal of the P25-billion PDAF, the lump sum appropriations in the Special Purpose Fund is still 50 percent (P1 trillion plus) of the P2.2 trillion 2014 budget – not stricken off.

If the Aquino III government is serious in abolishing the SARO system to stop corruption, why does it not abolish lump sum budgeting?   

Any act, not just the GAA 2014, is considered “in effect” once signed into law. But to actually take effect it needs implementing rules. The institution of the SARO system in 1999 amended the rules for the implementation of the GAAs. How free from red tape and corruption will be the releases of appropriations for itemized projects will depend on the new implementing rules as needed to safeguard government money.

Will there be no more corruption of lump sum appropriations? It will depend on how the SARO system will be modified under a new name. There is no mention of this in media reports on official statements but we are made to understand that lump sum appropriations are still subject to strict control outside of the new rule – GAA as the release document.

As a system, the SARO was good. But the people charged to use it to safeguard public funds used it to enrich themselves. The GAA as the release document is the new system and it is good. But the same people who misused the SARO will still be in charge of the new system. Will they change?

The fault is in the driver, not the car; in the tennis player, not the tennis racket. Will the race be won by changing the car; the tennis game, by changing the racket? Will all end well? Folks, stay till the end! (“Comment” is Mr. Patricio P. Diaz’ column for MindaViews, the opinion section of MindaNews. The Titus Brandsma Media Awards recently honored Mr. Diaz with a “Lifetime Achievement Award” for his “commitment to education and public information to Mindanawons as Journalist, Educator and Peace Advocate.” You can reach him at patpdiazgsc@yahoo.com.)

URL: http://www.mindanews.com/mindaviews/2014/01/06/comment-gaa-in-saro-out/


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