Who has the ‘Power of the Purse’?

BASIC to understanding the national budget are the facts that the “power of the purse” solely lies entirely in hands of Congress and that “specific line items have replaced lump sum” items to get rid of the abominable “pork barrel” entirely, in principle.

But according to Minority Senate Minority Leader Aquilino Martin “Koko” dL. Pimentel III, the 2023 National Budget is laced with a slimy P9 billion in “intelligenceligence and confidential funds,” by nature, beyond the ambit of audit and, therefore, sans accountability; makes it look worse than the “pork barrel.” Is this good for a nation whose national debt has reached an unprecedented P13 trillion and is in constant fiscal deficit spending?

To be fair, “national security” issues are automatically covered by such intelligence funds—and one can imagine also that for the Office of the President (but that huge at P4 billion?), the Ombudsman, the Office of the Solicitor General and the Philippine Amusement and Gaming Corp. But what about the rest? It seems that the Executive Department and its line agencies have more of those intelligence funds than the total “intelligence” of the military outfits—which seems ironic.

 While Congress and the Senate made the initial pass on the P5.2-trillion National Budget recently, that still has to go through the Bicameral Conference Committee (bicam) and the final bicam-approved version will again be evaluated by both Houses before being passed on the president for signature.

Is there still room, therefore, to make a “look-see” at the minutiae and the rationale of these intelligence funds so as to insist on the primordial role of Congress as being in charge of the purse strings?

We heard that the Senate is mulling creating a “special oversight committee” to review the intelligence funds of agencies and/or military outfits. If so, then, they should borrow some wisdom from what the US Congress is doing with this type of sensitive funding. There, they invite senior retired security experts to be part (resource persons) of their “special oversight” committee to review the intelligence budget.

In an interview with a blogger, former budget chief Heidi M. Mendoza said the “special oversight” committee will make a value judgment on whether the intelligence operational plans and financial support plans are really necessary, doable and operable. This process can be open to the public but the details, of course, could perhaps be done in an executive session.

In the US military, when so much of the fund utilization ratio is tilted towards the “discretionary” and just enough for the “mandatory” spending, little will be left for the “emergency” spending, which is always present in any given situation. This siphoning of funds, in short, could be depriving the military of adequate budgetary funding for their common basic needs.

A pre-budget approval appraisal appears necessary since, after the final approval of intelligence funds, they become virtual giveaways. For one, the liquidation of cash advances cannot contain details of their utilization and, for another, the “Certificate of Accomplishment” of plans is the lone document given without the attached results of the operations, precisely because of their confidentiality.

Yet, we have not seen a final certification of the final audit findings on the multi-billion pesos graft case involving Pharmally Pharmaceutical Corp., for instance. And this is already a very public case discussed from pillar to post in the Senate Blue Ribbon Committee for several months. What about the lesser visible ones like intelligence funds?

We understand that such intelligence funds can be used for travel, purchase of equipment and rent of safehouses, but cannot be used for salaries, consultant fees and capital expenditures. So, it can be used to buy expensive vehicles, do luxurious travel and rent a mansion without audit or bidding? What about paying trolls?

And to the ordinary laymen, the thought always crosses their minds that with such huge, discretionary and unaccountable millions, concerned beneficiary parties can easily be tempted to bribe the gatekeepers of people’s cash (Commission on Audit?) We understand, however, that all receipts and plans under the intelligence funds are locked safely in a vault and the COA Chairman can seek its review under a “special audit” as was reportedly done with the intelligence funds of the Air Force in 1987 as ordered by the late president Corazon Aquino.

Is this special power of the COA chairman still operable or was it carried out (in 1987) under the auspices of operating under a “revolutionary government” under then-president Aquino?

Let us recall that the Supreme Court, on two occasions, had lent its supreme power to interpret strictly the budgetary law in the sense of banning the “pork barrel” and the illegal use of the Development Acceleration Program by the Executive, indicating, therefrom, the SC’s utmost respect of the sanctity of the “power of the purse” of Congress- in order to maintain the bedrock of checks and balance between the three separate branches of government, especially in the use of the nation’s scant resources.

The Senate oversight committee (once assembled with the participation of intelligent, knowledgeable outside members) can start by looking seriously at the operational and financial plans of agencies with intelligence funds and ask as to what level of education and experience will the concerned agencies’ personnel have: to be able to carry out the objectives of such confidential expeditions.

 While, by law, national security matters are of supreme confidentiality, Congress should not so easily give up its “power of the purse” by nonchalantly accepting intelligent and confidential funding as a matter of course without exerting efforts to establish a semblance of the funds being equitably allocated, utilized above board and possess some kind of accountability without giving away the basis for their being confidential in nature, in the first place.

In normal circumstances, it will be in the second half of December that the president will affix his signature with finality on the proposed 2023 National Budget. There is, therefore, time to sift it again through a fine-toothed comb, if both houses of Congress truly desire to do so.

In the meantime, all of us can perhaps learn more about the inner trappings of the audit process from Mendoza who is said to be teaching such in at least two educational institutions in Manila. It is a tough subject to teach and tougher to understand and learn by heart.

Zoilo P. Dejaresco III, a former banker, is a financial consultant and media practitioner. He is a Life and Media member of the Financial Executives Institute of the Philippines (Finex). His views here, however, are personal and neither reflects those of the Finex nor the BusinessMirror. Email: dejarescobingo@yahoo.com.

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