COA: ₱5.9 billion in PCSO charity fund spent not for charity programs

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Metro Manila (CNN Philippines, July 13) — More than a third of the Philippine Charity Sweepstakes Office (PCSO)'s charity fund for 2017 was not used for charity programs as mandated by law, the Commission on Audit (COA) found.

In its annual audit report released Thursday, the COA said ₱5.89 billion of the charity fund were used for various purposes not related to health programs, medical assistance services, and other charities, violating Republic Act 1169.

COA also flagged that state lottery officials overspent the charity fund in 2017, using up a total of ₱18.035 billion and exceeding the net allocated amount of ₱14.40 billion. This resulted in a ₱3.53-billion deficit.

"Said deficit may be attributed to the various disbursements/charges to the Charity Fund in the total amount of ₱5.89 billion that were not related to health programs, medical assistances services and/or charities of national character," state auditors said in their report.

The amount should have been charged to the operating fund instead, COA said. It includes ₱5.3 billion that was used to pay documentary stamp taxes, ₱318.6 million that went to the Commission on Higher Education (CHED), ₱67.98 million that was paid to the personal services of employees of the PCSO Charity Clinic and ₱205.59 million that was used for the medical benefits of PCSO employees.

The COA said this misuse "may deplete the [charity fund] and eventually affect the delivery and implementation of the mandated purposes of the charity fund."

According to the audit, the PCSO replied that it started charging the charity clinic's expenses to the operating fund since January 2018, while the employees' medical benefits were still charged to the charity fund "being a health related expense."

"The CHED contributions, while not within the Charter of the PCSO, have to be complied with in view of the provisions of the law and the documentary stamp taxes are being charged to Charity Fund (CF) based on Minutes of the Meeting of the Members of the Board dated April 27, 1995," the PCSO said as quoted in the audit report.

State auditors, however, maintained all these expenses are not charity-related and may deprive supposed beneficiaries of the charity programs.

The PCSO in its financial statement said over 200,000 beneficiaries gained from its charity assistance program and over 91,000 patients were given medical assistance in 2017.

COA also urged the PCSO to finally enter into memoranda of agreement with local government units and congressional districts to clarify how their shares from the government-sanctioned small town lottery (STL) operations should be used.

"Absence of the required agreements with the LGUs/CDs resulted in quandary on how the fund shall be utilized," the audit read.

COA said these funds should also go to health programs, medical assistance and services and charity programs.

The PCSO said it is awaiting President Rodrigo Duterte to approve the implementing rules and regulations for STL.

'Extravagant' Christmas party

The COA report also flagged other findings, including the "extravagant expenditure" during the PCSO's Christmas Party in 2017, among others.

"Holding the CY 2017 PCSO Christmas Party at EDSA Shangri-La Hotel and Resort, Inc. for a total cost of ₱2.2 million @ ₱2,000.00 per head for 1,100 PCSO officers and employees rather than holding it in a much cheaper venue that would have costed ₱1.38 million only resulted in the incurrence of extravagant expenditure in the amount of ₱.820 million," the audit said.

This became the subject of a Senate investigation after PCSO Director Sandra Cam exposed the allegedly lavish Christmas party, which she claimed cost about ₱9 million. PCSO Chairman Jose Jorge Elizalde Corpuz has since resigned.

PCSO general manager Alexander Balutan told a Senate hearing the PCSO even saved millions of pesos last Christmas: from an approved budget of ₱10 million, it went down to ₱6.3 million.