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Priority Development Assistance Fund scam From Wikipedia, the free encyclopedia The Priority Development Assistance Fund scam, also called the PDAF scam or the pork barrel scam, is a political scandal involving the alleged misuse by several members of the Congress of the Philippines of their Priority Development Assistance Fund (PDAF, popularly called "pork barrel"), a lump-sum discretionary fund granted to each member of Congress for spending on priority development projects of the Philippine government, mostly on the local level. The scam was first exposed in the Philippine Daily Inquirer on July 12, 2013,[1] with the six-part exposé of the Inquireron the scam pointing to businesswoman Janet Lim-Napoles as the scam's mastermind after Benhur K. Luy, her second cousin and former personal assistant, was rescued by agents of theNational Bureau of Investigation on March 22, 2013, four months after he was detained by Napoles at her unit at the Pacific Plaza Towers in Fort Bonifacio.[2] Initially centering on Napoles' involvement in the 2004 Fertilizer Fund scam, the government investigation on Luy's testimony has since expanded to cover Napoles' involvement in a wider scam involving the misuse of PDAF funds from 2003 to 2013. It is estimated that the Philippine government was defrauded of some ₱10 billion in the course of the scam,[1] having been diverted to Napoles, participating members of Congress and other government officials. Aside from the PDAF and the fertilizer fund maintained by the Department of Agriculture, around ₱900 million in royalties earned from the Malampaya gas field were also lost to the scam.[3] The scam has provoked public outrage, with calls being made on the Internet for popular protests to demand the abolition of the PDAF,[4] and the order for Napoles' arrest sparking serious discussion online.[5] Contents [hide] 1 Background 2 Modus operandi 3 Accused parties 4 Investigation 5 Reactions 6 Protests 7 References Background[edit] Two infographs on the PDAF produced by the Assembly, the Political Science Organization of the Ateneo de Manila University. Main article: Priority Development Assistance Fund Although the history of pork barrel-like discretionary funds in the Philippines dates back to 1922,[6] during the American colonial period, the PDAF in its current form was only established during the administration of Corazon Aquino with the creation of the Countryside Development Fund (CDF) in 1990. With ₱2.3 billion in initial funding, the CDF was designed to allow legislators to fund small-scale infrastructure or community projects which fell outside the scope of the national infrastructure program, which was often restricted to large infrastructure items. The CDF was later renamed the PDAF in 2000, during the administration of Joseph Estrada.[7] Since 2008, every member of the House of Representatives usually receives an annual PDAF allocation of ₱70 million, while every senator receives an annual allocation of ₱200 million.[8] The President also benefits from a PDAF-like allocation, the President's Social Fund (PSF), worth around ₱1 billion.[9] Contrary to public belief, however, PDAF allocations are not actually released to members of Congress. Rather, disbursements under the PDAF are coursed via implementing agencies of the Philippine government, and are limited to "soft" and "hard" projects: the former largely referring to non-infrastructure projects (such as scholarships and financial assistance programs, although small infrastructure projects are also considered "soft" projects), and the latter referring to infrastructure projects which would be coursed via the Department of Public Works and Highways.[7] Because presidential systems are often prone to political gridlock, the PDAF is often used as a means to generate majority legislative support for the programs of the executive.[10] Furthermore, because PDAF allocations are released by the Department of Budget and Management (DBM), PDAF allocations are often dependent on the relationship a legislator has with the sitting President.[10] For example, during the latter years of the Gloria Macapagal-Arroyoadministration, she was more generous in allocating PDAF funds in the annual national budget in order to win the favor of legislators.[8] PDAF allocation has gradually increased over the years.[10]For example, before Arroyo stepped down, the last PDAF allocated was for the year 2010 at ₱10.86 billion, but when the Benigno Aquino III administration passed its first budget for 2011, the allocation more than doubled to ₱24.62 billion.[11] The PDAF has proven to be very unpopular, with numerous calls for its abolition. In 1996, the Philippine Daily Inquirer published an exposé on systematic corruption in the CDF, with an anonymous congressman (since identified as Romeo D. Candazo of Marikina) elaborating how legislators and other government officials earned from overpricing projects in order to receive large commissions. Public outrage over the misuse of the CDF was instrumental in the enactment of reforms which led to the formation of the PDAF.[12] The constitutionality of the PDAF has also been challenged in the Supreme Court. In 1994, the constitutionality of the CDF was challenged by the Philippine Constitution Association, arguing that the CDF's mechanisms encroach on the executive's power of implementing the budget passed by the legislature, but the Court ruled the CDF constitutional under the legislative's "power of the purse".[13] This ruling was reaffirmed in 2001, when the PDAF was challenged again in the Supreme Court.[7] Legislators themselves are torn on the abolition of the PDAF, with some supporting total abolition, others supporting increased regulation to minimize abuse of PDAF disbursements, and others opposed to it.[14] Modus operandi[edit] A graphic representation of the PDAF scam's modus operandi produced by the Assembly. The PDAF scam involved the funding of "ghost projects" that were funded using the PDAF funds of participating lawmakers.[15] These projects were in turn "implemented" through Napoles' companies, with the projects producing no tangible output. According to testimony provided by Benhur Luy's brother, Arthur, funds would be processed through fake foundations and non-governmental organizations (NGOs) established under the wing of the JLN Group of Companies, the holding company of Janet Lim-Napoles, with Napoles' employees—even a nanny—named as incorporators or directors.[16]Each foundation or NGO served as an official recipient of a particular legislator's PDAF funds, and each organization had a number of bank accounts where PDAF funds would be deposited for the implementation of these projects.[15] Napoles, who specialized in trading agricultural products, frequently used the procurement of agricultural inputs in the propagation of the scam. Either her employees would write to legislators requesting for funds for the implementation of a particular project (e.g. farm inputs), or a legislator would indicate to the DBM a particular recipient agency for his or her PDAF funds that would be pre-selected by Napoles.[17] Once received, this is forwarded to the DBM, which would then issue a Special Allotment Release Order (SARO) indicating the amount deducted from the legislator's PDAF allocation, and later a Notice of Cash Allocation (NCA) given to the recipient agency. The NCA would then be deposited in one of the foundation's accounts, and the funds withdrawn in favor of the JLN Group of Companies.[16] The funds would then be split between Napoles, the lawmaker, the official of the DA responsible for facilitating the transfer of funds and, for good measure, the local mayor or governor.[15] The JLN Group of Companies offered a commission of 10-15% against funds released to local government units and recipient agencies of PDAF funds, while a legislator would receive a commission of between 40-50% against the total value of his/her PDAF.[17] Letters sent by Napoles' employees to participating legislators would also include a letter from a local government unit requesting for funding, bearing the forged signature of the local mayor or governor. All documents involving local government units were prepared by Napoles' staff, and Benhur Luy would forge the signature of the local mayor or governor. Local government officials who were used by Napoles were often unaware that they were participating in the scam.[16] In other instances, however, Napoles would use emissaries to establish contact with local mayors in exchange for commissions that would come from the implementation of these projects.[15] Every recipient agency participating in the scam had employees or officials that maintained contact with Napoles, allowing for the smooth processing of transactions and the expedient release of PDAF funds to her organizations. Most importantly, Napoles was in regular contact with the DBM through Undersecretary for Operations Mario L. Relampagos,[18] who had three employees (identified as Leah, Malou and Lalaine) responsible for the processing of SAROs destined for Napoles' organizations.[17] Accused parties[edit] In the initial report published by the Philippine Daily Inquirer, 28 members of Congress (five senators and 23 representatives) were named as participants in the PDAF scam. Twelve of these legislators were identified by the newspaper, and close to ₱3 billion in PDAF funds coming from these legislators alone were exposed to the scam. Notably, the Inquirer named Bong Revilla, Juan Ponce Enrile, Jinggoy Estrada, Ferdinand
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