Press Release
January 14, 2012

Drilon asks Senate to probe alleged misuse
of Supreme Court loan from World Bank

Senator Franklin Drilon has asked the Senate to investigate the alleged misuse of a $21.9-million World Bank loan to the Supreme Court, warning that such irregularity, if left unchecked, could "prejudice the standing and credit worthiness" not only of the Supreme Court but also the entire Philippine government before international financial institutions.

Proposed Senate Resolution No. 674, filed by Drilon on Jan. 9, called on Senate Oversight Committee on Public Expenditures to look into circumstances surrounding the World Bank loan to the Supreme Court, particularly into reports that the funds were mismanaged and disbursed in a manner contrary to the agreement between the two institutions.

In his resolution, Drilon said the loan was approved by the World Bank's Board of Executive Directors on Oct. 2 2003 to finance the Judicial Reform Support Project (JRSP), which sought to enhance the Judiciary's efficiency and integrity. However, Drilon added, the World Bank reportedly raised some concerns later on how the project was implemented and expressed serious reservations on how the funds were disbursed.

"There are reports that the World Bank recently rendered an opinion to the effect that since the mid-2010, progress in attaining the development objectives of the JRSP and its implementation have been rated 'unsatisfactory,' with the fiduciary environment pertaining to the project deteriorating to a point that the JRSP has been rated 'high risk' on project management, project procurement and financial management decisions," the Drilon resolution said.

"The World Bank allegedly noted that several procurement of goods were undertaken without prior agreement and in some cases, even against the approval of the Bank, resulting to the present situation wherein further expenditures must be undertaken only with the prior agreement of the Bank, in writing, and reflected in the agreed procurement plan," the resolution added.

In the resolution, Drilon noted that the World Bank "reportedly stressed that the lack of appropriate segregation of duties of key Supreme Court officials involved in the project broke the control environment, increased fiduciary and reputational risks and led to irregular or inappropriate procurement and expenditure decisions."

"The circumstances, if found true, could prejudice the standing and credit-worthiness not only of the Supreme Court, but the national government as a whole, before such international financial institutions like the World Bank and curtail the inflow of much-needed loans and other monetary assistance," the resolution further said.

Drilon said financial arrangements like the JRSP loan "constitute a future financial drain on the already limited monetary resources at the disposal of the government."

"There is a need to closely monitor the management and disbursement of such funds and institute improved safeguards in future general appropriation measures to prevent undue dissipation of the already limited government monetary resources," the resolution said.

"The power of the purse as exercised by Congress carries with it the power to institute safeguards to curb wanton and negligent spending on any branch of the government," Drilon explained. "Whether the funding sources come from taxes or foreign loans, it is the duty of Congress to ensure that every centavo is responsibly spent."

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