COA flags 3 CEZA contract of service employees in managerial positions

Cagayan Economic Zone Authority (CEZA) allowed three contract of service personnel to hold managerial positions and travel abroad in violation of Civil Service rules, the Commission on Audit (COA) said.

A government-owned and controlled corporation, CEZA is tasked to manage and supervise the development of Cagayan Special Economic Zone and Freeport.

In the annual audit report on CEZA, state auditors noted at least three of CEZA’s contract of service employees respectively occupied the posts of acting senior deputy administrator, deputy administrator for Regulatory and Compliance, and corporate secretary in violation of COA, Civil Service Commission and the Department of Budget and Management (DBM) Joint Circular No. 1 s. 2017.

The circular covers the Rules and Regulations Governing Contract of Service and Job Order Workers in the Government which states that “contract of service and job order workers should not be designated in positions exercising control or supervision over regular and career employees.”

COA did not name the three employees who were hired as “contract of service workers.”

State auditors noted that CEZA hired a special assistant to the administrator/chief executive officer in January 1 to March 19, 2018. Subsequently, the person was later designated as senior deputy administrator on contractual basis and in acting capacity only, from March 19, 2018 up to present.

From March 19 to June 30, 2018, CEZA also designated a contract of service personnel as deputy administrator for operation in an acting capacity and, at present, has been designated as deputy administrator for regulatory and compliance, notwithstanding the contract of service agreement.

Another contract of service personnel was hired as special Assistant to the administrator/CEO in January 1 to March 19, 2018. Since then, the person has been designated as corporate Secretary in an acting capacity.

COA said the three contract of service workers occupying managerial posts were designated as chairman, vice chairman and members of various management committees, namely:

• Management Committee -Business Development, Investment and Promotions

• Anti-Money Laundering/Countering Terrorist Financing and Gaming Compliance Monitoring and Inspection Team

• Enterprise Compliance Monitoring and Inspection Group

• Management Committee – Regulatory and Compliance

• Committee on Member Disposition of Abandoned and/or Forfeited Cars and Other Similar Articles

• Compliance Monitoring and Inspection Management Committee Business Development, Investment and Promotions

The three contract of service personnel traveled abroad in their capacity as CEZA officials, even if not all of their foreign trips were paid for by CEZA.

The same COA report showed that CEZA’s acting senior deputy administrator traveled abroad seven times in February to November 2018:

• Tokyo, Japan in February 2 to 4, 2018 (final stage of negotiations to open up the trading and auction of capital goods at the Cagayan Freeport with Shinyo Trading Co., Ltd.)

• London in February 5 to 9, 2018 (Ice Totally Gaming Trade Show)

• Malaysia and Singapore from April 16 to 20, 2018 (site visit and validation for the finalization of terms of the memorandum of agreement with Positive Paragon Sendirian Berhad)

• Macao, May 15 to 18, 2018 (Global Gaming Entertainment Exhibition)

• Tokyo, Japan, August 26 to 28, 2018 (Investment Roadshow, Promotion and Trade Mission)

• Copenhagen, Denmark, September 17 to 23 (International Association of Gaming Regulators Conference)

• Shanghai, China, October 28 to November 3 (various meetings)

• In the trips to Macao, Tokyo, Denmark and Kuala Lumpur,  CEZA’s acting senior deputy administrator was joined by the corporate secretary

The deputy administrator for operation in an acting capacity and later deputy administrator for regulatory and compliance, on the other hand, traveled to Shanghai China twice, in May 8 to 12 to visit the textile factories of Shaoxing City Keqiao District Textile City Enterprise Development Promotion Association, and in October 28 to November 3 for various meetings.

“It is worth mentioning however, that most of the travelling expenses were not charged to the CEZA. Verification revealed that only travel to Tokyo, Japan and Royal Victoria Dock, London costing P45,164 and P88,616, respectively, or a total of P133,780, were charged to the Authority,” state auditors said.

“We just want to emphasize that the aforementioned officials are COS personnel. Since there is no employer-employee relationship, they can leave the Authority upon the expiration of their contract. Hence, the Authority might not benefit from the knowledge they have earned/gained from the seminars and conventions they attended abroad,” the commission noted.

COA questioned why the three contract of service personnel received salaries equivalent to a non-COS personnel.

CEZA’s acting senior deputy administrator received a monthly salary of at least P87,000 from March 19 to June 30, 2018 and P142,000 per month from July 1, 2018 to December 31, 2018.

The deputy administrator for regulatory and compliance, on the other hand, had P71,000 per month from March 19 to June 30, 2018 and P103,000 per month from July 1, 2018 to December 31, 2018.

The corporate secretary, on the other hand, had a salary of P64,000 per month from March 19 to June 30, 2018 and P65,000 per month from July 1, 2018 to December 31, 2018.

Given those findings, COA urged CEZA management to adhere to Section 7.3 of Joint Circular No. 1 when engaging the services of COS personnel and follow up before the DBM the status of its request for approval of CEZA’s new organizational structure.

In response, the CEZA management argued that the current manpower of CEZA could hardly cope up with the fast-paced business expansion and development within the Economic Zone and Free Port, and that the technical expertise in emerging technological and market advancement among organic CEZA personnel is wanting.

“While awaiting for the DBM’s approval of CEZA’s proposed new organizational structure, CEZA opted to engage COS personnel who possess the experience, proven track record and expertise needed to achieve with dispatch the lofty goals and objective of the agency,” CEZA told state auditors.

Foreign travel granted to contract of service personnel were more on trade mission and investment promotion activities, and they have provided significant contributions such as paving the way for the signing of memorandum of understanding and investment commitments from various investors and locators in the Cagayan Freeport Zone.

CEZA also required the three contract of service personnel to pay or return P133,780 for expenses incurred during their foreign travels and agreed to the Audit Team’s recommendations and adhere to the provision of CSC, COA and DBM Joint Circular No. 1. —VDS, GMA News