JANET LIM NAPOLES

(Priority Development Assistance Fund Scam)

Janet "Jenny" Luy LimNapoles (born January 15, 1964)

is a businesswoman who is
believed to have masterminded
thePriority Development
Assistance Fund Scam.

Business career and

government involvement
Napoles'

business interests date back to the

early 1990s. In 1993, she solicited for
investments in a shipyard inCebu promising
5% interest on all investments. It was later
discovered that the money was not invested
in the shipyard: according to Col. Ariel
Querubn, who was a friend of the Napoles
family, the money they had invested in the
shipyard was reportedly invested elsewhere,
with Napoles pocketing the interest. While the
investment
was
eventually
recovered,
Querubn claims the investment led to the
death of his first wife.

 In

2001, Napoles and her husband were

implicated
in
the
acquisition
by
theArmed Forces of the Philippinesof
3.8 million worth of substandardKevlar
helmets, and were charged with graft and
malversation
of
public
funds
by
theSandiganbayan
(people's
special
tribunal). While her husband was dropped
from the list of defendants in 2002, Janet
Napoles stood trial, and was acquitted on
October 28, 2010 for lack of evidence.

In

2013 it was revealed that Janet

Napoles's JLN Corporation had
paid significantly less taxes than
the average local public school
teacher. Records show that from
2009 to 2011, the company paid
between 9,036-25,164 in annual
taxes, whereas a public school
teacher at that time would have
paid around 35,952 per year.

PDAF Scam
Napoles

has been linked with an

alleged misuse of the Priority
Development Assistance Fund,
together
with
Philippine
SenatorsBong
Revilla,Jinggoy
Estrada,Juan Ponce Enrile, and
other congressmen

Background
The

NBI investigation started with the rescue

of Benhur Luy by NBI agents from Reynald Lim
at Napoles residence in Taguig City. Benhur
was apparently being held by Napoles in order
to prevent him from coming out and exposing
what he knows about the PDAF Scam
operation being conducted by Napoles through
the JLN Group of companies and fake NGOs.
Benhur had knowledge of this operation as a
trusted employee and relative of Napoles.
Because of Benhurs revelations, the NBI
conducted an investigation on the Napoles
PDAF Scam Operations.

Sources of Evidence
During the course of the investigation,
the NBI was able to gather its evidence
from the following sources:
1. The testimonies and documentary
evidence of the whistleblowers who
are former employees of JLN led by
Benhur;
2. Documents gathered from the COA,
DBM, SEC, and Implementing
Agencies of the PDAF projects such as
Special Allotment Release Orders
(SAROs), memorandum of agreements
(MOAs), Notice of Cash Allocations

project profiles, inspection and

acceptance
reports,
disbursement
reports,
disbursement
vouchers,
accomplishment
reports;
acknowledgement receipts, delivery
reports, certificates of acceptance,
photocopy of checks issues by NGOs,
official receipts issued by NGOs; and
3. COA Special Audit Report.

Modus Operandi
From

this evidence, the NBI came out with

a detailed picture of the modus operandi
used by Napoles in order to corner a huge
share of the Lawmakers PDAF allocation.
The scheme starts with an agreement
between Napoles and the Lawmaker where
the latter promises to designate Napoles
NGOs as the recipient of his PDAF fund for
purposes of supposedly implementing
projects authorized in the DBM menu of
projects that can be financed with the use
of the Lawmakers PDAF.

In

exchange for selecting the Napoles NGO, the

Lawmaker in turn will receive from Napoles 4060% of the cash value of the project as kickback.
The Lawmaker first submits a list of projects to
the DBM. The DBM in turn issues a SARO to the
lawmaker who then endorses a selected Napoles
NGO to the implementing agency. The
implementing agency, in turn, without any public
bidding, enters into a memorandum of
agreement with the NGO for the implementation
of the project. After all the documentation is
completed, the DBM issues a Notice of Cash
Allocation to the implementing agency. Upon
receipt of the NCA, the implementing agency
issues a check to the Napoles NGO which is
deposited by JLN employees and the cash
withdrawn and delivered to Napoles.

Along

the way, the kickback of the Lawmaker

is already paid in advance, first upon
submission of the project list to DBM, second
upon release of the SARO. The chief-of-staff of
the lawmaker or his representative who
facilitates documents and follow ups with
agencies for the Lawmaker and Napoles also
gets 1-5% of the project cost, also as kickback.
Finally, Napoles gives 10% of the project cost
to the head of the implementing agency, also
as kickback. The rest is pocketed by Napoles
after deducting the cost of overpriced supplies
such as agricultural kits and training materials
procured from a supplier enterprise which is
owned by her, or the full remaining amount if
there is no delivery at all.

Favoring Napoles NGOs

The

10 NGOs used as conduits

for the scam were ordered to be
incorporated by Napoles through
employees and other individuals
associated with her such as
relatives, house helps and
drivers. These NGOs have
interlocking incorporators,
common auditors, and notaries
public in their SEC documents.

The

projects are awarded to these NGOs by

the implementing agencies as endorsed by
the Lawmakers without any corresponding
appropriation law or public competitive
bidding, in violation of government
procurement rules. The Napoles NGOs are
not even shown as qualified to bid for
government projects costing millions of
pesos. The MOA entered into by the
implementing agency and the NGO also
deliberately does not include provisions on
control and management of funds and
monitoring of project implementation that
only proved convenient to the parties
insofar as transparency and accountability
are concerned.

Deliberate failure of control,

Management and Monitoring
As

a result, indicators of anomalous project

implementation were ignored, such as
recurring beneficiaries of the same or similar
training, overpricing, ghost beneficiaries, or
simple non-delivery of the NGO on the
project. What is given priority is complete
submission of liquidation documents on
overpriced supplies or ghost delivery of
supplies and lists of bogus beneficiaries,
without any validation of the same through
ground monitoring in the community
supposed to be benefitted by the project.

In

the end, there is really nothing to

monitor, because all the funds that were
supposed to be used for the project had in
reality already been pocketed by the
lawmaker, Napoles, the head of the
implementing agency, the lawmakers chief
of staff, and probably other officials whose
signatures were needed to facilitate the
scam and are bribed to look the other way.
This is the very reason why no one among
the actors, who are all responsible for
ensuring the legitimate use of public funds
through the actual implementation of
projects at full cost of the funds released
therefore, take no action or interest
whatsoever in performing this obligation.

The

crimes of plunder, malversation, bribery,

and other graft and corrupt practices were
thus committed when said lawmakers
received from Napoles kickbacks amounting
to 40-60% of the cash value of the project
cost for every project endorsed by the
lawmaker to a Napoles NGO. These kickbacks
are the lawmakers bribe for giving undue
favor to a Napoles NGO, or represent his
illegally contracted share from a
malversation scheme designed to misuse
and misappropriate public funds entrusted to
him, and which he appropriates instead for
private gain rather than the public benefit
intended by law.

In

order to accomplish all this, the lawmakers

took advantage and abused their official
position and authority as Senators and
Congressmen of the Republic, thereby
unjustly enriching themselves at the expense
and to the damage and prejudice of the
people and the Republic. The acts
constituting the offenses were performed
willfully, deliberately, and maliciously with
the legislators knowing fully well that their
act of receiving the large amounts of cash
from Napoles for their private use resulted in
the corresponding diminution of the funds
actually expended for the public purpose
intended by law.