National Bureau of Investigation (NBI) Director VIRGILIO L. MENDEZ submitted to Secretary of Justice LEILA M. DE LIMA the Final Report of Agent III JONATHAN A. MENGULLO and other members of the NBI Anti-Graft Division (NBI-AGD),dated 30 July 2014 , on the investigation they conducted into alleged rice smuggling activities and other related violations of criminal laws, which were the subject of Senate Committee Report No. 763 and allegedly perpetrated through the connivance of government officials and so-called "financiers”.
The NBI investigation was initiated after the Senate Joint Committees on Agriculture and Food, Ways and Means, Trade and Commerce, and Accountability of Public Officers and Investigations referred Joint Committee Report 763 to the NBI for further probe and the filing of the appropriate criminal complaints against those found to be involved in rice smuggling or other illegal activities.
Upon investigation, the NBI discovered a scheme whereby certain rice traders/importers were able to corner the National Food Authority's (NFA's) rice import allocations through the use of farmers' organizations/cooperatives and single proprietorships as dummies in the NFA bidding for rice Import Allocation under the Private Sector-Financed (PSF) Importation thru the NFA Tax Expenditure Subsidy (TES). These rice traders/importers pooled the bidders into groups and financed their individual bids for NFA rice import allocation. In exchange, the bidders were given a small percentage share of a certain amount per sack of rice awarded to them. This scheme, in tum, allowed these rice traders/ importers to corner the rice import allocations that were put up for bidding by the NFA, even if they were not licensed by the NFA to engage in rice importation or trading.
During the course of the investigation, the NBI gathered affidavits and statements from the officers of farmers' cooperatives/organizations who participated in the NFA's bidding for rice Import Allocation under the Private Sector-Financed (PSF) Importation thru the NFA Tax Expenditure Subsidy (TES). From these statements and affidavits, the NBI made the following findings:
1. Several bidders in the NFA bidding for rice import allocations, consisting of farmers' operatives/organizations (FCs/FOs) and single proprietorships, were mere dummies of at least two groups of rice traders/importers, one group being identified with David Tan/Davidson Bangayan and the other identified with DGL Commodities of Mandaue City, Cebu owned by the spouses David and Judilyne Lim.
2. The bids of the FCs/FOs and single proprietorships were bankrolled by the above-mentioned two groups of rice traders/ importers, using money the latter deposited in said entities' bank accounts and then converted by the former into Manager's Checks in the amount of their respective multi-million peso bids, in order to satisfy the requirement of the NFA for qualification in the bidding.
These findings gave rise to the recommendation to file the following criminal complaints against the following individuals:
a. Violation of Sec. 65 (b)2, (b)4 and (c)l, (C)2,and (c)3 of RA 9184 or the Government Procurement Reform Act for bid-fixing, to be filed against DAVIDSON BANGAYAN, also known as DAVID TAN, DAVID and JUDILYNE LIM, ELIZABETH FAUSTINO, ELEANOR RODRIGUEZ and LEAH ECHEVERIA, the owners on record of the single proprietorships, and the representatives and officers of the FCs/FOs; and
b. Violation of Article 186 of the Revised Penal Code (penalizing Monopolies and Restraint of Trade) against DAVIDSON BANGAYAN, also known as DAVID TAN, DAVID and JUDILYNE LIM, ELIZABETH FAUSTINO, ELEANOR RODRIGUEZ and LEAH ECHEVERIA. By their act of combining, conspiring and agreeing with one another in the manipulation of the bidding process for the award of Rice Import Allocation from the NFA, they substantially and, thus, effectively cornered the supply of imported rice in the local market; hence, they engaged in, or made transactions prejudicial to lawful commerce, restrained free competition in the market, and altered or manipulated the market price of rice, which is a commodity of prime necessity, in the Philippines.
Furthermore, the NBI also gathered the bid documents, such as financial statements and income tax returns, submitted by the FCs/FOs and single proprietorships in the NFA's bidding for rice Import Allocation under Private Sector-Financed (PSF) Importation thru the NFA Tax Expenditure Subsidy (TES). A review of said documents showed that the maximum annual gross income of the individual FCs/FOs did not exceed P200,000,00 while they individually made bids for a miniIb.um of P15,ooo,ooo.oo and a maximum of P60,ooo,ooo.oo for NFA pee import allocations. On the other hand, the single proprietorships all had a uniform average gross income of P150,ooo.oo, while they each made bids for a minimum of P60,ooo,ooo.oo and a maximum of P70,ooo,ooo.oo for NFArice import allocations. From this analysis of the bid documents, the NBI found, as follows:
1. The FCs/FOs and single proprietorships investigated did not have the financial capability required in the NFA's bidding for rice Import Allocation under Private Sector-Financed (PSF) Importation thru the NFA Tax Expenditure Subsidy (TES), due to the fact that these entities did not have the sufficient capitalization, logistical resources and income to support multi-million peso bids for rice import allocations, as shown in their financial statements and income tax returns.
2. The NFA Special Bids and Awards Committee (SBAC) for the PSF-TES rice import allocation bidding should have known from the bid documents submitted by the FCs/FOs and single proprietorship bidders that they were not financially capable entities, as required under the terms of the NFA's PSF-TES rice import allocation bidding.
3. Despite the lack of financial capability of the bidding FCs/FOs and single proprietorships, the NFA SBAC still considered them qualified and proceeded to award them the corresponding rice import allocations.
These findings gave rise to the recommendation to file criminal complaints against then NFA Administrator ANGELITO T. BANAYO, SBAC Chairman Atty. JOSE D. CORDERO, and SBAC members Ms. CELIA Z. TAN, Atty. GILBERTO F. LAUENGCO, Mr. CARLITO G. CO and Atty. JUDY CAROL L. DANSAL for violation of Section 3(e) and 3(j) of Republic Act 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, viz.:
a. For giving the winning bidders in the NFA PSF-TES rice import allocation biddings unwarranted advantage or preference in the NFA bidding through manifest partiality, evident bad faith or gross inexcusable negligence, when they qualified said bidders and awarded to them rice import allocations, despite their lack of financial capability to participate in the bidding as shown in the bid documents; and
b. For knowingly qualifying the FCs/FOs and single proprietorships as bidders and for awarding to them rice import allocations, even when they were not legally qualified to participate in the bidding or be awarded rice import allocations.
Thirdly, the NBI also looked into the issue of the identity of David Tan and Davidson Bangayan. From the evidence gathered, the NBI concluded that David Tan and Davidson Bangayan are one and the same person. The bases for this conclusion are the statements and positive identification of some of the officers of the FCs/FOs who were recruited by David Tan, as well as the admissions made by Davidson Bangayan himself, in pleadings he filed in pending civil and criminal cases, that he is also known as David Tan.
This finding gave rise to the recommendation to file criminal complaints against Davidson Bangayan, a.k.a. David Tan, for the following offenses:
a. For Using Fictitious Name or Concealing True Name, defined and penalized under Article 178 of the Revised Penal Code, as amended; and
b. For Violation of Commonwealth Act No. 142, as amended by RA I 6085.
Lastly, the NBI investigation concluded that Davidson Bangayan, a.k.a. David Tan, is not licensed by the NFA as a rice retailer, wholesaler, or importer. Therefore, he could not engage in any business involving, rice trading or importation. This finding therefore serves as the basis for further probe into any consummated acts of illegal rice importation or rice smuggling that may have been undertaken by Davidson Bangayan, whether or not through the use of NFA awardees as dummies. The further probe hopes to gather and complete the necessary Bureau of Customs documents to prove the crime of smuggling as penalized under the Tariff and Customs Code.
As a result of the submission of said Final Report of the NBI, Secretary of Justice De Lima approved the recommendations set forth therein and directed the NBI to immediately file the criminal complaints before the appropriate fora, including the Office of the Ombudsman, for the conduct of preliminary investigation, and to expedite the conduct of the further probe into illegal rice importation or rice smuggling activities.
The NBI is set to file the complaints tomorrow, 7 August 2014.