P500-M flagged by COA was investment for CAAP, insurance for all its personnel

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The Civil Aviation Authority of the Philippines (CAAP) sought to clarify on Tuesday concerns raised by the Commission on Audit (COA in its annual audit report of the agency regarding a CAAP-Cocolife investment placement amounting to P500 million.

Under Republic Act 9497, the law that created CAAP, the Authority was legally authorized to invest its funds, not needed in its operations, in any business venture it may deem appropriate, or in such secured note, government securities, and other negotiable instruments.

A major consideration of CAAP to enter into the investment was Cocolife’s offer to provide free group life insurance to all plantilla employees of the Authority. Aside from this main issue, the CAAP would also like to address several matters pointed out by the COA Audit Report. In the case of CAAP, the mode of insurance is through a policy called “Key Man Insurance” wherein the life of the key officers of a corporation are insured on the premise that their productivity is an asset of the corporation. The primary beneficiary of the insurance policy is CAAP and not the key man.

To emphasize, not a single centavo will go to the selected insured key man, except the burial/funeral expenses accorded to all CAAP employees in case of death.

 

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