INSIDE PCIJ
The truth about the OWWA funds
by: Alecks P. Pabico on 1 August 2006 at 9:08 am
(UPDATED) ALLEGATIONS of misuse of overseas workers’ funds held in trust by the government have again surfaced amid the bickering between government officials over the reported lack of money for the evacuation of Filipinos from war-torn Lebanon.
The issue has prompted a Senate inquiry that started yesterday but which was marked by the absence of key executive officials invited to shed light on the status of the funds of the Overseas Workers Welfare Administration (OWWA), citing ongoing “critical operations” to get Filipino workers out of Lebanon.
Almost three weeks after the Middle East crisis erupted between Israel and the Hezbollah armed group, the repatriation of overseas Filipino workers (OFWs) from Lebanon has stirred a controversy after Philippine Ambassador to Lebanon Al Francis Bichara said last week that money is running out for the beleaguered OFWs with no fresh funds coming in from Manila.
Testifying at yesterday’s Senate hearing via overseas phone call, Bichara, who had earlier apologized for the “confusion” his statement generated, said he is standing by his claims, insisting that embassy records show no funds have been transferred from the Department of Foreign Affairs for the evacuation of OFWs.
But the OWWA, which manages the funds coming from $25-contribution per contract of overseas workers, claimed it has already released an initial $2 million after violence escalated in Lebanon on July 14.
An OWWA official disclosed to the PCIJ that another $2 million has also been approved for release by its board of trustees last July 28 even as $2 million more is being set aside as standby fund upon the order of Labor Secretary Arturo Brion on the same day. The money is being sent to the OWWA welfare officer in Lebanon, a certain Mario Antonio, while payments for the chartered planes are said to be transacted in Manila or through Ambassador Roy Cimatu. The official however expressed surprise that Bichara, as head of mission, is being kept in the dark about the funds.
Earlier, Malacañang had also approved the release of P150 million from the National Treasury and $250,000 by the Philippine Embassy in Beirut for the evacuation of affected Filipinos.
These amounts were supposed to have covered the cost of evacuation in just a week, which OWWA Deputy Administrator Angelo Jimenez said, has already summed up to $1.5 million (P80 million), a big chunk of which were incurred for airfare expenses. Airlines are reportedly charging a minimum of P2 million per chartered flight, or an equivalent of $1,200 per evacuee.
Since “Oplan Sagip OFWs sa Lebanon” started on July 23, some 1,274 Filipinos have been repatriated back to the country — which foreign affairs undersecretary Esteban Conejos Jr. said is proof that there are sufficient funds.
Marianito Roque, OWWA administrator, also dismissed the allegations of fund misuse, saying the OWWA fund, which he said stood at P8.1 billion as of December 2004, remains intact.
Documents dated July 25, 2006 obtained by the PCIJ, however, show that the total funds, including dollar deposits and holdings, and investments in two government banks — the Land Bank of the Philippines and the Development Bank of the Philippines — now amount to P7.73 billion. The combined LandBank and DBP deposits under an investment management agreement total P6.58 billion.
TABLE 1: OWWA TOTAL PORTFOLIO
OWWA MAIN
NATURE OF FUND
AMOUNT
Capital Fund (as of May 31, 2006)
36,067,487.37
OWWA-MWLGF (LBP) May 31, 2006
43,961,409.68
OWWA-MWLGF (DBP) May 31, 2006
60,288,053.83
OWWA-SWF (as of May 31, 2006)
73,234,639.10
OWWA-IBPF (as of May 31, 2006)
14,913,103.69
OWWA-NLSF Trust Fund (as of May 31, 2006)
61,133,577.42
Tbills-CMWSP, Tbonds, LBP Bonds & Debenture Bonds(as of May 31, 2006)
371,491,073.99
TOTAL
661,089,345.08
US DOLLAR DEPOSITS
Savings Deposit
$682,501.70
OWWA-MEDICARE
Capital Fund (as of May 31,2006)
1,395,235.05
Tbonds, LBP Bonds and Debenture Bonds(as of May 31, 2006)
365,599,693.09
TOTAL
366,994,928.14
US DOLLAR HOLDINGS
Savings Deposit
$652,266.07
Time Deposit
471,314.18
ROP Bonds
640,000.00
TOTAL
$1,763,580.25
INVESTMENT MANAGEMENT AGREEMENT
LBP (as of May 31, 2006) inclusive of interest earnings
3,259,553,389.00
DBP (as of May 31, 2006) inclusive of interest earnings
3,321,451,097.90
TOTAL
6,581,004,486.90

TOTAL PhP
7,609,088,760.12
TOTAL $
2,446,081.95
TOTAL PORTFOLIO
7,733,838,939.57
Conversion Rate: US$1.00 = PhP51.00
Fund for emergency repatriation
If OWWA funds are inviting much scrutiny regarding the availability of money for the evacuation of OFWs, it is because under Republic Act No. 8042, or the Migrant Workers and Overseas Filipinos Act of 1995, the agency is mandated to administer, among others, an Emergency Repatriation Fund (ERF) to evacuate overseas workers in case of emergencies such as war, epidemic, disaster or calamities (natural or man-made).
A seed amount of P100 million was set aside for this purpose from the funds managed by OWWA, afterwhich Congress is supposed to allocate no less than P100 million for the ERF in the annual national budget.
But Congress has failed to allocate a single centavo to the fund over the years.
“Since there is no other source, presumably, the ERF gets a share from the $25 charged as fees by OWWA for every contract of OFWs,” says laywer Berteni Causing, who finds the law vague as to where the fund will be sourced.
“With about 3,000 workers leaving abroad every day, even at $1, you could just imagine how much money they are getting in a year,” he says.
OWWA places its average collection from OFWs between P800 million and P1 billion a year — though overseas workers are contesting why they get to be charged the $25 contribution when the law stipulates that “in no way shall the fees be charged or collected from the worker.”
Since the ERF is not being included in the General Appropriations Act, Ellene Sana, executive director of the Center for Migrants Advocacy (CMA), says it should still be incumbent on the government to produce the money and not just rely on OWWA.
An additional consideration, Sana points out, is the fact that most of the Lebanon evacuees are undocumented OFWs. “This somehow creates tension between documented and undocumented workers since the former are the ones who are required to contribute $25 to the OWWA Fund,” she explains.
In many cases, too, an OWWA official says, the agency has not been reimbursed for the money it advanced to evacuate OFWs, both documented and undocumented, including the last one in 2003 during the invasion of Iraq.
However, the ERF is not the only fund under the care of OWWA whose sourcing suffers from the lack of specific provisions in the law. RA 8042 also provides for the Migrant Workers’ Loan Guarantee Fund (MWLGF), Legal Assistance Fund (LAF), and Congressional Migrant Workers Scholarship Fund (CMWSF).
While the law states that money will be set aside by the national government in the budget every year for the loan gurantee fund, it also says that P100 million shall be made available as a revolving fund from OWWA. “This only means that it shall be provided from OWWA’s earnings from its operations like the charging of $25 per contract,” Causing says.
The revolving fund shall only serve as a guarantee for every loan that may be extended to any OFW or OFW family members by participating government financial institutions like the Land Bank and DBP and shall only be used if an OFW borrower is not able to pay his/her loan.
The legal assistance fund, on the other hand, will be sourced from the President’s contingency fund (P50 million), the Presidential Social Fund (P30 million), and the Welfare Fund for Overseas Workers (P20 million). The Welfare Fund is the precursor of the OWWA funds established under the Marcos-issued Letter of Instruction No. 537 and amended by Presidential Decree Nos. 1694 and 1809.
For the ongoing crisis in Lebanon, DFA’s Conejos has already requested the OWWA for an immediate supplemental legal assistance fund.
The scholarship fund, meanwhile, should receive P50 million from the equal shares of congressmen and senators, and P150 million from the proceeds of lotto operations.
Dubious investments and fund transfers
But the biggest reason for the apprehension about the OWWA funds’ status, particularly among OFWs, considering the huge amounts of money involved, is that the said funds had been the subject of a number of questionable transactions in the past.
Migrant workers’ organizations point to anomalous investments in Landoil Resources Corp. and Greater Manila Corp. in 1983 amounting to the P200 million, and the P664 million in the Smokey Mountain Project Participation Certificates (SMPPC) issued by R-II Builders owned by Reghis Romero during the time of Pres. Fidel Ramos.
To this day, investments in Landoil, majority of which was owned by House Speaker Jose de Venecia, have not been repaid. The Smokey Mountain project investment, on the other hand, was in violation of a Department of Finance circular requiring government-owned and -controlled corporations to invest their funds only in qualified government securities.
While the issue with the Smokey Mountain project has been settled with the Home Guarantee Corporation (HGC) agreeing to pay OWWA P500 million in cash in two tranches in January 2003, the rest of the balance of the P1.07 billion settlement in the form of debenture bonds remains not fully paid.
In its audit report (download here) of OWWA last year, the Commission on Audit recommended that OWWA negotiate with HGC for the immediate cash settlement of the outstanding balance of its claim amounting to P479.33 million instead of waiting for HGC to settle the account by issuing debenture bonds.
OFW groups have also denounced the alleged gross misuse and plunder of OWWA funds in relation to Gloria Macapagal-Arroyo’s candidacy in the 2004 elections involving the transfer of the P530-million Medicare Fund for OFWs to the Philippine Health Corp. (PhilHealth) and $87,757 (then P23.587 million) rechanneled to the International Labor Affairs Service of the Department of Labor and Employment.
The PCIJ reported last year that among the fund releases that were allegedly diverted to the Arroyo campaign in 2004 was the OWWA Medicare fund, the transfer of which was made possible by a resolution signed by then Labor Secretary Patricia Sto. Tomas, in her capacity as chairperson of OWWA, along with then OWWA Administrator Virgilio Angelo.
Francisco Duque III, then PhilHealth president had proposed his agency’s takeover of OWWA’s medicare functions as early as November 2002. Now health secretary, Duque is known to be a close Arroyo ally and is a long-time friend of the First Family and their neighbor at La Vista in Quezon City.
In his memorandum to Arroyo, Duque said “the proposed transfer will have a significant bearing on the 2004 elections.” Three months later in February 2003, Arroyo signed the proposed executive order.
The money enabled Arroyo to give away Philhealth cards valid for a year to people in the places she visited during the campaign. OWWA, by that time, had already been turning down health claims of hundreds of overseas workers and eventually stopped all medical reimbursements in a meeting on January 16, 2004.
Migrante also called for the investigation of other “anomalous” transactions such as the alleged P30-million transfer by the Manila Economic Cultural Office (MECO) to the Office of the President in August 2003 and the US$293,500 released to Ambassador Cimatu supposedly for massive evacuation operations in the Middle East during the U.S.-Iraq war in April 2003 that did not actually take place.
Recently, overseas workers are also protesting a Malacañang proposal to convert the Philippine Postal Savings Bank to an OFW Bank that is also eyeing P1 billion in OWWA funds as initial capital for the venture.
No legal basis for investing OWWA funds
Taking up the cudgels for OFWs, Causing says he sees no basis in law for using OWWA funds for purposes other than they were created. “It is a basic principle that no single centavo can be spent without a law saying where, how and for what it is to be spent. I dare say that investing OWWA money in any form is illegal,” he argues.
Causing likewise points out that the authorities relied on by OWWA (issuances like board resolutions) are not laws and can never be higher than the laws. At the same time, he says OWWA has no fiscal autonomy. “It cannot therefore determine as to how and where it can source its funds. It cannot therefore determine as to how its money will be spent.”
Yet as the COA report also reveals, violations are being done in this regard. In its audit, the COA found that OWWA released a total of P33.65 million to the Provident Fund of its employees from October 2004 to August 2005, despite the board’s suspension of the benefits for lack of legal basis. A Malacañang directive had also called for the immediate suspension of employer contributions to the Provident Fund last December 30, 2003.
The state audting firm maintained that as per the December 9, 2003 memorandum of the Senior Deputy Executive Secretary to Arroyo, the government would be limited only to a one-time contribution and not as a regular yearly expense.COA also reported cash advances amounting to P144 million — nearly the same amount the Office of the President released for the evacuation of OFWs in Lebanon — that have remained unliquidated as of December 31 last year.

Overcharging POEA fails to submit books ? CoA
12/19/2007 Daily Tribune Bobbit Mariano
Its records are still being hidden even from the official audit agency.
Despite raking in huge amounts from Filipinos working overseas with a $25-membership fee each, based on an overcharge of P51 per dollar against the prevailing 41 per dollar exchange rate, the Philippine Overseas Employment Agency (POEA) has been remiss in providing government with its financial records.
The POEA has failed to submit important financial records to the Commission on Audit (CoA) for this year, the Tribune learned.
CoA senior staff, Edna Rodriguez, detailed at POEA, told the Tribune that the audit agency is being delayed in looking through the financial records of the POEA due to its failure to submit documents, primarily the trial balance and bank reconciliation statements which are necessary in determining the financial health of the agency.
The trial balance is a financial worksheet prepared in each financial period while bank reconciliation matches figures from the accounting records against those presented on a bank statement which is made primarily to uncover any possible discrepancies.
Rodriguez said the CoA only received some of POEA’s vouchers, collection and receipts every month but not the two important financial records. CoA is mandated under the l987 Constitution to submit an annual report to the Office of the President and Congress on the financial condition and on the result of the operation of all agencies of government not later than Sept. 30 each year.
CoA’s auditor detailed in POEA, Rosemarie Valenzuela, only goes to the agency once a month.
Obtaining some financial documents from CoA must first have a clearance from their director, Rodriguez stressed.
Asked why POEA failed to submit the financial papers, Rodriguez said in the CoA report POEA’s failure to submit such financial records is ‘due to lack of manpower.’ She is referring to POEA’s short of accounting staff.
The Tribune reported on the lack of manpower in Poea’s accounting division in the fifth floor and discovered later that only three employees work, including the Accounting Chief at 2 p.m. office working hours.
Poea accounting Chief Lyn Adalia said some workers were not in their offices because one was absent, one was on leave, one was out distributing documents, one was in the Department of Budget and Management, while the department still has three vacancies.
Acting on the instruction of Poea’s finance director Candida Vistro, Adalia disclosed that Poea has so far remitted a total of P330 million to the national treasury and P360 million in 2006.
Adalia said the workers’ employment agency is receiving an average collection of P20 million a month, of which a large portion of the amount stemmed from the collection of processing and license fee. The Poea exit clearance for Balik-Manggagawa or Returning Overseas Filipino Workers is pegged at P100 and P900 for Philhealth Coverage Premium.
Adalia refused to disclose Poea’s quarterly financial reports which included their collection fees and remittances to the national treasury.
Poea said a returning worker may opt to have the exit clearance processed at the Rural Net and its affiliate rural banks. The worker must submit the required documents such as valid passport and re-entry visa and pay the government fees and P350 service fee.
A worker on leave with valid Overseas Workers Welfare and Administration (OWWA) membership and PhilHeath coverage will only pay P100 for Poea processing fee.
Some forms of exit clearance include: e-receipt, an integrated receipt for payments of Poea, OWWA and Philhealth fees that also serve as the exit clearance at the airport. E-receipt are issued by the firm’s central office, Poea Cebu and La Union.
The e-receipt and Overseas Employment Certificate are issued in five copies, a copy each for the Poea, OFW, LAC, airline and airport authority and are valid for 60 days.
The multiple travel exit clearance, meanwhile, is a set of two or more clearances issued to the airline cabin crew, flight attendants, off-shore workers, and other workers for use as an exit document that is valid for 12 months from date of issue.
According to Poea, an exit clearance is proof that the worker has undergone the legal and right procedure of overseas employment. Being a registered OFW, the worker is accorded the full protection and benefits from government institution while he is working abroad and upon his return to the Philippines. It also exempts the OFW from payment of travel tax and terminal fee.
Aside from various fees imposed among OFWs, Poea had allegedly engaged in money making activities such as setting up kiosks and stalls in cafeterias with a rental fee of about P15,000. Stalls inside the cafeteria are: Western Union, OFW loan one day processing, two kiosks offering house and lot sale and e-load.
At the entrance going to Balik Mangagawa Processing Center, commercial establishments were set-up which includes: Elite Travel Center, Manila International Travel and Regent Travel Corp, occupying about 50-60 sqm space. One of the tenants refused to disclose how much is his rent to Poea when asked by The Tribune.
Hundreds of OFWs were being entertained yesterday by Globe-sponsored program that includes bingo, singing and dancing. Some radio personalities and actresses like Jolina Magdangal and Katya Santos also graced the occasion.
Poea deploys a total of 2,953 daily average workers, a total of 2,234 are land-based and 719 sea-based workers. The agency has processed a total of 1.02 million working contracts this year.
Poea receives an average of 3,000 clients and as much as 5,000 clients on peak days especially during December and January in the main office alone located in Edsa corner Origas avenue in Mandaluyong City.
These clients are overseas job applicants, seafarer-registrants, name hires, newly hired workers, overseas performing artists, relatives of migrant workers, victims of illegal recruiters, foreign employers and representatives of private recruitment agencies.
Poea and Malaca recently honored 12 OFW as recipients of 2007 Bagong Bayani Awards. They are: Chitael Carmona, Vito de Raya, Cuadrato Gidoc Gaspi, Eduardo Gulmatico, Rolando Ocampo, Hazel Reposo, Jesus Sumook, Mary Jane Pajarillo-Tupaz, Josefina Villarey, Roberto Abella, Francisco Roque and Richard Gabriel.
Poea is the government agency, which is responsible for optimizing the benefits of the country’s overseas employment program. Poea’s mission is to ensure decent and productive employment for Overseas Filipino Workers.
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