Primer on Corruption PDF

PRIMER ON CORRUPTION Content Outline A. Typology of Corruption B. Assessment of Corruption in the Philippines 1. Prevalence of the Problem 2. Costs and Consequences 3. Specific Cases a. Corruption in the Executive...

PRIMER ON CORRUPTION Content Outline A. Typology of Corruption B. Assessment of Corruption in the Philippines 1. Prevalence of the Problem 2. Costs and Consequences 3. Specific Cases a. Corruption in the Executive b. Corruption in the Legislative c. Corruption in the Judiciary d. Corruption in the Military e. Corruption and the Media C. Reforms and Initiatives to Combat Corruption 1. Combating Corruption: Policies, Plans, and Institutions Involved a. Government Strategy b. Other Sectors’ Plans 2. Cases and Experiences: Bad and Best Practices a. Commission on Audit b. Presidential Commission Against Graft and Corruption c. Inter-Agency Anti-Graft Coordinating Council d. Office of the Ombudsman f. Nongovernmental Organizations g. Business Sector h. Other Institutions i. Lifestyle Checks 3. International Experiences D. Recommendations to Combat Corruption Better A. Typology of Corruption The term “corruption” serves as shorthand for a wide variety of actions in which public office is abused for private gain. Some types of corruption, such as procurement fraud or the payment of lagay [speed or grease money], are common across many different agencies while others are agency specific. There are three layers or levels of corruption: Corruption within the Broader Political System. This includes the demands of electoral politics, the extensive use of patronage in political appointments, and the existence of “pork barrel” funds. Corruption within the Public sector. The analysis of corruption related to the performance of the public sector at a system-wide level focuses on three major problems: 1. Spotty performance of mechanisms for identifying and sanctioning employees engaged in corrupt and illicit behavior. 2. Considerations of pay and employment. 3. Government procurement. Corruption within specific agencies. In agencies like the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC), corruption involves both grand corruption, involving widespread syndicates and millions of pesos; and petty corruption, involving small payments of “grease” money to facilitate the delivery of goods and services. In his study on “dirty” money, New York University economics and finance professor Ingo Walter says that in many countries, corruption in government has become a way of life. He claims that government officials who have the power to alter decisions, like favoring one supplier over another, can be prone to corruption. The categories of “dirty” money are: Bribes—the significant payments to officials with decision-making powers to convince them to do their jobs properly. Grease—used to facilitate payments to minor officials to encourage them to do their jobs improperly. Extortion--“payments to persons in authority to avoid damage from hostile actions which they may inflict on the payer’s interest. Political Contributions--payments to political parties linked to favors or threats of retribution in case of non-payment. Projects that would have the most impact – those aimed at improving health, alleviating poverty or upgrading the quality of education appear to be also those  from which the most amount of money can be lopped off to benefit private individuals rather than the public. B. Assessment of Corruption in the Philippines 1. Prevalence of the Problem The Philippines is the second most corrupt country in Asia, according to the 2005 Political and Economic Risk Consultancy Report for 2005. Corruption and cronyism are identified as the most glaring weaknesses in the country by multinational companies operating in the Philippines, as indicated in the 2000 Corporate Performance Survey by the Economist Intelligence Unit. A mere 13% of the businesses in the Philippines are untouched by corruption, while eight percent spend more than 10% of their turnover to bribes, according to A World Business Environment Survey by the World Bank. In 1999, An Exploratory Study of Graft and Corruption in the Philippines by Linda Luz B. Guerrero and Steven A. Rood, revealed that nearly 2/3 of the survey respondents thought that there was corruption in government; 38% said it was “a great deal”; and 34% said “some”. In the 1998 Social Weather Station (SWS) survey on the public’s perception of the government’s commitment to combat corruption, half of the respondents believed that the government is exerting some effort to combat corruption. P erceptions of Government Commitment to Combating Corruption A great deal 15% 23% Some A little 12% None 50% Source: 1998 Social Weather Stations Survey A World Bank study in 2000 revealed that no one could accurately measure the extensiveness of corruption within the country as there is no systematic data available on its magnitude, location or trend. The same study, however, stated that “several information sources provide a strong indication that corruption is systemic and a key public policy issue” and that “corruption in the public and private sectors in the Philippines is pervasive and deep-rooted, touching even the judiciary and the media. The prevalence of corruption in countries around the world is measured by the Corruption Perception Index (CPI), published by the Transparency International. The CPI score refers to the perceptions on the degree of corruption as seen by business people and risk analysts, and ranges between zero (for highly corrupt) to 10 (for the highly clean). Over time, our ranking has deteriorated- from relatively in the middle (rank 54 in 1999) to near the bottom of the ranking (98 to 102 in 2003 and 2004) from among 100 or so countries around the world. Philippine Corruption Perception Index Year Rank Score 2004 102** 2.6 2003 98 * 2.5 2002 77 2.6 2001 65 2.9 2000 69 2.8 1999 54 3.6 **out of 146 countries *out of 133 Countries Source: www.transparency.org Countries with lowest level of perceived corruption for 2004 Country CPI Finland 9.7 New Zealand 9.6 Denmark 9.5 Iceland 9.5 Singapore 9.3 Sweden 9.2 Switzerland 9.1 Source: www.transparency.org Countries with most acute level of perceived corruption for 2004 Country CPI Haiti 1.5 Bangladesh 1.5 Nigeria 1.6 Myanmar 1.7 Chad 1.7 Paraguay 1.9 Azerbaijan 1.9 Source: www.transparency.org Comparative Statistics on the Number of Cases Filed in Graft-Prone Government Agencies (2000-2001) RANK AGENCY 2000 2001 INCREASE (DECREASE) 1 BOI 2 0 (100%) PEZA 3 0 (100%) PCSO 6 0 (100%) 2 DFA 7 1 (86%) 3 DENR 68 33 (52%) 4 DOH 27 15 (44%) 5 PPA 15 10 (33%) 6 HUDCC 17 12 (29%) 7 DPWH 48 39 (19%) DILG1 2466 2002 (19%) 8 DECS 156 134 (14%) NAIA 21 18 (14%) 9 BOC 40 35 (13%) 10 HLURB 10 9 (10%) 11 BID 19 20 5% 12 DOTC 53 56 6% 13 DA 19 21 11% BIR 27 30 11% 14 DND2 36 43 19% 15 NPC 10 15 50% 16 SEC3 48 72 57% 17 COMELEC 12 24 100% 18 NHA 13 39 176% 18 NIA 4 13 225% 20 DOE 0 4 400% 21 DFP 0 5 500% TOTAL 3,125 2674 (15%) Source: OMB Annual Report 2001 1 The number includes cases filed against LGUs, BJMP & PNP 2 Includes AFP cases 3 Resident Ombudsman was installed in January, 2001 In another SWS survey on corruption conducted among Filipino managers engaged mostly in manufacturing, trade, finance, transportation and communication businesses and other private services, respondents said that: Corruption in the public sector is worse than in the private sector Business use of bribery and failure to report solicitation are appalling The private sector must take the lead in raising and managing the resources needed to overcome corruption Other findings: o Most incorrupt agencies (as perceived by respondents): Supreme Court, SEC and DOH o Most corrupt agencies: BIR, Customs and DPWH o 72% were asked for a bribe connected to taxes or licenses o 35% were asked for a bribe connected to a transaction with government o Most common government regulation activity prone to bribe: local government permits or licenses, payment of income taxes and national government permits or licenses. o 57% reports that most or almost – all companies in their sector use bribes to get public contracts. o Managers continue to be willing to pay 2% of Net Income to fund a program for halving corruption in 10 years. o Imprisonment is the recommended government and business sectors’ punishment for corrupt people. o What’s wrong with corruption? It hurts the country--55% It is immoral—45% o Can government run without corruption? Yes—56% Corruption is a way of government—44% 2. Costs and Consequences US$48 billion—lost by government to corrupt practices over the last 20 years according to the Ombudsman. PhP2 billion—lost by governmental to corruption annually according to COA. The most obvious negative impact of corruption is that on the potential beneficiaries of public programs or projects. By eating into the provisions for a project, corruption  either raises the cost to project beneficiaries, or lowers the quality (or both simultaneously) of a project. Through the years, Philippine society, politics and economy has been profoundly damaged by corruption—which, among others, resulted to: 1. Significant economic losses 2. Problems of poor growth and underdevelopment. 3 Political instability, military intervention, and regime change 4. Corrosion of values and a breakdown of social norms, resulting in a perverse ‘make do’ culture 5. Undermining of government agencies such as the BIR and Customs 3. Cases of Corruption Corruption in the Executive Marcos Rule Aquino Ramos Regime Estrada Presidency 1965-1986 Administration 1992-1998 1986-1992 1998-2001 *Corruption was said *There were numerous *The several *Estrada combined the to be at its height. stories of the corruption scandals vintage methods of President’s relatives that rocked the presidential plunder engaging in shadowy Ramos regime, that Marcos had *In 1972, the transactions and drained the little perfected – behest imposition of martial corrupt deals. gains achieved by loans, commissions rule gave Marcos what could have from contracts, and the unchallenged political *Corruption in this era been the Tiger ownership of powers, which he and was perpetrated by Economy of Asia. companies through his cronies used to what was dubbed as dummies – with newer lick the government Kamag-Anak *The Centennial types of machinations coffers clean, to Incorporated. Expo scam, the such as stock market siphon tens of billions PEA-Amari scandal speculation and of dollar loans and to and the several IPP corporate mergers and extort shares of deals mark this takeovers using state whatever business regime. pension funds. they set their sights on. *Estrada was said to have accumulated as *Many Marcos cronies much as Php20 billion have managed to in cash and real estate remain at the while in Malacañang. corruption trough till today. Source: Department of Agriculture An investigative report by the Philippine Center for Investigative Journalism (PCIJ) alleged the existence of systemic corruption in the Department of Agriculture (DA). The report points out that corruption is deeply rooted in a number of DA Regional Offices, which have power and resources but little monitoring or accountability. For instance, in the highly fertile province of Sultan Kudarat in Mindanao, farmers often complain that the Department has been providing low-quality planting materials and unhealthy farm animals. It has also not been delivering farm equipment under its assistance program. PEA-AMARI scandal Dubbed as the “grandmother of all scandals,” the PEA-Amari deal involves a whopping PhP 1.75 billion worth of bribes, paid by Amari Coastal Bay Resources Corp. to a number of Public Estates Authority officials and some brokers to secure contract covering the sale of reclaimed public land in Manila Bay. Almost two years following the Supreme Court’s affirmation of its May 2003 ruling voiding the controversial deal, there are still some questions involving Speaker Jose de Venecia and then President Fidel Ramos that have yet to be clearly answered. PIATCO-NAIA Terminal 3 Deal The Supreme Court in May 2003 nullified the US$650 million contract to build and operate the Ninoy Aquino International Airport (NAIA) Terminal 3 by the Philippine International Air Terminals Co. Inc. (PIATCO), citing irregularities in the bidding and existence of onerous provisions in the contract. It was reported by Fraport AG, PIATCO’s foreign partner, that the EUR 59.8 million write down on loans or shareholders’ advances was spent to bribe and pay high government officials from the DOTC and other agencies for the immediate implementation of the NAIA 3 project. IPP contracts: Corruption involving GOCCs The Committee tasked to review the contract entered into by the government through NAPOCOR with Independent Power Producers (IPPs) revealed that of the 35 IPP contracts, only six are found to be free of legal, technical and financial defects. The Casecnan, San Roque Multi Purpose Project and CBK-Impsa were among those contracts that carried enticing incentives and guarantees, to the detriment of the public. It was surmised that despite the lopsided provisions, the contracts were approved because the IPPs gave a significant amount of grease money to the officials of NAPOCOR, NIA, DOE and other agencies. Corruption in the Legislative The Pork Barrel refers to appropriations and favors obtained by a representative for his or her district. These funds are discretionary in nature, meaning it is up to each congressman or senator to identify the projects that will be funded by their pork- barrel allocation and the beneficiaries of the spending. Pork through the years 1920s Marcos Rule Aquino Ramos Regime At present Administration As early as Pre-martial law Frustration over FVR was able to Each member of 1922, Senator days, solons the bureaucracy’s rally legislators the House of Juan then bragged slow delivery of behind his Representatives Sumulong that they had basic services to agenda with receive pork barrel stood at a point greater access their constituents promise of amounting to P70 of privilege to to pork and gave birth to the goodies for the million each year. condemn his enjoyed Countrywide legislators’ colleagues in uncontested Development constituents. Senators on the the legislative latitude in its Fund (CDF) by the other hand receive who recklessly use. members of the Thus, with as much as P200 spend public 8th Congress. Solons getting as million worth of funds to serve At the time the much as pork barrel. their own Martial Law was The fund allotted P65 million each interests. imposed, the P12.5 million to year, the Ramos In both houses the dispenser of each member of administration members closest pork was the House of became what is to the leadership concentrated on Representatives now known as get hundreds of Pres. Marcos for their priority the Golden Age millions of pesos alone, with infrastructure of Pork of pork. absolutely no projects. Any check on any addition had to be abuse negotiated with Malacanang or with the departments Source: Good Side of the Pork: It provides for the needs of the constituents that have been neglected by national government It is a necessary developmental tool, especially to 5th and 6th class municipalities The reality of Pork It is primarily a vote getting vehicle and a tool of political patronage. It is also a tool wielded by the President to buy the support of Congress for the bills Malacaňang wants passed. It provides an opportunity for lawmakers to rake in bribes and commissions from contractors of pork-funded projects. Legislator’s estimated percentage share from pork funded projects: 60 %—for ghost deliveries (where contracts for materials are faked)  40-50%-- for books, magazines and medicines (more if the medicines are expired or soon to be expired) 12-20%-- for infrastructure construction At present, the pork barrel is composed of the following: Type of Fund Description/Application Amount in millions for each solon per year 1. Priority Used for any type of project whether physical infrastructure, P12-18M Development livelihood, scholarship, vehicle and equipment acquisition Assistance medicines or training Fund (PDAF) 2. Budgetary items incorporated in allocations for various agencies P15 M Congressional over which legislators have the power to direct disbursement of Initiatives particular appropriations Most of these funds are inserted in the Allocation budgets of the DepEd, the DPWH, DILG, and the DOH (CIA) 3.Public Exclusively for physical infrastructure projects P20-60M Works Fund 4.School For the construction of school buildings in representative’s P4.5 M Building Fund district 5.Farm-to- For farm-to-market road construction in representative’s district P.05M market road construction fund Source: According to PCIJ’s recently launched book, The Rulemakers: How the Wealthy and Well-Born Dominate Congress, apart from the pork barrel, politicians scamper to get a seat in Congress for other perks. The following table indicates just how much a representative can receive in his incumbency. What a Representative Can Receive PURPOSE AMOUNT Salary P35,000 a month Published expenses P200,000 a month Allowance from the Speaker P50,000-100,000 a month Christmas gift from the Speaker P100,000-200,000 Occasional gift from Malacañang (Christmas) P100,000-150,000 Election for the speakership as much as P200,000 Attendance in a plenary session to vote on selected P50,000 (can go up to 500,000 for urgent, national bills controversial measures) Special occasions (e.g. barangay elections) P50,000 Foreign travel $300 per diem As officer or committee chairman Varies, depending on expenses Pork barrel (Priority Development Assistance Fund and P65 million a year Public Works Fund) Source: *Salaries are fixed by law. Foreign travel per diem is set by the House leadership. Pork barrel fund is fixed by the General Appropriations Act. The other amounts are based on interviews with former and current congressmen and House staff members. Corruption in the Judiciary PLDT Case In a sworn affidavit, an expert alleged that then Justice Hugo Gutierrez of the Supreme Court faked authorship of a controversial and important decision that preserved the virtual monopoly of the PLDT on profitable overseas calls. The decision, which overturned the Court’s earlier ruling that criticized monopolies and upheld the National Telecommunications Commission’s power to order interconnection among telecom firms, appeared to have been written by a PLDT lawyer. The said case raised the possibility of the presence of biases, partiality and lack of independence in the judicial decision-making process. Beer Case In 1998, San Miguel Corp. sued Asia Brewery Inc. for allegedly copying the size, shape and color of its famous beer bottle. Then Justice Jose Campos, who was assigned to pen the decision on the case, revealed that Asia Brewery had offered two other justices an amount equivalent to PhP 2.5 million in exchange for a decision in their favor. Justice Campos decided against Asia Brewery, but months later, the Supreme Court reversed his decision. San Miguel’s lawyer recalled being approached by a person who advised the company that the judge would decide in their favor for a fee of PhP 3million. San Miguel refused to pay and lost the case. Corruption in the Military Maj. Gen. Carlos Garcia Congressional investigations indicated that a year after his appointment to AFP Chief of Staff for Comptrollership, Garcia’s bank account reached PhP 7 million. It was also alleged that he was able to make a down payment for two posh condominium units in the US amounting to $200,000. There were also allegations that Garcia must have brought an estimated PhP 71 billion to the US, which would have been enough to buy 71,000 pairs of boots for soldiers or provide a one-year meal allowance to 6,500 troops. Philippine Veterans Affairs Office We are the only country in the world where veterans are increasing in numbers even as the past wars have faded away in history. The anomalies in PVAO have resulted to legitimate veterans receiving their pensions late, if at all, and to millions of pesos being lost. According to former DND secretary Orlando Mercado, the anomalies would not have been possible without the knowledge or collusion of some officials of the Philippine Veterans Bank. Corruption and the Media The media, too, has fallen prey to corrupt practices. In the SWS National Survey conducted during the Fourth Quarter of 2000, 11 percent of the respondents said newspaper writers were bribed to say false things "very often." Reforms and Initiatives to Combat Corruption 1. Policies, Plans, and Institutions Involved Government Strategy The Arroyo Administration's Key Initiatives The first Administrative Order of Pres. Arroyo prohibited government agencies from entering into any business contracts with the President, her husband or their relatives. Created the Presidential Anti-Graft Commission (PAGC) to investigate allegations of corruption involving presidential appointees and to recommend appropriate actions to the President. Strengthened the Presidential Committee on Effective Governance, which is the highest-level anti-corruption body in the government. Reactivated the Presidential Commission on Good Government (PCGG) to recover the ill-gotten wealth of Estrada. Created the privately-funded Governance Advisory Council to serve as watchdog against corruption and to complement the work of PAGC. Specified the elimination of graft and corruption as one of the objectives of the Medium-Term Philippine Development Plan. Created the Lifestyle Check Coalition that will investigate “the morality, lifestyle, and nightlife of government officials to gather evidence of graft and corruption.” Administrative and Legislative Reforms Congress passed the following measures to send a strong signal to the global community on the government's determination to promote a healthy business environment: The Securities Regulation Code (August 2000) to strengthened the regulatory powers and independence of the Securities and Exchange Commission (SEC). The Anti-Money Laundering Act (2001 and 2003) which aims to curb national and transnational illegal transactions. Procurement Reforms The Department of Budget and Management (DBM) initiated procurement improvement reforms in early 1999 to streamline the procurement system and minimize opportunities for corruption. Approved Executive Order (E.O.) No. 262, which aims to increase competition, reduce delays, limit the discretion of bids and awards committees, and eventually to reduce opportunities for corrupt practices. Approved E.O. No. 322 mandating all national government agencies to use the electronic procurement system. Passed the Government Procurement Reform Act. Involved civil society in monitoring procurements through Procurement Watch to promote transparency and accountability. Public Sector Reforms Implemented a comprehensive public expenditure management improvement program intended to restore fiscal discipline and increase transparency and accountability in the budget process. Adopted the Medium-Term Expenditure Framework, which develops a multiyear budgeting, to enhance sustainability of government's economic plan and expenditure program. Introduced the Sector Effectiveness and Efficiency Reviews to sharpen priorities, help assess the effectiveness of agency programs, and strengthen evaluation within agencies. Introduced the Organizational Performance Indicator Framework to focus the budget process on outputs and outcomes instead of inputs. Judicial Reforms Introduced an Action Program for Judicial Reform, which outlines a comprehensive and holistic approach that is crucial to judicial reform and identifies a number of steps such as streamlining the administration of both the Supreme Court and the lower courts. Inter-Agency Coordination Composed of the Commission on Audit (COA), the Office of the Ombudsman, Civil Service Commission (CSC), PAGC, Department of Justice (DoJ) and the National Bureau of Investigation (NBI), Inter-Agency Anti-Graft Coordinating Council came up with the Guidelines of Cooperation, which outlined each member agency's role in the detection, investigation, and prosecution of graft and corruption cases. GOVERNMENT BODIES TASKED WITH FIGHTING CORRUPTION Office of the Ombudsman The 1987 Constitution gives the Ombudsman the mandate to fight graft and corruption in various ways: through public assistance, graft prevention, investigation, prosecution and administrative resolution. Despite its multifaceted nature, the Ombudsman is best known for three functions: investigation, prosecution and administrative adjudication. This mandate is all-encompassing, as provided in Section 13 of RA 6770, or the Ombudsman Law of 1989: “The Ombudsman and his deputies, as protectors of the people, shall act promptly on complaints filed in any form or manner against officers or employees of the Government, or of any subdivision, agency or instrumentality thereof, including government-owned and controlled corporations, and enforce their administrative, civil and criminal liability in every case where the evidence warrants in order to promote efficient service by the Government to the people.” Workload and Status of Criminal and Administrative Cases (OMB Docketed and OSP/TBP Transferred Cases) As of December 31, 2001 Total Workload of Criminal 13,585 and Administrative Cases Cases received during the year 7,720 Referred by the other OMB 221 Offices Disposed cases reverted back to Pending 32 Carry-over from CY 2000 5,833 Less: Cases Recalled to CO/ Transferred to 221 other OMB offices Disposed 9,324 Prosecution 1,374 Penalty Imposed 390 Dismissed/Exonerated 6,270 Closed and Terminated 1,290 Pending 4,261 Source: OMB Annual Report 2001 Sandiganbayan The Sandiganbayan is the special court created to hear criminal and civil cases of graft and corruption involving public officials. It is equivalent in rank to the Court of Appeals. Its jurisdiction is limited to cases involving violations of the following: R.A 3019 (Anti-Graft and Corrupt Practices Act); R.A 1379 (Forfeiture of Illegally Acquired Property); Revised Penal Code listing crimes committed by public officials – bribery, indirect bribery, and corruption of public officials; and R.A 9160 (Anti-Money Laundering Act), a recent addition to the Sandiganbayan’s jurisdiction Sandiganbayan Facts and Figures Year created 1979 Exercises jurisdiction *Local government officials over the following *Foreign affairs officials with the rank of accused officials: consul and higher *Naval captains, air force captains and (As stipulated in RA military officers of higher rank, 8249) *Provincial directors of the Philippine National Police (PNP) and higher, *Prosecutors in towns and cities and in the Ombudsman, *Heads of GOCCs *Members of Congress and its officials belonging to Salary Grade 27 *Members of the Judiciary with the exception of members of the Supreme Court who are subject to impeachment, *Heads and members of Constitutional Commissions. Number Cases handled 30,000 from 1991 to 2000 Total amount involved Php12 billion in the cases Most common cases Falsification, malversation, estafa, violations of RA 3019 Civil Service Commission The CSC calls itself “the central personnel agency of the government.” It makes sure that the country’s 1.4 million civil servants (Sto. Tomas, 1993) comply with the standards required of them under the Administrative Code and the Civil Service Law as well as the Code of Conduct and Ethical Standards for Public Officials and Employees. The CSC handles cases when civil servants violate administrative rules and regulations. Cases that come to its attention may be either filed directly by citizens or referred by the Ombudsman. Presidential Anti-Graft Commission PAGC is directly under the Office of the President and is the venue for filing administrative complaints against presidential appointees. Commission on Audit The COA has been called the “watchdog of the treasury” and the government auditors the guardians and protectors of the public fund. This office makes sure government collects the correct amount of revenues and spends money wisely. Philippine Government Anti-Corruption Agencies Agency Legal Status Date Mandate Establish ed Office of the Constitutional 1986 Investigates and prosecutes. Adjudicates administrative Ombudsman cases and takes criminal cases (or Sandiganbayan depending on government official’s rank) Commission on Constitutional 1986 Conducts independent audits of government agencies and Audit refers financial irregularities discovered in audits to ombudsman’s office Civil Service Constitutional 1986 Plays preventive role in setting standards and norms for Commission civil service appointments and punitive role for meting out penalties and punishments for violations. Sandiganbayan Constitutional 1986 As main anti-graft court, adjudicates criminal cases brought to it by ombudsman’s office. Deals only with cases brought against high-ranking government officials. Judiciary Constitutional 1901 Adjudicates law in all areas. (headed by Supreme Court) Department of Executive NA Oversees reforms in the procurement, tax and expenditure Budget and management, streamlining the bureaucracy and civil Management service reform Commission on Constitutional 1986 Tasked with promoting free, orderly, honest, peaceful, and Elections credible elections and handling expeditiously every action brought before it. Presidential Executive February Assigned at its inception with recovering ill-gotten wealth Commission on Order No.1 1986 from Marcos family. Now also tasked with similar Good recovery from Estrada. Governance Bangko Sentral Constitutional 1993 Performs central banking functions. Replaced old central ng Pilipinas (New Central bank created in 1946 Banking Account) Securities and Commonwealt October Oversees registration of securities, evaluating financial Exchange h Act #83 or 1936 condition and operations of applicants for security issues, Commission Securities Act and supervising stock and bond brokers and bond brokers, as well as stock exchanges. Tasked with strengthening corporate governance Inter-Agency Executive August Shares information and resources to enhance coordination, Anti-Graft Order No. 79 1999 between its members’ activities (CoA, Office of the Coordinating Ombudsman, CSC, PAGC, DoJ, and NBI) Council National Bureau Gathers evidence for probable cause hearings and files of Investigation appropriate charges Presidential Executive October Formulates public sector institutional strengthening and Committee on Order No. 165 1999 Streamlining Agenda. Chaired by Executive Secretary, Effective vice-chaired by DBM, members include: Heads of CSC, Governance CoA, DoF, NEDA and Presidential Management Staff Presidential Executive April Investigates violation of anti-graft laws by presidential Anti-Graft Order No. 12 2001 sub-appointees and can recommend suspension of Commission individual to president (Same mandate as the Ramos administration’s Presidential Commission against Graft and Corruption, which it superceded). Also superceded Estrada administration’ National Anti-corruption Commission. Governance Executive July 2001 Advises president in formulating governance reform Advisory Order No. 25 agenda. Consists of private sector appointees Council Anti-Money Created by Septemb Consists of BSP Governor, commissioner of Insurance Laundering Anti-Money er 2001 Commission and SEC Commissioner. Receives reports on Council Laundering covered transactions and can freeze suspicious accounts Law (Republic with recourse to courts for 15 days. Act 9160) Source: WB, “Combating Corruption in the Philippines: An Update,” 30 September 2001. ANTI – CORRUPTION LAWS The 1987 Constitution states that: 1. As public office is a public trust, public officers and employees must at all times be accountable to the people. Government officials and functionaries must serve the people with utmost responsibility, integrity, loyalty, and efficiency They shall conduct themselves with patriotism and justice. They must lead modest lives. (Sec. 1, Article XI) 2. The President, the Vice-President and similar highly placed government officials may be removed from office by impeachment. They may be held so liable for culpable violation of the Constitution, treason, bribery, graft and corruption, other high crimes, or betrayal of public trust. (Sec. 2. Article XI) The Revised Penal Code has provisions on the following: Crimes Against the Fundamental Laws of the State, (Title II) 1. Any public officer may be held criminally and civilly liable for the following acts or omissions: 1.1. Arbitrary detention (Art. 124) 1.2. Delay in the delivery of detained persons to the proper judicial authorities (Art. 125) 1.3. Violation of domicile (Art. 128) 1.4. Prohibition, interruption, and dissolution of peaceful meetings (Art. 131) 1.5. Interruption of religious worship (Art. 132) Malfeasance and Misfeasance in Office (Chapter 2, Title VII) 1. Dereliction of duty 2. Bribery 3. Corruption of Public Officials Other acts defined and penalized 1. Frauds and illegal exactions and transactions 2. Malversation of Public funds or property 3. Infidelity of public officers, and 4. Other offenses or irregularities by public officers. Other laws An act Defining and Anti-Graft and An Act Declaring Code of Conduct Penalizing the Crime Corrupt Practices Act Forfeiture in Favor of and Ethical of Plunder (R.A. No. 3019) the State any Property Standards for (R. A. No. 7080) Found to have been Public Officials and Unlawfully Acquired Employees by any Public Officer (RA 6713) or Employee and Providing for the Procedure Therefore (R. A. No. 1379) 1.Any public officer *This was enacted in *This law zeroes in on *This law was who by himself or in accordance with the any public officer or enacted in line with connivance with other policy of the employee who has the policy of the state persons accumulates Government to repress acquired during his to promote a high or acquires ill-gotten certain conducts of incumbency any standard of ethics in wealth in the aggregate public officers and property which is public service. amount of seventy five private persons which manifestly out of (Sec. 2) million pesos constitute or may lead proportion to his salary (P75,000,000.00) shall to graft and corrupt or other lawful sources *In their discharge be guilty of plunder. practices. of income. and execution of official duties, every 2. He shall be *The following are acts *Such property may public official and punished by life or omissions which this include the following: employee shall imprisonment with law defines and observe the following perpetual absolute penalizes as corrupt 1. Those which the as standards of disqualification from practices: public officer orpersonal conduct. holding any office. employee unlawfully (Sec. 4) 1.Direct or indirect acquired but titled in 3.His ill-gotten wealth pecuniary interest in the name of another 1. Commitment and their fruits, any contract or person (e.g. spouse or to public interest proceeds or income transaction between the relative) shall be forfeited in government and any 2.Professionalism favor of the State. other party wherein the 2. Those which were public officer in his donated to him/her 3. Justness and official capacity may during his/her Sincerity intervene under the incumbency unless he law; can prove that the 4. Political neutrality donation is lawful. 2.Accepting or having 5.Responsiveness to any member of his public family accept employment in a 6. Nationalism & private enterprise Patriotism which has pending official business with 7. Commitment to him during the democracy pendency thereof or within one year after its 8. Simple living termination. (Sec. 3, par. d) 3.Entering on behalf of the Gov’t into any contract or transaction manifestly and grossly disadvantageous to the same, whether or not the public officer profited or will profit thereby. (Sec. 3 par. g) 4.Knowingly approving or granting any license, permit, privilege or benefit in favor of a person who is not so qualified or entitled. (Sec. 3 par. J)  Initiatives from other sectors Makati Business Club Its initiatives in fighting corruption include Project Simplification, which aims to simplify transactions in licensing and real estate permits, and the Transparent and Accountability in Governance Project, which surveys firms on the extent of corruption in the private sector. Governance Advisory Council The GAC has prepared a new corporate governance reform agenda that covers guidelines on the roles and responsibilities of corporate boards, a code of proper practice for directors, and a code of ethics for enterprises. Civil Society Procurement Watch Inc., an NGO organized by a group of economists, lawyers and policy analysts, helps monitor on demand the major procurement activities of the government. Aside from being a watchdog, PWI conducts studies, promotes e-procurement, and assists in streamlining procedures that govern procurement of goods, supplies, materials, services, and infrastructure projects of the national government. Bantay Katarungan monitors court proceedings and applicant screenings for positions in the lower courts and courts of appeals. The 1,000-member Fellowship of Christians in Government, which has fellowship groups in 50 government agencies, has quietly made its presence felt by publishing a booklet on how to transact business with various government agencies. In 2001, civil society organizations led by the Transparency and Accountability Network (TAN) had taken the first steps toward developing a civil society anticorruption agenda. The agenda consists of action plans for preventing corruption, prosecuting offenders, and promoting a corruption- intolerant culture. TAN is composed of 19 academic institutions, media and NGOs. 361 NGOs and POs were accredited as corruption prevention units and 1,074 student and community-based youth organizations were registered as junior graft-watch units by the Office of the Ombudsman. Media Dubbed as the watchdog of society, the media has played a crucial role in promoting transparency and curbing corruption. Reports on corrupt practices of government officials often trigger public outcry, launch series of investigation and judicial proceedings, or sometimes resignation of the official involved. PCIJ As a non-profit, independent agency specializing in investigative reporting, the PCIJ has rocked the present and previous administrations with its well-researched and in- depth exposés of the conduct of public officials. Its reports have enriched public opinions and debates. 2. Cases and Experiences: Bad and Best Practices Commission on Audit Adoption of a simplified, computerized accounting system consistent with international accounting standards. Adoption of government-wide and sectoral performance audit and audit team approach to streamline audit structure and ensure efficiency and independence in auditing. Promotion of government-integrated financial management information system. Office of the Ombudsman Enlisted citizens' support in its fight against graft and corruption. Took an aggressive role in addressing the problem of money laundering to further the cause of corruption prevention. Filed corruption cases against President Estrada in the Sandiganbayan in 2001. Nongovernmental Organizations PCIJ’s reports on President Estrada's unexplained wealth stirred public awareness and discussions on governance and corruption. Three of the PCIJ reports were part of the impeachment complaint against the now deposed president. These reports shared the top prize in Jaime V. Ongpin Awards for Investigative Journalism in 2000. The Corruption Prevention Unit (CPU) Program is spearheaded by NGOs and POs and is aimed at establishing CPU public assistance centers in the community to ensure community-based participation in the drive against corruption and inefficiency in the government. Business Sector The Makati Business Club represents the progressive elements of the business community who are looking at the larger picture of the economy, not only at their  own business interests. This group was instrumental in supporting the movement for accountability and has endorsed the demand for good government. Lifestyle Checks The “Lifestyle Check Coalition,” which is composed of 16 government agencies, NGOs and civil society, pools the expertise, resources and manpower of its members in identifying leads, gathering information and prosecuting accused public officials. The public provides the information, while the intelligence-gathering units of the coalitions (such as the NBI and the Intelligence Service of the AFP investigate suspected officials. The findings are forwarded to other member units for evaluation and confirmation. To further ensure the success of this undertaking, lifestyle checks and anti-graft units were formed in six agencies the DoF, DAR, DOH, DPWH, DENR and DepEd. 3. International Experiences Based on a comparative analysis of five Asian countries (India, Hongkong, Mongolia, Philippines and Singapore), Professor Jon S.T. Quah of the National University of Singapore draws six lessons for designing successful anti-corruption efforts: Commitment by political leadership is crucial. A comprehensive strategy is more effective. The anti-corruption agency itself must be incorruptible. The anti-corruption agency must be removed from police control. Opportunities for corruption in vulnerable agencies must be reduced. Corruption can be reduced by raising salaries, if a country may afford to so. Hongkong’s experience In the 1960s and early 1970s, Hongkong, with one of the world’s largest police forces, was notorious for the number of its officers engaged in systematic acts of corruption. Moreover, corruption was prevalent not only in the government, but also in the private sector. In 1971, the government enacted the Prevention of Bribery ordinance then later created the Independent Commission Against Corruption (ICAC). The new agency was given sweeping powers and complete operational independence. It could require any person to provide any information, issue restraining orders to freeze assets and properties, and seize travel documents to prevent escapes. ICAC has developed a remarkable system of internal controls and outside advisory to provide and analyze information about possible corruption and abuses of power and enjoys widespread support. The following factors have been critical for its success in combating corruption:  Recognition of the problem and commitment to solving it. An unimpeacheable anticorruption agency Attention to all reports Confidentiality ADB-OECD Anti-Corruption Initiative for Asia and the Pacific 1997 saw the launching of the Anti-Corruption Action Plan for Asia-Pacific, which had the following pillars: developing effective and transparent systems for public service strengthening anti-bribery actions promoting integrity in business operations supporting active public involvement. The regional anti-corruption conference of ADB-OECD Anti-Corruption Initiative for Asia and the Pacific in 2003 featured: Capacity building workshops that enabled delegates to improve their knowledge in areas such as the use of protection of whistle-blowers, forensic accounting to cope with complex corruption, incidences, detection of corruption in public procurement and transnational judicial cooperation. Discussion on the emergence of legal and institutional frameworks to stem corruption. World Bank’s efforts on measuring corruption and designing strategies to combat and improve governance in Albania, Georgia and Latvia. Findings in Albania, Georgia and Latvia 1. There are many types of corruption, and each country’s pattern is distinct 2. Institutional causes of corruption differ, suggesting different priorities for reform 3. Enterprises would pay higher taxes if corruption were eliminated. 4. Corruption disproportionately hurts the poor - Although richer household are more likely to pay bribes, the burden of corruption is much greater for poorer households. 5. Bureaucrats pay for lucrative positions - The price of obtaining “high rent” positions is well known among public officials and the general public, suggesting that corruption is deeply institutionalized. - In Latvia, ministerial positions are purchased more often than in Albania and Georgia. Features of anti-corruption strategies in Albania, Georgia & Latvia 1. All three countries first sought assistance from the World bank in designing reforms to improve governance. 2. They committed to open and transparent policy making—including collecting detailed data on corruption and sponsoring public workshops to discuss the data and the policy agenda. 3. The 3 governments initiated policy processes the should culminate in anti-corruption programs for regulator reform, civil service and public administration reforms, public finance reform and judicial reform. 4. Efforts were made to promote the participation of civil society In Albania and Georgia, the data were presented in workshops that were open to members of all branches of government, the business community, and civil society. In Albania, doing such resulted in shift in policy debates from vague unsubstantiated accusations to a process focused on empirical evidence and systemic weaknesses. Survey results were printed on front page of major newspapers. In Latvia, the government opened the debate on corruption with a workshop in early 1997. In June 1998, the new government presented the basic program at a public conference, prior to the completion of the survey. Recommendations to Combat Corruption Better Measure Corruption Why measure corruption? When evidence on proliferation of corruption is available, the debate on corruption can be depoliticized and its focus shifted to substantive issues; Can help establish priorities for reform by identifying activities and agencies where corruption is concentrated; Educates the public about economic and social costs of corruption; and Establishes a baseline against which the successes and failures of reform can later be measured World Bank’s Proposed Nine-Point Approach to Fighting Corruption in the Philippines Reducing opportunities for corruption by police reforms and deregulation Reforming campaign finance Increasing public oversight Reforming budget processes Improving meritocracy in the civil services Targeting selected departments and agencies Enhancing sanctions for corruption Developing partnerships with the private sector Supporting judicial reform Setting Priorities and Generating Local Ownership Identify a set of high priority, highly visible actions that could be delivered reasonably quickly and that would build support for the unfolding of the full program. Identify leaders (whether groups, agencies or individuals) within and outside the government who will launch, sustain and monitor the anti-corruption action program. Ensure faster-paced and results-oriented implementation. Strengthening the Management of the Government’s Anti-Corruption Action Program and Ensuring it is Adequately Resourced Ensure that the Government's anti-corruption effort has strong and senior leadership (to spearhead it and to communicate the goals, plans, and progress, to the public on a continuous basis) and that the institutional arrangements for supporting this leadership are adequately resourced. Establish a multi-sectoral advisory group consisting of experts (national and international) involved in anticorruption efforts, and including Filipino citizens representing civil society efforts to combat corruption is important. Recommendations for Sustaining/Initiating Specific Activities as part of a Medium-Term Anti-Corruption Program Involve Public in Oversight of Government Services to improve transparency and quality of public services and decision-making. Sustain the DBM Led Program for Reform of Government Procurement Sustain/Accelerate Reforms in Budgetary and Accounting/Auditing Systems to reduce risk of corruption, increase disbursement controls and to improve fiscal monitoring. Design and Implement Anti-Corruption Plans in selected Departments and Agencies. Support Improvement in Corporate Governance and Competition Policies Support Judicial Reforms to increase the speed and fairness of the court system Strengthen the anti-corruption content of the legislative agenda Strengthen anti corruption actions at the local government level Recognize and Reward Good Governance Performance Coalition Building for reforms National Anti-Corruption Program reforms should be advanced by a broad anti- corruption coalition. Coalition agenda should include altering the people’s and policymaker’s values about corruption, re-framing problems to emphasize the severity of the issue of corruption, taking advantage of windows of opportunities that emerge in the political and policy arenas. Public support and participation for NACP is essential and should be a key element of coalition building effort. It is crucial to find and draw the support of reformist public officials. Find and supporting political champion who will advance anti-corruption a coalition. The higher the official and office involved, the better Managing the implementation of anti-corruption policies and programs Requires a keen understanding of where, when and how resistance to NACPs can be overcome Resistance may stem from governmental sphere or from private vested interests or both. To help increase the prospects for effective implementation of anti-corruption reforms, the provisions in the policies should be clear. Vague, ambiguous provisions can leave room for different interpretations that can provide excuses for non- compliance. The choice of individuals and agencies to lead the implementation of anti-corruption reforms is critical. (credibility and legitimacy) Timing and sequencing matters. – social marketing In predicting and preparing for resistance and opposition to anti-corruption policy implementation, policy makers need to stock of the resources available to them. Understanding the nature of existing and obtainable resources that policy makers can deploy is critical to countering challenges to carrying out reforms. Economic strategy and the scope of government (By Emmanuel de Dios and Ricardo Ferrer) A central argument is that less government intervention in the economy and a greater reliance on markets instead is a key ingredient in reducing corruption [World Bank 1997a], a contention that must be measured, on the other hand, against the idea of an activist “developmental state” in the East Asian mode [Chang 1996]. How countries of the latter sort (e.g., South Korea or Japan) managed to temper the state interventions that mode called for with the need to restrain bureaucratic and political self-seeking is an indispensable part of a growth puzzle. The characteristics of the problem determine the very approach required to address it. The following are broad suggestions: 1. “Take it from the top” and attack political corruption, using the levers of accountability for the polity-politician relationship. This follows from the analysis that in the Philippines, closed-form bureaucratic corruption is subordinate to politicians (and has not reached the point where underworld elements instead dominate politics). Electoral contests must be an effective tool for recruiting honest and accountable politicians of a sufficient number to break the monopoly of adversely selected trapos. For this to occur, however, obviously what is needed is voter education and information; transparency in campaign finance; public transparency, and a prominent role for media and communications. 2. The credibility of the justice system must be restored especially in the prosecution of corruption cases. A decisive resolution of the most prominent pending political cases is needed. 3. The reduction of political discretion from the center. 4. It is important to raise the morale and professionalism of bureaucracy to render it less vulnerable to arbitrary political demands and more sensitive to the general public interest. 5. Underlying all of these reforms in incentive mechanisms, society must begin to address the network of real social relationships that envelope and shape the political PA relationship. In particular, the problem of low social cohesion, of low political education and civic apathy need to be addressed. Some Political Consideration in Fighting Corruption by Robert Klitgard, Dean, the RAND Graduate School, Santa Monica, California Who will spearhead the government’s efforts? What is the “low hanging fruit”? To build momentum, it is important to select a relatively easy-to-fix corruption problem first. Which are the more favorable forces in the political environment and how can the government align its efforts with them? If there is a culture of impunity, it can only be ruptured by “frying big fish” Build political support by: creating a sequenced publicity campaign to raise the profile of the anti- corruption effort; and within the public sector, it is important to do something good for the government officials before seeming to attack them. Strengthen institutional capacity not only through “supply side measures” (more training, more experts, more computers) but especially thru changing systems of information and incentives. Contextualize any anti-corruption strategy as a part of a broader vision of transforming governance. For the Media To be able to act as a vigilant watchdog over the conduct of public officers, it is vital for the media to be freed from political interference. State-owned media should be treated at arm’s-length by the government. At the same time, mechanisms have to be set in place to ensure that different proprietors own the media. --- References 1. Making Anti-Corruption Policies and Programs More Effective: An Analytical Framework by Vinay Bhargava and Emil Bolongaita Jr. 2. Combating Corruption in the Philippines by V. Bhargava 3. Will Rising sentiment help eradicate one of the great obstacles in poverty reduction? by Omana Nair,as featured in Countering Corruption, March-April 2004. ADB Review 4. New Frontiers in Combating Corruption, World Bank 5. Challenging Corruption in Asia: Case Studies and a Framework for Action by Vinay Bhargava and Emil Bolongaita. WB. 6. Combating Corruption in the Philippines. WB. May 2000. 7. "Can Corruption Be Measured?". WB 8. Ombudsman’s Journal Volume 8 No.1 (May 7, 2003) 9. Memorandum of Understanding – Lifestyle Check Coalition 10. OMB Brochure: Graft Prevention Programs of the Ombudsman 11. Combating Corruption in the Philippines: An Update. Rajashree Paralkar. September 30, 2001. Philippine Country Management Unit. East Asia and Pacific Regional Office. World Bank 12. Pork and other perks Corruption and Governance in the Philippines; Philippine Center for Investigative Journalism Evelio B Javier Foundation and the Institute for Popular Democracy ;1998 13. The Rulemakers: How the Wealthy and Well-Born Dominate Congress, PCIJ 2003 14. Impact of Pork (Diokno, Chronicle) 15. PDI, Solons didn’t know pork was bloated, 24 Jan 1998) 16. Pork Barrel Politics: (Source: Yvonne Chua, With Pork, Legislators can Play gods, PCIJ, Aug 2004.)