Defective, undervalued fire trucks cost gov’t 12.5 B – COA

The government lost 12.577 billion in revenues from the importation of 469 China-made fire trucks delivered to the Bureau of Fire Protection (BFP), a purchase that the Commission on Audit (COA) had red-flagged as fraught with irregularities.

A COA team assigned with the Bureau of Customs (BOC) has confirmed the findings of its counterpart in the BFP of irregularities in the procurement in 2015 of the fire trucks.

In the 2016 annual audit report released yesterday, COA said the undervaluation of the imported fire trucks by as much as 12.270 billion “resulted to underpayment of duties and taxes amounting to 12.577 billion.”

Earlier, the COA at BFP revealed that 176 out of the 469 trucks delivered to the bureau in 2015 were defective.

The audit findings confirmed the late Interior and Local Government Secretary Jesse Robredo’s suspicions that the BFP purchase was anomalous. Robredo died in a plane crash shortly after he aired his observation.

In its Customs audit report, COA noted that the audit team of the Pier of Manila, Manila International Container Port, and the Port of Batangas conducted a joint audit of the importation of the fire trucks.

The shipment was part of the contract between the BFP and suppliers Kolonwel Trading and Hubei Jiangnan Special Automobile Co. Ltd based in Hubei, China.

“However, a review of the transaction showed that the valuation indicated in the commercial invoice of a supporting document of Single Administrative Document and the Value Reference Information System provided by the Assessment and Operations Coordinating Group amounted to 1306,967 million which BOC used as the basis for the computation of duties and taxes,” the audit report stated.

State auditors said that the audit examination indicated that there has been an undervaluation of 12.270 billion.

“This undervaluation constituted more than 30 percent of the declared value, thus resulted in the forfeiture in favor of the national government (NG) of the value of the fire trucks in compliance with Section 2503 of the TCCP Volume II,” COA stated.

Reacting to the audit comment, the BoC management insisted that “there’s no irregularity in the performance of duties of its employees and all the supporting documents can be presented.”

However, COA appeared unperturbed by the BoC’s reaction, as it called on the agency to investigate the causes of undervaluation and improve the system of control” to avert similar incidents from happening again in the future.

In the same report, state audit examiners disclosed that fire truck suppliers Kolonwel and Hubei are not registered importers of the BoC, thus, making the BFP the accredited importer.

“The undervaluation in the importation of 469 fire trucks by BFP with Kolonwell and Hubei as supplier deprived the NG of the much-needed funds to support its programs and projects,” said COA.

In the BFP audit report, COA noted that the agency had preferred cheaper models over “reliable brands,” especially branded heavy equipment produced in Europe.

It was reported that European models were excluded from the bidding reportedly because the BFP set the Approved Budget for the Contract (ABC) at a low 16 million for the 1,000 gallon fire trucks and 15 million for the 500-gallon model.

“The setting of low ABC for the procurement of the fire trucks restricted competition and it did not allow the participation of suppliers of known quality and of international standard,” the COA added.