Several “ghost” borrowers which were extended loans by the Agriculture department have been granted billions worth of assistance under the Agricultural Competitiveness Enhancement Fund (ACEF) in 2010, a special purpose fund intended to help farmers and cooperatives, Senator Franklin Drilon disclosed Thursday.

And as such, the government will no longer be able to collect a total of P2.5 billion worth of loans, cautioned Drilon.

Drilon, citing the latest Commission on Audit (CoA) report, said hundreds of companies were extended loans by the Department of Agriculture from 2000-2009, a majority of which were done during the term of former President Gloria Macapagal-Arroyo, but the state auditing agency cannot locate what appeared as “ghost” borrowers.

Drilon suspects business ventures were opened just to advance from the multi-billion government credit line, pointing out what appears as collusion between previous DA officials and recipients of the agricultural support fund, since borrowing does not require collateral and has no interest.

“The government is clearly prejudiced in this case because the amount could not be collected anymore since these are clearly ghost borrowers,” said Drilon, chairman of the Senate Finance Committee.

The CoA, in its report on the agency, noted that letters of confirmation were sent to the borrowers but these “yielded negative results.” Of the 264 confirmation letters sent to the borrowers, 140 did not reply for balances totaling P2.1 billion and 27 with balances of P370 million returned the letters to the CoA due to various reasons, the CoA said.

Beneficiaries that borrowed a total of P66.4 million, meanwhile, failed to pay back their loans due to closure of the companies affected by typhoons and firms that no longer exist. The audit agency said that P1 million in loans may not be collected anymore because of death, insufficient address or unknown identity of the borrower.

During a budget hearing of the Agriculture department last year, Lyndon Tan, owner of Basic Necessity who is closely identified with former Agriculture Secretary Arthur Yap, has been identified as recipient of the P38 million loan under ACEF. He, however, was only able to pay, at that time, about P2.5 million.

Later, Tan, who requested that the DA restructure his loan, was appointed as member of ACEF Executive Committee in 2008, under Yap’s watch.

“We do not want to see a repeat of this again,” said Drilon, adding that he may include the matter in the impending investigation to be conducted by the Senate regarding the alleged irregularities in farm-to-market projects executed during the latter part of the Arroyo administration.

A newspaper report has earlier said that P10 billion in ACEF funds has already dissipated, apparently due to the irregularities committed by previous Agriculture officials, politicians and businessmen supposedly favored by the Arroyo administration.

Enacted in 1996, the ACEF serves as a special purpose fund created by Republic Act 8178 or Agricultural Tariffication Act which comes from all duties of the importation of agricultural products. The program was supposed to fold up in 2007, but in 2008, Congress extended the program’s implementation until 2015.

The coverage of the fund was expanded to include micro-, small- and medium-scale agricultural enterprises, aquaculture and fisheries sectors, young entrepreneurs, out-of-school youths, graduates of agriculture-related courses, and agricultural cooperatives, among others.