Senate Report on Fertilizer Scam

Source : Senate Committee Report 54

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A summary of the findings of the Senate Blue Ribbon Committee and the Senate Committee on Agriculture and food on the Fertilizer Fund Scam.
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8 March 2006

The Fertilizer Scam

The Senate Committees on Agriculture and Food, and Accountability of Public Officers and Investigations (Blue Ribbon) have concluded that agricultural funds intended for farmers were diverted by Agriculture Undersecretary Jocelyn "Joc-joc" Bolante for the 2004 electoral campaign of President Gloria Arroyo.

Testimonies and corroborative statements of DA officials, 13 farmer groups (see attached list), Commission on Audit officials, Budget Secretary Emilia Boncodin, and alleged "runners" of Bolante concluded that farmers did not get a single "farm input or implement" in 2004. At least two LGU officials testified that their districts did not receive any fertlizer in spite of records showing that deliveries had
been made. Several Congressmen also denied having made requests for fertilizer assistance or receiving fertilizers.

Asked if Usec Bolante's requests for funds was upon the instructions of the President, former Budget Secretary Emilia Boncodin replied, "I would imagine so."

Who is Joc-joc Bolante?

The committee report points to Bolante as the principal architect and implementor of the scam. He negotiated the release of funds from the Department of Budget and Management, had authority to release funds and the discretion to pick the fertilizer fund's proponents. He also sent letters to congressmen and local officials informing them of the availability of funds.

He was the first appointee of the President in the DA (even prior to Sec. Leonardo Montemayor's appointment) and concurrently held positions as acting chairman of National Irrigation Administration, Livelihood Corp., and Strategic Investments and Development Corp. He was also a director of National Power Corp. and Land Bank of the Philippines.

Wrong timing for fertilizers

The fertilizer fund appropriation was implemented only in 2004, incidentally during the election season. Funds were released from February to May 2004 or during harvest months when fertilizers are of no use because planting time starts in November. The DA's Rice Program (known as GMA or Ginintuang Masaganang Ani) director Frisco Malabanan testified that fertilizer requirements for 2003 totaled
only P28.613 million for the entire Philippines - compared to the P2.806 billion released in 2004.

Overpriced and inappropriate fertilizer

The fertilizers used were actually liquid fertilizers known as foliar, normally used for ornamental plants and flowers and anything leafy but not usually used for rice or corn. To add insult to injury, the "wrong and overpriced fertilizer for rice was even diluted with water." The Commission on Audit reported overpricing of foliar fertilizer (allegedly supplied in all transactions) from 700 to 1,250 percent. For instance, a witness cited Bio Nature liquid fertilizer regularly sold in the market at P180 to P350 per bottle were priced at P1,500 per bottle.

Sharing scheme

Atty. Frank Chavez testified that the fertilizer funds were shared in the following manner: 25% for the DA official (referring to Jocelyn Bolante); 30% for mayors, governors and congressmen concerned; 20% for the supplier of farm inputs; and 25% for DA official runners. A certain Jose Barredo, Jr. also testified under oath (as being one of
the runners) how the fertilizer scam operated and how he offered the fertilizers to local officials and congressmen.

Who were the fertilizer suppliers?

In spite of the size of the program, no major fertilizer suppliers appeared to have participated in the program. The Fertilizer Industry Association of the Philippines (FIAP), which has 17 member-companies and a market share of 95%, testified that none of its members participated in the DA's fertilizer program.

Instead, AKAME Marketing, Castle Rock Construction, and FESHAN Philippines, Inc. were identified as the suppliers of the fertilizer. Two of the companies could not be traced and one has no prior track record of dealing in fertilizers. Feshan, for instance, is originally a medical supplier and started to supply fertilizers only in 2004.

Bigger pie

The Senate Committees on Agriculture and Blue Ribbon revealed that the P728 million fund is just a portion of the Larger Fertilizer Fund released during the 2004 elections. The Department of Agriculture received P2.806 billion for the purchase of farm inputs and implements before the 10 May 2004 elections.

Nature of Fund/Program SARO Number and Date Amount

GMA Farm Inputs and Implements E-04-00164 (Feb. 3, 2004) P728 million

GMA Rice and Corn E-04-00294 (Feb. 11, 2004) P1.102 billion

Marcos Wealth for CARP E-04-01090 (Apr. 28, 2004) P544 million

GMA Rice Program and
Fertilizer Procurement and From Agency Budget Matrix
Distribution Component (regular budget) P432 million
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P2.806 billion

Criminal culpability

The Senate committees recommended an overhaul of the Department of Agriculture. Filing of criminal and administrative charges were recommended against Agriculture Undersecretary Jocelyn Bolante, Secretary Luis Lorenzo, Undersecretary Ibarra Poliquit, Undersecretary Belinda Gonzales, Assistant Secretary Jose Felix Montes, and all regional directors of the DA who participated in the fertilizer scam. President Arroyo (who may have had knowledge on the Bolante requests for funds) was also asked to account for the mismanagement of the fertilizer fund. Private sector partners or suppliers who connived with the DA in overpricing diluted fertilizers and ghost deliveries could also be charged.

ATTACHMENT A

Farmer groups that testified in the Senate Fertilizer Scam hearings and claimed that they had not received fertilizer assistance :

1. Kilusang Magbubukid ng Pilipinas (KMP)
2. Pambansang Ugnayan ng mga Nagsasariling Organisasyon sa Kanayunan (UNORKA)
3. Pambansang Lakas ng Kilusang Mamamalakaya ng Pilipinas
4. Kalipunan ng mga Maliliit na Magniniyog sa Pilipinas
5. Katipunan ng Samahang Magbubukid sa Timog Katagalugan (KASAMA-TK)
6. Pahagpong sa mga Mag-uuma sa Panay (PAMANGGAS)
7. Katipunan ng Samahang Magsisibuyas (KASAMNE)
8. Alyansa ng Magbubukid sa Gitnang Luzon
9. KMP-Southern Tagalog
10. Samahan ng Gugti ng mga Parag-uma - Sinirangan Bisaya (SAGUPA-SB)
11. SAGUPA-SB, Northern Samar
12. National Federation of Peasant Women (AMIHAN)
13. KMP-Bicol