NBI Urges COA To Account For Funds Given To LGUs

Manila: The National Bureau of Investigation (NBI) has urged the Commission on Audit (COA) to conduct a thorough account on the Internal Revenue Allocation (IRA) funds given by the national government to local government units (LGUs) in Mindanao amid intelligence reports that many of the region's local officials had invested the taxpayers' money in a failed get-rich-quick investment scheme of a Malaysian-run firm.

In its report to the Department of Justice (DOJ) dated November 7, 2012, the NBI said that the IRA of some cities, municipalities, and provinces were invested to the Pasay-based Aman Futures Group (Aman) owned by Malaysian businessman Manuel Amalilo.

Amalilo was last tracked by authorities in Singapore three weeks ago.

The NBI report, however, did not specify which cities, municipalities, and provinces in Mindanao placed the peoples' money in an investment firm which the bureau later on established to be ponzi-scheme.

What made the whole situation alarming, according to the NBI, was the fact that the funds or proceeds - totaling to more or less than P12 billion as of October - collected from investors were not only used in money laundering activities but also "might be a case of terrorist financing activities."

"Thus, it is imperative that coordination with the Commission on Audit be made," the NBI stressed in its report, of which a copy was obtained by the Manila Bulletin from a well-placed source in the DOJ.

Coincidentally, Interior and Local Government Secretary Manuel "Mar" Roxas III suddenly announced that his department will be conducting an investigation on the scam which he said had victimized pedicab drivers, vendors, and police officers, two days after the NBI report was submitted to the DOJ.

Roxas has directed the local police in the province to scour Cebu and hunt down the officials of the alleged investment firm, Aman Futures Group.

Amalilio as well as the company's board of directors could possibly be hiding in Cebu. Further, reports from the NBI reveal that Amalilio's last known address is in Cebu City.

"Several local officials in Zamboanga del Sur have also called expressing their concern over the so-called scam. I decided to fly to Pagadian so we can get a clearer picture of the problem," Roxas said in a statement. "The complaints continue to reach our office."

The NBI, for its part, reported that they have already received at least 7,000 complaints in October and had recommended that the charges be consolidated and be brought to the DOJ for preliminary investigation.

Based on the report, the bureau first learned about the scam from an intelligence report dated June 25 that an investment company, reportedly owned by a Malaysian national, had been illegally engaging in a supposed Ponzi-type of operation in the provinces of Lanao del Sur, Lanao del Norte, Zamboanga del Sur, and Misamis Occidental.

A ponzi scheme is a type of investment wherein new investors are usually enticed by offering higher profit returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent.

On June 28, 2012, the NBI Anti-fraud and Action division (NBI-AFAD) was asked to conduct verification with the Department of Trade and Industry (DTI), Securities and Exchange Commission (SEC), Philippines Stock Exchange (PSE) and Bangko Sentral ng Pilipinas (BSP), on whether Aman and two other companies - namely Unigen Future Exchange Trading (UFET) and Ikachi Future Trading (Ikachi) - were listed or registered or had obtained the necessary authority to conduct business.

The bureau also asked assistance from the Anti-Money Laundering Council (AMLC) in order to obtain information with respect to the bank accounts used in the pyramiding scheme since it was learned that the investors were instructed to deposit the money in United Coconut Planters Bank (UCPB), Union Bank, and Bank of the Philippine Islands.

NBI intelligence report also disclosed that the proceeds of the said investment scheme were transferred from Pagadian to Cebu, were Amalilo was based.

"There was difficulty in gathering information about the fraudulent activity since the information given to the ordinary investors are very limited and there were threats that their investment would not be accepted if they would ask too many questions and strictly no cellphone or camera were allowed in the Aman office in Pagadian City," the report said.

"During the initial investigation being carried out by PAGDO, investors threatened to hold public rally in the provincial capitol compound where our office is located because apparently the NBI is a spoilsport in what they perceived to be an easy way to enrich themselves and gain wealth without much effort," it added.

According to the NBI report, the ponzi scheme started as early as February 2012 of which investors were said to be mostly commoners. At first, the investors were required to pay P500 worth of investment. But when rich politicians, businessmen started putting their money in Aman, the company reportedly hiked the minimum, invesment amount to P250,000.

As a result, the NBI said that the commoners formed groups in order to meet the P250,000 requirement for investment.

Meanwhile, both the BSP and the PSE said that Aman, UFET and Ikachi were neither listed in the Exchange nor it was among the financial institution under the supervision of the central bank. The DTI, on the other hand said, that Aman is the only firm which has existing business name registration.

The SEC, meanwhile, confirmed that Aman had been registered on July 22, 2012 with the following incorporators and board of directors;Manuel Amalilo; Fernando Luna; Lelian Lim Gan; Eduard Lim; William Fuentes; Naezelle Rodriguez; and Lurix Lopez.

On October 8, the NBI said that the SEC issued a cease-and-desist order which prohibitted Aman Futures and its officials from further soliciting investments from the public after allegedly collecting around P12 billion from clients lured 60 to 80 percent monthly returns on their investments in just 20 or 30 days.

"It was unusual that the business flourished without even obtaining the necessary business permits or licenses prior to its operation, however, there were reports that the operators enjoyed the protection of politicians and the police," the NBI pointed out. (With a report from Czarina Ong)