BSP shocked by cash piles in flood control corruption

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is tracing unusually large cash flows across the financial system as part of a widening probe into the multibillion-peso flood control scandal, but it assured the public that the banking sector remains strong and liquid.

In an interview yesterday with “Thought Leaders” on One News, BSP Governor Eli Remolona Jr. said the scale of corruption and the sheer volume of cash involved stunned monetary regulators.

“It was worse than we thought… We knew there was corruption all along, but not on this scale,” he said, saying the scandal was “as much of a shock” to the central bank as it was to the public.

Remolona pointed to accounts of roughly a billion pesos being packed into suitcases and transported to private homes by car, with massive stacks of cash reportedly laid out on tables – scenes he described as startling.

“But we’re working hard to fix things,” he said. “We want to make it more difficult for the contractors, for the guys involved in this flood control mess, before taking money out of the banks.”

The BSP chief, who also chairs the Anti-Money Laundering Council (AMLC), disclosed that regulators are “making a lot of inquiries” to identify big flows of cash or any financial transaction that looks unusual.

“So far we think more (funds) came from the government financial institutions and that makes sense because it’s government money,” he noted.

As of now, the AMLC has frozen over 700 accounts linked to the scheme, with more freeze orders expected in the coming months.

Remolona acknowledged the move could have some impact on liquidity, but stressed that banks remain well-capitalized and no bank runs are anticipated.

To curb illicit cash movements, the BSP has directed banks to scrutinize and, when necessary, reject withdrawals exceeding P500,000 in cash per day.

While withdrawals may still be made through checks or digital transfers, these must be done through channels that allow authorities to track where the funds are going. Clients with valid requirements, such as payroll expenses, can still secure cash, provided they present a reasonable justification to the bank.

Remolona expressed support for proposed legislation to lift the country’s bank secrecy law, saying this would allow regulators to freeze suspicious accounts more swiftly.

The governor also acknowledged “a risk” that the Philippines could return to the Financial Action Task Force gray list or the European Union’s high-risk list.

“But unlike before, we’re now being more proactive,” he said, citing measures such as restricting large cash withdrawals and ordering banks to remove apps linked to online gambling.

Flood control funds used for patronage

Flood control projects are being used as patronage tools for political gain over public safety and making it easy to misuse budgets meant for disaster prevention, former Department of Budget and Management (DBM) chief Florencio Abad said.

Citing the importance of executive oversight, he said a weak checks-and-balances system lets Congress keep exploiting projects and boosting their political power and personal gain, while initiatives like flood control fail to deliver the intended benefits to the public.

“When politicians get involved, the politicians’ minds aren’t on the water management project. Just like what’s happening now, instead it is on how to make money and how to benefit for the election, so the motivation is different instead of what should be the goal of the project,” Abad said in an interview with Christian Esguerra’s Facts First program.

The former DBM official said many flood control projects suffer from poor construction and are repeatedly damaged by storms. Unfinished works are often blamed on typhoons, underscoring inefficiencies and the persistent vulnerability of infrastructure to natural disasters.

“And maybe another big thing they put in place is what we can say about the projects for reelection, the patronage projects like the multipurpose buildings we hear about in the Senate, local roads, small projects that their voters will be happy about,” Abad said.

Due to alleged anomalies in the government’s flood control projects, the Department of Finance reported that the government may have averaged P118.5 billion economic loss from 2023 to 2025.

Based on the 2026 National Expenditure Program, funding for flood control projects was supposed to have P274.9 billion but President Marcos ordered its removal, citing that its current budget for this year remained unspent.

Abad said the weak checks and balances and executive inaction allowed the legislature to dominate, expanding its power and benefits over three years without any pushback.

“If the executive does not intervene, Congress will continue its actions, as their power expands first, followed by the growth of their personal or political benefits,” he said.

The former official warned that without accountability, repeated neglect not only increases losses, but also encourages officials to disregard the law and forget their responsibilities to the public. — Marco Luis Beech