SEC tightens watch on foundations
MANILA, Philippines—The Securities and Exchange Commission (SEC) is closely scrutinizing charitable foundations and will crack down on entities that may be involved in fraudulent activities similar to the pork barrel scam.
While there’s no law that specifically mandates the SEC to monitor foundations except for some provisions of the Terrorist Financing Prevention and Suppression Act, SEC chair Teresita Herbosa said the commission felt it was its duty to look more closely at foundations.
She said the SEC could use information technology to trigger alerts—such as when a person is incorporating one foundation after another in a short period of time or when tax identification numbers (TINs) seem amiss.
Without a more proactive stance, Herbosa said the SEC would have to depend on complaints. “When they register you don’t know if they’ll do something fraudulent,” said Herbosa in a press briefing on Friday.
She said the SEC would also intensify efforts to check on the completion of projects listed by foundations and the conditions that were imposed.
Foundations are required to indicate where they got their funding and how the money was spent.
“For foundations, we can do stricter monitoring,” she said. “We’re starting to do that now.”
She said the public should check with the SEC regarding the standing of foundations before dealing with them, reiterating a reminder posted on the SEC’s website.
Part of the overall reform process is to help upgrade the standards of the accounting and auditing professions through an accreditation process, Herbosa said.
Of around 5,000 certified public accountants (CPAs) engaged in public practice, SEC Commissioner Antonietta Ibe said the SEC had so far accredited only 659 as eligible to audit entities that the SEC oversees, including publicly listed companies.
Now that everyone is using nongovernment organizations (NGOs) to implement projects, Ibe said the accreditation process at the SEC could be useful.
Notwithstanding the SEC’s limited manpower compared to the large number of entities that it monitors, Herbosa indicated that the corporate watchdog would like to do its share in improving the governance of foundations.
A computerization program that was started in 2011 is seen as allowing the SEC to make better use of its corporate databank and share more of its data with other entities like the Department of Trade and Industry and local government units as well with the public.
To date, the SEC is awaiting approval to hire more personnel. The SEC currently has around 400 employees monitoring over 500,000 corporations. Including inactive companies, there are 800,000 regulated entities.
Public outrage was sparked recently when it was revealed that possibly over P10 billion in public money was chaneled by some representatives and senators to what appeared to be 20 fake NGOs and foundations run by Janet Lim-Napoles.
COA chair Grace Pulido-Tan said audit findings showed there were up to 82 suspect NGOs in the pork barrel scam, suggesting there is a far larger number of fake NGOs and foundations outside of the Napoles group.