State-owned printing firm Asian Productivity Organization-Production Unit Inc. (APO) continues to get the raw end of a Joint Venture Agreement (JVA) with a private printing company in connection with the implementation of government contracts that included the P38-billion printing of electronic passports.

Audit observations contained in the 2020 APO Annual Audit Report that was recently released by the Commission on Audit (COA) noted that the government printing firm has failed to implement several audit issues raised by state auditors since 2018 in connection with the APO-United Graphic Expression Corporation (UGEC) Security Printing Joint Venture (AUSPJV).

In the audit report, COA also asked the APO Board of Trustees and principal officers to return to government P1.218 million that the audit body considered as “excess per diems” they received while attending board meetings.

“The principal officers and the members of the governing Board of Trustees of APO were granted per diems on committee meetings totaling P2.226 million which exceeded the allowable or maximum limit of per diems that should be granted for committee meetings actually attended during the year by P1.218 million,” the COA report stated.

This COA observation is just one of several controversies raised by a group of individuals against APO and its executive officers headed by Michael Dalumpines in connection with the printing of E-passports and other alleged irregularities.

Among the issues raised is the lease by APO of an allegedly refurbished printing equipment that UGEC allegedly brought for P193 million.

APO reportedly pays UGEC a lease of P180 annually for the use of the equipment.

In the 2020 audit report, COA disclosed that APO failed to implement the 2018 audit recommendation for an increase in the profit sharing ratio with UGEC.

Under the AUSPJV, APO gets only 30 percent of the profit from its deal with UGEC although all printing jobs awarded to the joint venture involved government agencies, thus, there is a guaranteed clientele.

In the 2018 audit report, state auditors said APO deserved a bigger share in the joint venture because of its “goodwill” as it has ensured a clientele through its captured market even before the JV was executed.

“Furthermore, the payment of AUSPJV Management Fees totaling P134.293 million covering CY’s 2015-2017 without said provision in the JVA is likewise disadvantageous to APO,” COA added.

The state audit body also asked APO to assign internal auidit personnel to inspect and examine the JV’s financial reports “to determine the validity and propriety of expenditures” of the partnership.

The 2018 audit recommendations were not implemented by APO in 2019 and 2020, COA disclosed.

As of last year, APO and UGEC has failed to reach an agreement for the implementation of the audit recommendations.