A Muntinlupa-based anti-graft organization has warned banks and other financial institutions against extending the city government's new loans in the wake of an unfavorable Commission on Audit (CA) report on its finances.

In a letter sent to two state-owned banks, the Muntinlupa Alliance Against Corruption Inc. cited the recently released 2008 CoA report on Muntinlupa City as a strong ground for rejecting or carefully studying any application for loans from the local government.

MAACI president Rafael Arciaga sent the letters to the Land Bank of the Philippines and Development Bank of the Philippines which have reportedly extended loans to the city government in the past.

Arciaga underscored the need to carefully study any loan application from the city as he pointed out that the unfavorable CoA report may put the banks at risk.

In its 2008 study of Muntinlupa City’s financial standing, CoA assailed the purchase of 40,000 pieces of trolley school bags as “unnecessary” and a violation of two laws – Republic Act 9184 or the procurement act and Republic Act 7160, otherwise known as the Local Government Code of the Philippines.

CoA also revealed that the present administration also committed a serious irregularity in the purchase of five generator sets worth P5 million without conducting a competitive public bidding.

State auditor Roland Rey, head of the audit team that examined the finances of Muntinlupa City, said the city government secured a P22 million loan last year only to finance the distribution of school bags to elementary school pupils. The 40,000 bags were delivered to the city government on May 9, 2008.

The MAACI official said Muntinlupa City will be paying P8.8 million annually in 10 years for loan interests alone based on the P22 million borrowing for the purchase of the bags.

Arciaga’s letter showed that under item no. 5 of the same audit report, infrastructure projects worth P582,767,916.58 were not based on a duly approved Annual Investment Program (AIP) or Annual Procurement Plan (APP), thus violating certain provisions of RA 7160 and the implementing rules and regulations of RA 9184 or the Government Procurement Reform Act.

According to Rey, local government units may secure loans only for the purpose of “construction, installation, improvement, expansion, operations and maintenance of public facilities, for housing projects, acquisition of real property and implementation of other capital investment projects.”

City officials, for their part, said the purchase of the bags is part of its efforts to develop the minds of its young citizens toward a more productive future, and said the issues raised in the CoA report have since been clarified with CoA auditors.