Philippines: A flood of trouble — what happens to plunderers

Manila: What happens to plunderers in the Philippines?

The taxpayers of this Asian nation have seen their money siphoned away through every trick in the book — from hidden Swiss accounts to the infamous ‘pork barrel’ scams.

Now, a new modus has been unearthed, via "midnight" insertions in the national budget, known as the General Appropriations Act (GAA), disappearing smartphone messages and fake projects.

With another independent probe underway (on top of the Senate and House livestream inquiries), new pieces of the puzzle are emerging, nudging the Asian nation into some serious soul-searching while whispers of Indonesia or Nepal-style meltdown loom like a plot twist nobody asked for.

Boomerang effect

Just in the last three years (2023 to 2025), budget insertions (aka fund "diversions") — estimated at ₱1.47 trillion ($25.7 billion) had been unearthed to be the handiwork of a few "bicam" lawmakers in the House and Senate, which has reportedly incensed the President.

It's a sign of a dubious pattern that's been going on for decades.

As the plot thickens amid back-and-forth finger-pointing by some of those involved, the parallel Senate and the House probes have led to a boomerang effect.

So far, it had already led to the ouster of Chiz Escudero from the Senate presidency and Martin Romualdez, the president's cousin, from House Speakership.

Some of those conducting the probe have themselves been exposed as allegedly being part of the same web of plunder being investigated.

Now, the Philippine Department of Justice (DOJ) is looking into what its head termed a "conspiracy" involving government employees, auditors, certain lawmakers and contractors.

On Thursday, the Senate heard that a top contractor, or a group of contractors held by dummies but run by British-Filipino Sarah Discaya and her husband Pacifico, has bagged ₱207 billion ($11.73 billion) worth of projects from 2016 to 2025.

One interesting bit: kickbacks (locally termed "tongpats") related to such contracts flow in the form of cash, instead of cheques or bank transfers.

Budget insertions in focus

On Thursday (September 18), Senate grilling continued where Brice Hernandez, a former assistant district engineer in Bulacan province, admitted his involvement in ghost projects. He claims he did it upon orders by his boss, ex-district engineer Henry Alcantara.

Both were sacked recently.

Alcantara, identified as a casino regular alongside Hernandez and their ex-colleagues, denied wrongdoing.

In an attempt to wiggle out of the mess, Alcantara pointed the blame back to his assistant Hernandez.

An important part of Alcantara's testimony is his insistence: once a project shows up in the GAA, they just “implement” it.

Earlier, Hernandez pointed at two Senators as beneficiaries of kickbacks linked to infrastructure budget insertions, which resulted in ghosts.

Who made the insertions in the GAA?

Nobody knows for sure at this point. No rule or law exists to require the lawmakers behind the insertions to be identified.

Casinos used for money laundering?

Both Hernandez and Alcantara are casino high-rollers on assumed identities, according to Senator Ping Lacson, an astute investigator and new head of the Senate Blue Ribbon Committee.

By law, government officials are banned from entering casino premises.

On Thursday, the Department of Transportation (DOTr) had slapped both Alcantara, Hernandez and others with a formal complaint over the use of fake driver’s licences (Article 172 of the Revised Penal Code provides for penalties for the “use of falsified documents” of up to a year jail and a fine of up to ₱1 million).

It's not immediately clear how the state engineers obtained the knockoff driving licences.

Lacson had earlier tagged Alcantara and Hernandez as charter members of the so-called ‘BGC boys’ — short for the ‘Bulacan Group of Contractors’ — who, along with along with Arjay Domasig, Jaypee Mendoza, and Edrick San Diego, are better known for their all-nighters at the casino tables than for building anything concrete.

The Senator also believes the group, or at least its key members, visited the casinos not only to gamble, but to launder money.

The Bulacan scam, it has emerged, is just the tip of the iceberg.

Besides the Justice department, another Filipino congressman has labelled the midnight budget insertions as the handiwork of a "syndicate" involving lawmakers.

Here's how the budget insertions work, in a nutshell:

What is a budget insertion?

Every year, the Philippine national budget becomes the most scrutinised policy document in government.

Far from being a simple accounting of revenues and expenses, it often turns into a political battlefield — where competing interests clash.

The insertions refer to allocations slipped into the GAA, often at the last minute.

Why is it controversial?

It has always been controversial. Budget insertions are derided by many lawmakers themselves as "dagdag-bawas" (addition-subtraction).

But public outcry had been muted, then, as most Filipino taxpayers trust their lawmakers to represent their best interests and to be transparent about the process.

In practice, it's far from transparent.

Based on statements from numerous congressmen and senators, the dagdag-bawas process is shrouded in secrecy.

At the centre of this scheme is the 7,000-page GAA document. Calls for greater transparency in budgeting are ringing out louder.

Are budget insertions illegal?

Budget insertions are not inherently illegal.

Lawmakers argue they allow Congress, given their "power of the purse" under the 1987 Constitution, to fund projects that directly benefit their districts.

These include village meeting halls, covered basketball courts, farm-to-market roads, classrooms, health centres and flood control.

In theory, this practice ensures that local needs are represented in the national budget.

What happens in practice?

In practice, however, critics say insertions are prone to abuse.

They are also assailed for serving as vehicles for political patronage, “pork-barrel” spending, and perpetuating the tongpats (kickbacks from overpriced projects) scheme.

The controversy usually revolves around the lack of transparency and consultation.

What are examples of midnight insertions fuelling anomalies?

A number of Philippine budget insertions appear with little justification or technical review.

This raises question: Do they reflect genuine development priorities or whimsical handiwork of a cabal of lawmakers in order to steal?

For instance, watchdog groups have flagged large allocations for road projects that overlap with existing infrastructure.

There are budgets, allocated for facilities in areas with limited population.

Such anomalies fuel suspicion that funds are being funnelled for political gain, rather than public service.

Another issue is equity: Well-connected lawmakers are often perceived to secure larger slices of the pie.

This leads to complaints that certain districts are favoured over others, not because of real need, but because of political alliances, where legislators assume a dual function as members of the executive, carrying out supposed development project

What happened to PDAF?

The pattern recalls past controversies such as the Priority Development Assistance Fund (PDAF), also known as the controversial "pork barrel", which the Supreme Court struck down as "unconstitutional" in 2013, after revelations of ghost projects and fund misuse.

What do defenders of the budget insertions say?

Defenders of insertions argue that Congress, as the “power of the purse,” has the prerogative to amend the executive’s proposed budget.

Without this, they say, the legislature’s role in shaping national development would be undermined.

What do transparency advocates say?

Transparency advocates, meanwhile, insist that insertions must undergo rigorous vetting, public disclosure, and compliance with national planning standards to avoid the pitfalls of pork.

Right now, no one knows who, when and how the budget insertions happen within the 7,000-page GAA document.

The debate over budget insertions highlights a deeper challenge: balancing local representation with national priorities, while ensuring accountability.

As long as the process remains opaque, suspicions of corruption will persist.

Reforms in budgeting process: How can it be done?

Genuine reform may lie not in banning insertions outright. Rather, it lies subjecting them to following

• Stricter scrutiny

• Public reporting | greater transparency

• Citizen participation.

These are the key demands of protesters against the practice.

How to report fake or substandard projects

As for citizen participation, reports of corruption involving fake or substandard public works project are now being encouraged, through the whistleblower site https://sumbongsapangulo.ph.

The site allows for geolocated reports, photos and videos to be uploaded by ordinary residents and citizens.

What is the remedy under Philippine law for theft of public funds?

"Plunder", under Republic Act No. 7080 (Anti-Plunder Law), is defined as amassing ill-gotten wealth of at least P50 million by public officers through schemes like kickbacks or ghost projects. 

Under RA 7080, plunder is punishable by:

• Life imprisonment

• Perpetual disqualification from holding any public office

• Forfeiture of intersts, income and assets in favour of the State upon conviction.

How do these midnight insertions contribute to corruption and plunder?

In general, here's how the opaque insertions foul up the national budgeting system:

Lack of transparency and due diligence

Insertions bypass rigorous executive vetting (e.g., feasibility studies, clearances).

Many end up as "ghosts", with up to 60 ghost flood-control projects reported by the Philippine Senate.

Only 30-40% of funds reaching actual construction, if at all, as per latest revelations amid on-going inquiries.

In flood control (under the remit of the Department of Public Works and Highways, DPWH), up to 70% of allocations (potentially ₱1.089 trillion | $19.05 billion since 2023) had been lost to corruption, per Greenpeace and Senate estimates. 

Contractors testify to siphoning via fake bids, with favoured firms like those linked to the Discaya couple family securing ₱31 billion ($542 million) in projects from 2022-2025 alone.

Pork barrel-like abuse

Despite the 2013 Supreme Court ban on discretionary pork (e.g., PDAF scam involving ₱10 billion in theft via Janet Napoles), insertions serve as a loophole for "hyperlocal" projects benefiting politicians' districts or allies. 

The 2025 budget saw ₱142.7 billion in “bicam” insertions, enabling the Philippines' tongpats system. This echoes earlier cases like the Malampaya scam (₱366 million plunder) and AFP funds theft (₱303 million).

Economic and social impact

Corruption drains 20% of the annual budget (₱1.2 trillion or $13.35 billion yearly), per the Ombudsman. 

In flood control alone, ₱42.3-₱118.5 billion was lost from 2023-2025, as per the Department of Finance, crimping GDP growth by preventing 95,000-266,000 jobs and exacerbating climate disasters (e.g., leptospirosis surges from unbuilt flood defences). 

Lawmakers at the centre of 'insertions'

Zaldy Co, an influential congressman from the AKO Bicol Patry-list, and head of the Lower House's powerful Appropriations Committee, alongside former Senate President Francis Chiz Escudero, had been assailed by some lawmakers over the magical GAA insertions.

But where is Zaldy Co? Colleagues in the House, whose Speaker has already stepped down as public anger over corruption is boiling over, said Co is in the US, undergoing medical treatment.

A congressman, however, has decried the crackdown on flood-control projects as potentially causing greater harm than good.

Low-lying Bulacan and Manila districts are at the receiving end of constant and severe floods in recent months.

Caloocan's Representative Edgar Erice (2nd District), has pointed his finger at the executive for "negligence".