Batuhan: The numbers have to reconcile

There is a reason the financial testimony in Vice President Sara Duterte’s impeachment trial has been difficult to follow. The numbers are large, the legal arguments complicated, and words such as “covered,” “suspicious,” “confidential” and “unexplained” already carry conclusions. Perhaps an accountant can help make the problem smaller. AMLC Executive Director Ronel Buenaventura testified that approximately P4.4 billion in covered and suspicious transactions were reported in connection with Duterte and her husband, Manases Carpio, from 2007 to 2025. That was later broken down into roughly P1.63 billion of identified inflows, P1.3 billion of identified outflows, and about P1.4 billion whose direction AMLC had not determined. The first thing an accountant would say is that P4.4 billion in transactions is not P4.4 billion in wealth. Move P10 million from one account to another and the banking system may record P10 million going out and another P10 million coming in. The same money has produced P20 million of movement without making anyone richer. Comparing P4.4 billion with somebody’s net worth and calling the difference unexplained wealth would therefore be bad accounting. But this is where the analysis should begin, not end. Think of the SALN as something resembling a balance sheet. It shows assets, liabilities and net worth at a particular date. Bank records provide part of the cash-flow story. The missing bridge is what generated those flows and where their economic effects ended up. The proceedings are beginning to supply that bridge. Bank witnesses have authenticated year-end balances for several years. Those can be compared with the SALN for the same reporting date. But balances from different years cannot simply be added together and called wealth. The BIR has also testified about combined income over the period. Cumulative income cannot simply be compared with closing net worth without considering opening wealth, taxes, living expenses, asset sales, investments, borrowings and transfers. These are personal accounts, not corporate operating accounts. A company can have enormous turnover from ordinary business activity. Personal accounts have no comparable operating cycle. That does not make large personal transactions improper. There may be legitimate explanations. But those explanations should leave a trail. If the money was income, where was it earned and taxed? If borrowed, where is the liability? If an asset was sold, where are the sale and tax records? If money moved between accounts of the same owner, match the two sides and eliminate duplication. If corporate money entered a personal account, why, and how did the corporation record it? And then comes the question that keeps bothering me: Where are the residuals? Cash need not remain cash. It can become property, investments, insurance products, debt repayment, expenses, taxes or transfers to others. Recent testimony involving time deposits and manager’s checks illustrates the point: changing the form of an asset does not make its economic value disappear. If very large amounts move through personal accounts while the ending financial position remains comparatively modest, the question is not merely how much moved. It is what produced the movement, what purpose it served, and where the value ultimately went. “Pass-through” is not enough by itself. If the money did not belong to the account holder, whose money was it? Why did it enter a personal account? What was the account holder expected to do with it? Where did it go next? None of these questions proves wrongdoing. Covered or suspicious transactions are not proof of corruption, and the P4.4-billion figure is not proof of P4.4 billion of undeclared wealth. But saying “they are only transactions” does not dispose of them either. The prosecution now appears to be moving toward the accounting exercise that matters: connect the SALNs, bank balances, AMLC reports, tax records, investments, insurance products and relevant corporate records into one financial story. Match the internal transfers. Identify the loans. Trace asset sales and investments. Explain third-party funds. Show the tax treatment. Then ask whether the resulting financial position agrees with the sworn disclosures. Perhaps this case would make an excellent accounting examination problem someday. The question would not be, “Who is guilty?” It would simply be: Show your reconciliation. Because the billions are not yet the conclusion. They are the trail.