Pork barrel scam

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events or newly available information. (February 2014)

The Priority Development Assistance Fund scam, also called the PDAF scam or

the pork barrel scam, is a political scandal involving the alleged misuse by several
members of the Congress of the Philippines of their Priority Development Assistance
Fund (PDAF, popularly called "pork barrel"), a lump-sum discretionary fund granted to
each member of Congress for spending on priority development projects of the
Philippine government, mostly on the national level.
The scam was first exposed in the Philippine Daily Inquirer by Nancy C. Carvajal on
July 12, 2013,[1] with the six-part exposé of Carvajal[2][3][4][5][6] pointing to
businesswoman Janet Lim-Napoles as the scam's mastermind after Benhur K. Luy, her
second cousin and former personal assistant, was rescued by agents of the National
Bureau of Investigation (NBI) on March 22, 2013, four months after he was detained by
Napoles at her unit at the Pacific Plaza Towers in Bonifacio Global City.[7] Initially
centering on Napoles' involvement in the 2004 Fertilizer Fund scam, the government
investigation on Luy's testimony has since expanded to cover Napoles' involvement in a
wider scam involving the misuse of PDAF funds from the 2000s to 2013.
It is estimated that the Philippine government was defrauded of some ₱10 billion in the
course of the scam,[1] having been diverted to Napoles, participating members of
Congress and other government officials. Aside from the PDAF and the fertilizer fund
maintained by the Department of Agriculture, around ₱900 million in royalties earned
from the Malampaya gas field were also lost to the scam.[5] The scam has provoked
public outrage, with calls being made on the Internet for popular protests to demand the
abolition of the PDAF,[8] and the order for Napoles' arrest sparking serious discussion
online.[9]

Contents

 1Background
 2Modus operandi
 3Accused parties
 4Investigation
 5Reactions
 6Protests
 7See also
 8References

Background[edit]
Two infographics on the PDAF produced by the Assembly, the Political Science Organization of the Ateneo de
Manila University.

Main article: Priority Development Assistance Fund

Although the history of pork barrel-like discretionary funds in the Philippines dates back
to 1922,[10] during the American colonial period, the PDAF in its current form was only
established during the administration of Corazon Aquino with the creation of the
Countrywide Development Fund (CDF) in 1990. With ₱2.3 billion in initial funding, the
CDF was designed to allow legislators to fund small-scale infrastructure or community
projects which fell outside the scope of the national infrastructure program, which was
often restricted to large infrastructure items. The CDF was later renamed the PDAF in
2000, during the administration of Joseph Estrada.[11]
Since 2008, every member of the House of Representatives usually receives an annual
PDAF allocation of ₱70 million, while every senator receives an annual allocation of
₱200 million.[12] The President also benefits from a PDAF-like allocation, the President's
Social Fund (PSF), worth around ₱1 billion. [13] Contrary to public belief, however, PDAF
allocations are not actually released to members of Congress. Rather, disbursements
under the PDAF are coursed via implementing agencies of the Philippine government,
and are limited to "soft" and "hard" projects: the former largely referring to non-
infrastructure projects (such as scholarships and financial assistance programs,
although small infrastructure projects are also considered "soft" projects), and the latter
referring to infrastructure projects which would be coursed via the Department of Public
Works and Highways.[11]
Because presidential systems are often prone to political gridlock, the PDAF is often
used as a means to generate majority legislative support for the programs of the
executive.[14] Furthermore, because PDAF allocations are released by the Department of
Budget and Management (DBM), PDAF allocations are often dependent on the
relationship a legislator has with the sitting president. [14] For example, during the latter
years of the Gloria Macapagal Arroyo administration, she was more generous in
allocating PDAF funds in the annual national budget in order to win the favor of
legislators.[12] PDAF allocation has gradually increased over the years. [14] For example,
before Arroyo stepped down, the last PDAF allocated was for the year 2010 at ₱10.86
billion, but when the Benigno Aquino III administration passed its first budget for 2011,
the allocation more than doubled to ₱24.62 billion. [15]
The PDAF has proven to be very unpopular, with numerous calls for its abolition. In
1996, the Philippine Daily Inquirer published an exposé on systematic corruption in the
CDF, with an anonymous congressman (since identified as Romeo D. Candazo
of Marikina) elaborating how legislators and other government officials earned from
overpricing projects in order to receive large commissions. Public outrage over the
misuse of the CDF was instrumental in the enactment of reforms which led to the
formation of the PDAF.[16] The constitutionality of the PDAF has also been challenged in
the Supreme Court. In 1994, the constitutionality of the CDF was challenged by the
Philippine Constitution Association, arguing that the CDF's mechanisms encroach on
the executive's power of implementing the budget passed by the legislature, but the
Court ruled the CDF constitutional under the legislative's "power of the purse".[17] This
ruling was reaffirmed in 2001, when the PDAF was challenged again in the Supreme
Court.[11] Legislators themselves are torn on the abolition of the PDAF, with some
supporting total abolition, others supporting increased regulation to minimize abuse of
PDAF disbursements, and others opposed to it.[18]

Modus operandi[edit]
A graphic representation of the PDAF scam's modus operandi produced by the Assembly.

The PDAF or pork barrel scam involved the funding of "ghost projects" that were funded
using the PDAF funds of participating lawmakers. [19] These projects were in turn
"implemented" through Napoles' companies, with the projects producing no tangible
output. According to testimony provided by Benhur Luy's brother, Arthur, funds would be
processed through fake foundations and non-governmental organizations (NGOs)
established under the wing of the JLN Group of Companies, the holding company of
Janet Lim-Napoles, with Napoles' employees—even a nanny—named as incorporators
or directors.[3] Each foundation or NGO served as an official recipient of a particular
legislator's PDAF funds, and each organization had a number of bank accounts where
PDAF funds would be deposited for the implementation of these projects. [19]
Napoles, who specialized in trading agricultural products, frequently used the
procurement of agricultural inputs in the propagation of the scam. Either her employees
would write to legislators requesting for funds for the implementation of a particular
project (e.g. farm inputs), or a legislator would indicate to the DBM a particular recipient
agency for his or her PDAF funds that would be pre-selected by Napoles. [20] Once
received, this is forwarded to the DBM, which would then issue a Special Allotment
Release Order (SARO) indicating the amount deducted from the legislator's PDAF
allocation, and later a Notice of Cash Allocation (NCA) given to the recipient agency.
The NCA would then be deposited in one of the foundation's accounts, and the funds
withdrawn in favor of the JLN Group of Companies. [3] The funds would then be split
between Napoles, the lawmaker, the official of the DA responsible for facilitating the
transfer of funds and, for good measure, the local mayor or governor. [19] The JLN Group
of Companies offered a commission of 10-15% against funds released to local
government units and recipient agencies of PDAF funds, while a legislator would
receive a commission of between 40 and 50% against the total value of his/her PDAF. [20]
Letters sent by Napoles' employees to participating legislators would also include a
letter from a local government unit requesting for funding, bearing the forged signature
of the local mayor or governor. All documents involving local government units were
prepared by Napoles' staff, and Benhur Luy would forge the signature of the local mayor
or governor. Local government officials who were used by Napoles were often unaware
that they were participating in the scam.[3] In other instances, however, Napoles would
use emissaries to establish contact with local mayors in exchange for commissions that
would come from the implementation of these projects. [19]
Every recipient agency participating in the scam had employees or officials that
maintained contact with Napoles, allowing for the smooth processing of transactions
and the expedient release of PDAF funds to her organizations. Most importantly,
Napoles was in regular contact with the DBM through Undersecretary for Operations
Mario L. Relampagos,[21] who had three employees (identified as Leah, Malou and
Lalaine) responsible for the processing of SAROs destined for Napoles' organizations. [20]

Accused parties[edit]
See also: List of implicated parties to the Priority Development Assistance Fund scam
In the initial report published by the Philippine Daily Inquirer, 28 members of Congress
(five senators and 23 representatives) were named as participants in the PDAF scam.
Twelve of these legislators were identified by the newspaper, and close to ₱3 billion in
PDAF funds coming from these legislators alone were exposed to the scam. Notably,
the Inquirer named Bong Revilla, Juan Ponce Enrile, Jinggoy Estrada, Bongbong
Marcos and Gregorio Honasan as the five senators who participated in the scam.
Revilla was the largest contributor among the 28 legislators, with around ₱1.015 billion
of his PDAF funds being transferred to organizations identified with the JLN Group of
Companies, although the extent to which legislators participated in the scam varied
widely.[4]