What the Heck Are Confidential Funds, Anyway?

(SPOT.ph) Vice President Sara Duterte and the proposed budget for two of her offices—the Office of the Vice President (OVP) and the Department of Education (DepEd)—is the center of discussions about confidential funds after she asked P500 million and P150 million respectively for each office.

Confidential funds have become the butt of jokes and memes after Duterte addressed questions about her proposed multi-million fund request by thanking President Ferdinand "Bongbong" Marcos and other administration officials for their support, while she called out opposition lawmakers like Risa Hontiveros for her "flair for drama" after the senator asked what the P500-million budget is for during the Senate budget hearing for the Office of the Vice President's proposed P2.36-billion funds for 2024.

It also garnered buzz on social media after news that Duterte's OVP received P125 million in confidential expenses in 2022, even when the budget for that year prepared by former Vice President Leni Robredo, had no allocation for such funds. On September 25, information from the Commission on Audit (COA) showed that the funds were exhausted within 11 days, or equivalent to P11.3 million per day.

Duterte's OVP and DepEd aren't the only agencies asking for confidential funds under their proposed budgets for 2024. According to the research of GMA Integrated News, 28 agencies sought confidential funds for next year including the P2.25 billion for the Office of the President.

Also read:
Looks Like the Memes Are Turning "Confidential" Online
VP Sara, Senator Risa, TikToks and a Meme: A Short 'Barda' History

What are confidential funds, anyway?

Confidential funds are lump sum amounts alloted for national government agencies for their confidential expenses, or those related to surveillance activities in civilian agencies that will support their operations and mandate, according to the 33-page joint circular released by the Commission on Audit, Department of Budget and Management, Department of the Interior and Local Government, Governance Commission for GOCCs, and the Department of National Defense in January 2015.

Some local government units (LGUs) with peace and order as priority concern may also be alloted confidential funds for related programs.

Since it was given all at once, it gives agencies the flexibility to use it as they deem necessary within their mandate and the bounds of the law. Unlike other government spendings, confidential funds will not require public disclosure of its accounting.

Confidential funds versus intelligence funds

Intelligence funds—like confidential funds—are also lump sum amounts given to an agency, except that it's for the information gathering of uniformed and military personnel, and other intelligence practitioners whose work has direct impact on national security.

This includes the Department of National Defense, the Philippine Navy, the Philippine Air Force, the Philippine Army, Armed Forces of the Philippines, the Philippine National Police, the Philippine Coast Guard, the National Intelligence Coordinating Agency, the Philippine Drug Enforcement Agency, and other national government agencies providing budget allocation for intelligence funds.

Use of the confidential funds

The joint circular specified the uses of confidential funds specifically for these confidential expenses:

• Purchase of information necessary for the formulation and implementation of program, activities and projects relevant to the national security and peace and order
• Rental of transport vehicle related to confidential activities
• Rentals and the incidental expenses related to the maintenance of safehouses
• Purchase or rental of supplies, materials and equipment for confidential operations that cannot be done through regular procedures without compromising the information gathering activity concerned
• Payment of rewards to informers, or non-employees of the concerned government agency
• Uncover or prevent illegal activities that pose a clear and present danger to agency personnel or property, or other facilities and resources under the agency protection, done in coordination with the appropriate law enforcement agencies

Both confidential and intelligence funds cannot be used for the following:

• Salaries, wages, overtime, additional compensation, allowance or other fringe benefits of officials and employees who are employed by the government in whatever capacity or elected officials, except when authorized by law
• Representation, consultancy fees or entertainment expenses
• Construction or acquisition of buildings or housing structures

Agencies with confidential funds and/or intelligence funds are required to submit quarterly accomplishment reports certified by the heads of the agencies, according to the joint circular.

"The utilization of such funds is·generally confidential and classified by nature, which requires not only strong internal controls in the release and utilization thereof, but also strict accounting and auditing rules to prevent mishandling or improper application of the funds," it stated.

What happens next?

Requests for confidential funds tucked into government agencies' budgets are under scrutiny as more civilian agencies ask for this specific allocation.

As early as 2022, Albay First District Representative Edcel Lagman said "no stretch of the imagination or flexibility of logic can justify" OVP's request for confidential funds as it is not a surveilance agency.

"Since the utilization of confidential and intelligence funds are shrouded in mystery and the supposed audit by the Commission on Audit could not be disclosed to the Congress and the public, these funds breed corruption, and the more enormous the funds are, the greater the magnitude is for the possibility of graft," Lagman said in a statement.

Marikina Rep. Stella Quimbo, who earlier drawn flak for defending Duterte's confidential funds, also pushed for the creation of the House Special Oversight Committee for confidential and intelligence funds (CIFs) to increase transparency in government agencies requesting for such funds.