COA questions OMB's disposal of confiscated goods

 MANILA, Philippines - The Commission on Audit found that goods seized by the Optical Media Board were not fully accounted for, lending doubt to the OMB's report that it disposed all of the 54,900 kilos of goods that it confiscated.

In a report dated March 12, 2012, COA said the disposal through sale of the goods confiscated by OMB, the agency tasked to conduct raids on vendors and stalls of pirated CDs, DVDs and other goods, was unsupported by complete documents.

Section 23 of the Republic Act 9239 or the Optical Media Act provides that any illegal or pirated optical media or materials shall be forfeited in favor of the government and shall be disposed "in accordance with pertinent laws and regulations."

Upon COA's audit, it found that a total of 9,150 sacks estimated at six kilos per sack or 54,900 kilos of seized optical discs, casings and labels for disposal were under the custody of OMB. These goods were seized by the agency between June 2009 and August 2010. COA said it appraised the value of the goods at P5 per kilo.

In January and February last year, however, the OMB disposed of these goods through sale.

However, the COA found that the documents submitted by the OMB to support the conduct of the sale only reflected lesser kilos of the goods.

"The audit disclosed that out of the total 54,900 kgs. inspected, only 25,089 kgs were sold for a total of P1.07 [million] at 42.66/kg as supported by seven official receipts in the Report of Collections but the 54,900 kgs of confiscated discs were dropped from the books per Journal Entry Voucher No. 11-03-094, thus showing a discrepancy of 29,811 kgs," COA said.

"In the course of our audit of the transactions, we noted that Journal Entry Vouchers pertaining for the sale of confiscated goods and the subsequent dropping of the said inventory account from the books were not supported by bid documents, Inventory and Inspection Report and other pertinent documents whicever were applicable," COA added.

Another sale or disposal was undertaken by the OMB in September 2011, and COA said, it also found a discrepancy of 5,989 kilograms.

To address the problem, COA said it told OMB to "ensure the propriety of the transactions and that all the personnel responsible be instructed to explain/account for the discrepancy noted in the mentioned sale."

In a rejoinder, the OMB said the difference between the volume that was sold and the volume that was confiscated was owing to the request of the winning bidder for the goods, Bubay Enterprises Inc., to reconsider because the pirated discs sold to the company in one lot price were in poor condition and that it could mean a big loss to it.

The OMB said it evaluated the company's request and found that the seized pirated discs were already exposed to bad weather and accumulated knee deep mud through the years. The seized items were stored in the open garage of the office for more than two years, and it was hauled from Janaury to February 2011 only.

"The estimated 54,900 kgs of which the basis was the filled sack at 6kgs/sack as a sample, that in totality of the seized items there were more half-filled sacks than the sample 6kgs/sack," said the OMB

It added that the sale tripled the earnings of the government by selling the products at a P1.07 billion, more than triple the appraised value of P274,500.

COA, however said, the OMB management should undertake corrective measures to prevent a repeat of the negotiated sale.

"While we understand the plight of the winning bidder that led to the compassionate gesture of the Disposal Committee to grant his request for reconsideration due to the justifications presented, we relieve that the better action of the committee was to anticipate in advance that such problem could surface and should have been considered during pre-bid conference/s and/or at the time the interested bidders inspected the items to be bid so that equal opportunity be also extended to other qualified bidders," COA added.

The audit also found that the agency had "inadequate controls over confiscated goods", despite its 17 years of existence as Videogram Regulatory Board before.

"We noted however, that despite its long years in its pursuit of an economy that is free from optical media piracy, OMB does not have, as yet written policies or Systems Manual relative to the confiscation, accounting, handling and disposl of confiscated goods as guide for the agency personnel and other accountable officers in their respective activities," COA said.

Among these lapses were the use of parking lot as storageplace, exposing confiscated goods to elements, lack of written policies to contain procedures regarding confiscation and disposal of goods, and slow disposal of seized goods.

The COA report was prepared by State Auditor V Samuel C. Sison. - Cheryl M. Arcibal