Ex-Tourism Secretary Wanda Teo, Usec took P2.5 million-worth of Duty Free goods - COA report

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Metro Manila (CNN Philippines, June 28) — Resigned Tourism Secretary Wanda Teo and a former Tourism executive took millions worth of luxury items from Duty Free stores in 2017 and charged them as well as consultancy fees to the funds intended to fuel the department's programs, the Commission on Audit has found.

A 2017 COA audit report on Duty Free Philippines Corporation (DFPC) found that P2.52 million-worth of Duty Free items, such as branded bags, luxury brand cosmetics, appliances, and chocolates, were withdrawn from stores following orders from Teo and ex-Undersecretary for Administration and Special Concerns Rolando Cañizal.

Duty Free Philippines Corporation, which sells tax-free luxury items, is a government-owned and controlled corporation (GOCC) under the Tourism Department.

COA said Teo issued various memos to withdraw items worth P43,885, while Cañizal withdrew items from Duty Free worth P1.37 million. Duty Free also withdrew items for the Tourism Department worth P758,525. This totals to P2.17 million.

Aside from this, COA flagged that the DOT also withdrew P346,446-worth of merchandise from a Duty Free store from May to September 2017. COA said the withdrawal was not properly logged, which resulted in the understatement of receivables from the DOT and overstatement of the inventory.

Nearly 300 Duty Free items were authorized by DOT officials to be delivered to their offices through Gate Pass Slips (GPS), said COA.

"The withdrawn merchandise consisted of toiletries, kitchen wares, beddings, appliances, canned goods, branded bags, luxury brand cosmetics, chocolates and others," COA said.

COA said the luxury items were received by the office of Teo.

"The 277 items costing US$6,938.35 or P346,446.80, apart from the US$43,091.13 or P2,174,150.08 that were recorded in the books, were all duly receipted by the Office of the DOT Secretary upon the release of the items from the DFPC warehouse based on the issued and approved GPS," the report read.

In addition to the merchandise, COA also took note of the P1.6 million consultancy fee and cost of shipment of DOT donations worth P22,893.

The auditing body said the P3.797 million-worth of merchandise, consultancy fee, and shipping cost was deducted from DOT's share in Duty Free's net profit. This is in violation of provisions of Republic Act No. 9593 or the Tourism Act of 2009, COA said.

"Stop the practice of directly charging from DOT's share in DFPC's net profits for the cost of items withdrawn by DOT from the DFPC stores and other payments made by DFPC for and in behalf of the DOT pursuant to the pertinent provisions of Republic Act (R.A.) No. 9593 (Tourism Act of 2009)," it recommended.

Section 105 of the Tourism Act states that a minimum of 50 percent of Duty Free's annual net profit shall be automatically remitted to the Office of the Tourism Secretary "to fund tourism programs and projects."

COA said the Department of Tourism should be billed by the DFPC management for the P4.14 million-worth of expenditures.

It also recommended DFPC's accounting department to record the transactions withdrawn by the Tourism officials.

The former Tourism secretary said that she has yet to read the COA audit, but that the Tourism Department would not have allowed unlawful receipt of items and merchandise.

"I hereby affirm that the DOT under my watch would not have allowed receipt by the DOT of any DFPC items and merchandises unless the lawful processes are duly observed and followed," Teo said in a press statement.

"I cannot make any intelligent comment since there were no names... Preliminary naman ang COA report not yet conclusive," he said on Thursday.

Teo submitted her resignation in May "out of delicadeza" following issues of corruption. She resigned in the wake of a controversial ₱60 million advertising deal between the Tourism Department and a television program run by her brothers, Ben and Erwin Tulfo.

Related: Tulfo-Teo: No conflict of interest in P60M tourism ads on brother's show on PTV-4

Her successor, Bernadette Romulo Puyat, asked the Commission on Audit in May to review all programs of the Tourism Department after finding out several projects did not go through public bidding.

Teo is also under investigation at the Office of the Ombudsman.

CNN Philippines Senior Correspondent Cecille Lardizabal contributed to this report.