COA flags CAAP’s P500-M insurance plan for 10 execs
The Commission on Audit (COA) has called out the Civil Aviation Authority of the Philippines (CAAP) for availing of a P500-million life insurance package for just 10 of its officials.
Based on the COA’s annual audit report on CAAP, the agency, on Dec. 14, 2018, placed P500 million with Coconut Planter’s Life Assurance Corp. (COCOLIFE) for its variable universal life insurance plan, also known as the Zenith plan.
The COA said the amount was withdrawn from CAAP’s savings account with the United Coconut Planter’s Bank (UCPB).
The COA said its audit team’s verification revealed that the insurance placement did not have the approval of the CAAP board of directors, in violation of Republic Act 9497 or the Civil Aviation Authority Act of 2008.
The audit body said that while the CAAP management reasoned out that the proposed insurance investment was presented to the board of directors on Dec. 13, 2018 and none of the board members raised any objection, still there was no board resolution ever issued approving the proposal.
There was also no clear criteria for the selection of the 10 CAAP officials insured, the COA said.
Based on the COA’s record, the CAAP paid a P50-million premium for each of the 10 officials for a fiveyear insurance plan.
The COA said that under the deal, all proceeds shall be received by CAAP in case of death of the insured key men. The CAAP, however, has an option to give 25 percent of the proceeds to the family of the deceased insured official.
The COA said the audit team’s review showed that the 10 selected officials for the insurance plan “include officers whose functions are not critical or essential to the operations of CAAP.”
Though the names of the 10 officials were not revealed in the audit report, the COA said they include a corporate board secretary, a corporate executive officer of the Office of the Director General, area center manager and department manager of the finance department.
The COA also noted that two of the 10 insured officials are Palace appointees, thus, their service are co-terminus with the President who only has three years left in office, while the insurance plan will mature only after five years.
Lastly, the COA said CAAP also failed to present any study justifying the insurance plan instead of investing in higher-yielding investment such as treasury bonds (t-bonds) or treasury bills (t-bills).
The P500-million insurance plan would gain a total interest of P106.782 million at the end of five years while t-bonds and t-bills would earn CAAP P139.547 million and P117.258 million in interest, respectively, the COA said.
Unimplemented projects
Meanwhile, in the same audit report, the COA also called out the CAAP for P1.021 billion in unimplemented projects for 2018.
The audit body said that of the CAAP’s 336 programmed infrastructure projects for 2018 with a total budget of P1.797 billion, only 43 percent or 143 projects were implemented while 57 percent or 193 projects amounting to P1.021 billion have yet to start as of year-end.
Among the reasons cited by CAAP for the delays were the lack of manpower to undertake the procurement process and project implementation as well as the problems encountered during the procurement procedure such as failure of public bidding.
The CAAP agreed to review and choose which “programs, activities and projects to be undertaken during the year and assess its ability to implement them prior to the preparation of the budget in order to ensure that these are implemented as planned,” the COA said.