The government failed to pay private companies more than P100 billion in 2018 due to a “corrupt system” that continued to control the payment scheme for public works contracts, according to House appropriations committee chair Rep. Rolando Andaya Jr.

In a statement on Friday, the Camarines Sur congressman said the government’s failure to pay for completed projects might drive away contractors and derail the Duterte administration’s “Build, Build, Build” infrastructure program.

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“This gargantuan amount of payables has reincarnated an old system that forces (public works) contractors to cough up kickbacks just to be paid for completed infrastructure projects,” Andaya said.

Quoting “concerned employees” of the Department of Budget and Management (DBM) and the Department of Public Works and Highways (DPWH), the lawmaker said the total amount of unpaid contracts for public works projects in 2018 shot up from P44 billion in November to more than P100 billion at the end of the year.

DBM response

In a statement responding to Andaya’s claim, the DBM said “we are not aware as to how the P100 billion in (accounts payable) have been arrived at since books of accounts have not yet been closed.”

“Notices of Cash Allocation, or NCAs, are issued based on the submitted list of due and demandable accounts payable (APs) of the DPWH. For this year, we have already released a total of P64 billion for APs of the DPWH,” said the statement prepared by Undersecretary Tina Rose Marie Canda.

“Under a reenacted budget, 25 percent of funds for personnel services, maintenance and other operating expenses, and capital outlays may be obligated. Amounts corresponding to salaries for their casual employees is included in this authority. It is now up to the DPWH to resolve this matter.”

House probe

Andaya has been leading the House investigation into what lawmakers considered to be “anomalous practices” in the DBM, starting with the alleged unauthorized insertion of P75 billion worth of projects into the 2019 National Expenditure Program.

“(Budget) Secretary (Benjamin) Diokno has yet to explain his role in the 11th-hour insertion of P75 billion in DPWH budget. Now we have uncovered another dark secret lurking in the DBM: P100-billion payables that breed corruption in payment of DPWH contracts for 2018 projects,” he said.

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Andaya has accused Diokno of orchestrating the insertion of P75 billion worth of public works projects for Catanduanes and Sorsogon, where a “favored” contractor, CT Leoncio Construction Inc. supposedly managed to corner most of the DPWH contracts in 2017 and 2018.

The House committee is following the money trail of P81 million worth of bank deposits that contractors paid as kickbacks to Aremar Construction and Trading Inc., a firm linked to Diokno’s in-laws.

‘Grease money’

According to Andaya, the amount of unpaid DPWH contracts ballooned because of a “system of corruption” that has crept back into the DBM and the DPWH.

He said releases of payments for completed projects from the DBM to the DPWH vary per engineering district, depending on the amount of “grease money” that contractors are made to cough up.

“In some districts, the running rate (of kickbacks) is 10 percent (of the contract amount) only, while others (are) given 30 percent, depending on the amount of bribes; contractors who refuse to give in get zero payment,” Andaya said.

The DBM releases payments to engineering districts in lump-sum amounts, over which discretion is given to regional directors to allocate the payments among contractors, he added.

“Since the payments are usually insufficient, contractors have to resort to bribery just to get paid,” Andaya said.

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