THE Department of National Defense (DND) has ordered the Armed Forces of the Philippines (AFP) to shut down accounts with at least four banking institutions after these were flagged by the Commission on Audit (COA).

The accounts containing a total balance of P1.813 billion, and one of which was used by the military in transactions in its ongoing modernization program, did not escape the scrutiny of the government auditor, calling them as "unauthorized."

"The DND has already issued its guidance to the AFP upon our receipt of advice from the Department of Finance and the findings by the COA," Defense Secretary Delfin Lorenzana said in a statement released through Arsenio R. Andolong, the DND spokesman.

"The DND-AFP has been processing the closure of these accounts in adherence to the COA guidelines," Lorenzana added.

The defense chief, however, said that while the closure of some of the assailed accounts were already in the process, they cannot altogether shut down all of the accounts, especially with deposits that have something to do with the modernization projects of the military.

"However, some accounts cannot be closed outright as these are the depository accounts for our current projects, most of which are multi-year obligations," Lorenzana was quoted in the statement as saying.

Most of the big ticket items of the military, like purchase of ships and aircraft, were acquired and contracted through multi-year obligation agreements with the manufacturers of the platforms and with the states where these equipment have come from or have been inked with.

The Philippine government signed these loan agreements through the DND because it and the military cannot simply acquire or shoulder the cost in a single billing.

The COA flagged 20 accounts of the military as unauthorized with the Land Bank of the Philippines, the Philippine Veterans Bank, the Development Bank of the Philippines and the United Coconut Planters Bank.

It named several offices under the AFP like the AFP Modernization Act Trust Fund- Central Office, AFP Education Benefit System Office and the AFP General Headquarters as maintaining these deposits.

"We have since informed both the DOF and the COA on the situation.," Lorenzana said. "Further, future DND-AFP projects will be henceforth placed in the remaining authorized accounts."

The state auditor noted that the closure of these accounts was ordered by Finance Secretary Carlos G. Dominguez in his letter to Lorenzana last June 19. The accounts ordered closed by Dominguez included that of the modernization trust fund. The Finance chief's instruction was for the DND to remit the money to the national treasury.

The letter was immediately acted upon by Lorenzana, according to the DND chief's statement.

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