Mon, 14 Sep 2009 02:20:19 -0700

In response to call for suggestions on governance from Ms. Connie Gomez of the Global Filipino Nation, Mr. Mar Tecson presents general measures against one of the worst forms of POOR GOVERNANCE--rampant CORRUPTION in government. He said that the suggested anti-corruption measures cannot be undertaken by just one person; these have to be done as group effort by civil society organizations, such as your own.



THE ROLE OF CIVIL SOCIETY GROUPS

IN AN ALL-OUT ANTI-CORRUPTION WAR





PART I

DOING WHAT CAN BE DONE

AGAINST RAMPANT CORRUPTION

UNDER A HOSTILE ENVIRONMENT





Here is an inductive process of presenting CIVIL SOCIETY GROUPS’ vital role as the people’s representatives in undertaking a crucial aspect of fighting corruption. Their role will be performed under an existing major constraint, that is, without any change in incumbent government officials whose motives are suspect--because they have collectively failed to wage an all-out war against corruption despite repeated recommendations/reminders to them from media and the public.





POINTS TO CONSIDER IN THE FORMULATION OF ANTI-CORUPTION ROADMAP


1. CORRUPTION is the ROOT many of the country’s major ills, most of which are in the nature of MONEY PROBLEM, or the lack of enough government funds for poverty alleviation and other vital public services, fallaciously addressed through imposition of regressive indirect taxes, like VAT, that hits the rich and poor alike.



As quantified hereunder, for the partial periods cited alone, some $73 BILLION was lost to corruption. Imagine what such amount could do if we had it today and it could be used in corruption-free ways to promote economic growth and uplift the living conditions of Filipinos.

As reported by World Bank sometime back, the Philippine government has lost some $48 billion to corruption in a span of 20 years as early as some years ago, bigger than its borrowings of $40.6 billion over the same period. (Elena Torrijos, “$48B lost to graft in 20 years—WB,” Philippine Daily Inquirer, December 2, 1999, p. 4). Despite the efforts of our anti-corruption government offices to curb corruption, it has worsened in succeeding years and goes on unabated to this day. “Ombudsman Merceditas Gutierrez said that at least P1.3-trillion (about $25 billion) in public revenue were lost due to fraudulent practices of some government officials and agencies from 2001 to 2005. Speaking at the start of a seminar-workshop on Integrity Development and Public Accountability at the Quezon City Hall , Gutierrez said the money lost could have been used in improving health, education and social welfare services and to reduce the national debt. ‘Bigger amounts have been lost to corruption. We could have wiped out totally our foreign debt if we used the amount for that purpose, and would still have a surplus,’ Gutierrez said.” (Julie Javellana-Santos, “Philippine Govt Lost $25 Billion the Last 5 Years to Corruption: Ombudsman,” Arab News Online, May 24, 2006)







2. Most of past big-time cases of CORRUPTION were in the nature of fraud in the DISBURSEMENT of the government’s more than TRILLION-PESO annual budget, usually involving anomalous contracts for major procurement and infrastructure projects that requires public bidding.



Following are examples of apparently anomalous major government projects:

a. The classic P728-million fertilizer scam that was PREVENTABLE because blatantly and crudely executed—it did not use any hard-to-detect sophisticated and ingenious modes of corruption, just gross overpricing, ghost deliveries, etc. that are easy to discover in COA pre-audit—yet was not prevented by the behemoth COA because it totally abdicated its pre-audit or last-line-of-defense function in the government’s more than TRILLION-PESO budgeted annual expenditures, thereby leaving a void in the government’s internal control system that makes possible the commission of large-scale corruption.
b. The irregular P1.3-billion COMELEC automated counting machine contract with Mega-Pacific nullified by the Supreme Court.



c. The controversial $470-million IMPSA hydroelectric power deal that allegedly entailed some $14-million kickback.



d. The ultra expensive P1.1-billion Diosdado Macapagal Boulevard, the gross overpricing of which was blamed on the alleged soft or loose reclamation materials underneath, which claim could have been readily checked and proved or disproved through core samplings or outright excavations of strategic points of the boulevard and adjacent areas, including the much cheaper extension of the boulevard constructed by a different contractor. Before opening of bids, if there were independent per kilometer cost standards shown to the Bidding Committee by COA, or by PUBLIC OBSERVERS, the overpricing could have been readily detected and prevented. Unfortunately, COA was not competently doing its job and there were no public observers then yet, hence the overpricing.



e. The scandal-tainted $465-million PIATCo contract for the construction of NAIA 3, voided by the Supreme Court owing to corruption and violations of the anti-dummy law.



f. The multi-billion-peso Clark centennial mess during the time of President Fidel Ramos.



g. The missing or improperly used P20-billion recovered Marcos Swiss deposits (“Drilon hits ‘deception’ in use of P20B FM funds,” Malaya , March 21, 2006), part of which might have been absconded through the P728-million fertilizer anomaly.



h. The P365.8-million grossly overpriced lamp posts in Cebu in 2007.



i. The P300-million textbook procurement scam during the time of President Joseph Estrada.



j. The media reported P2.5-billion anomalous QUEDANCOR swine dispersal program,

officially implemented since March 2004. .



k. The $329-million broadband contract with ZTE, supposedly exempt from public bidding pursuant to a still non-existing executive agreement, is allegedly attended to by $130-million overprice, betrayed by P200-million and $10-million bribe offers as claimed by a witness and whistle blowers.



l. The $503-million NORTHRAIL project which, as part of an executive agreement with China, was exempted from, and did not go through, competitive public bidding; in the absence of such bidding, COA cannot prove conclusively in post audit that the agreement covering this project is in compliance with the constitutional and lawful mandate against irregular, extravagant, excessive, unconscionable, and disadvantageous government contracts.



m. The $932-million SOUTH RAIL Project, consisting of $627.811 million for Phase 1 and $304.226 million for Phase 2, according to the Philippine National Railways (Aurea Calica, “Review of South Rail project sought,” Philippine Star Online, August 8, 2009). This project is irregular in the sense that, like the NORTHRAIL project, it was exempted from public bidding under an executive agreement, but the exemption does not cure the major defect that, in the absence of such bidding, COA cannot prove conclusively in post audit that the agreement covering this project is in compliance with the constitutional and lawful mandate against irregular, extravagant, excessive, unconscionable, and disadvantageous government contracts.






3. The fact that publicized big-time cases of CORRUPTION are frauds in government DISBURSEMENTS is quite SIGNIFICANT because it means that there is a way of CURBING them.



Unlike corruption in taxation in the form of non-payment or underpayment of taxes and customs duties perpetrated through bribing of government authorities, which corruption has no AUDIT TRAIL or documentary evidence to go by for its detection and prevention, corruption in government expenditures is much easier to detect and prevent because the corresponding disbursements are subject to government accounting and auditing regulations, non-compliance to which will expose the anomalies in irregular government contracts. Thus, once government taxes, borrowings, privatization proceeds, etc. are received in the form of CASH and RECORDED in the books of the government, these funds will now fall under the protective mantle of the government’s internal control system. The public funds cannot be properly disbursed unless the government transactions are found in conformity with government regulations designed to prevent CORRUPTION.



For example, under existing laws and regulations, payment should not be made for procurement contracts that did not go through public bidding. To prevent corruption in this type of transactions, what needs to be done is simply to enforce this rule strictly and consistently, something that is not being done but can be done if desired, it is a matter of wanting to do it.





4. Under fraud-prevention elements of INTERNAL CONTROL, no one person should be in complete control of transactions, otherwise it will be so easy to commit frauds because there will be no need for the help and connivance of other persons in the successful execution of corruption. In the government, this internal control rule can be expanded or refined further, to the effect that complete control of transactions should not be entrusted either to group of officers/employees reporting to one common high official—because they can form an evil syndicate acting just like ONE person in control of transactions.



When the Commission on Audit (COA) totally abolished pre-audit of government disbursements in 1995, in effect it blatantly violated the foregoing element of internal control because in essence it entrusted to the graft-ridden government bureaucracy the complete control of government transactions. Under 100% COA post-audit system, government agencies and entities can fully consummate and pay even anomalous transactions—no matter how large in amount--without the need to seek COA’s imprimatur prior to payment. The result has been the successful consummation of staggering cases of detectable and preventable corruption—like the P728-MILLION fertilizer scam--which were not detected and prevented by the 12,000-strong Commission on Audit simply because it abdicated its role as the last line of defense against frauds in government disbursements.







5. To remedy the major violation of internal control rule under 100% COA post audit that abdicated complete control of transactions to the graft-ridden government bureaucracy, the clear-cut solution is restoration of selective/partial COA pre-audit, totally abolished in 1995 in favor of 100% COA post audit. Fortunately, under the amended COA Circular No. 2009-002 dated May 18, 2009, selective COA pre-audit has been restored effective August 1, 2009. It constitutes a major reform in the uphill battle against rampant corruption in government.



Since February 2005, I have written to COA Commissioners and others about the need for prompt restoration of partial COA pre-audit of government transactions, with focus on corruption-prone staggering government procurement and infrastructure contracts. My justifications for partial COA pre-audit evolved into a simple comparison between 100% COA post audit and partial pre-audit. For ready reference, following are the arguments for partial COA pre-audit:



Partial COA pre-audit involves doing the same kind of work under the present 100% COA post audit, including looking at exactly the same disbursement vouchers and supporting documents being used in post audit, except that pre-audit is done earlier--or BEFORE payment and consummation of government transactions--on selected key government transactions, therefore:


(a) It does not entail increase in volume of COA audit work; it just advances the audit work to dates before payment of transactions and, in the process, compels COA to do its work promptly and without delay--because the audited government agencies/corporations are waiting for COA's pre-audit verdict on the disbursement vouchers before effecting payments.



(b) It can detect and prevent corruption because it is done BEFORE payments are made, or when acts of corruption are not yet consummated and it is not yet too late to stop them, thus it is useful in the PREVENTION of corruption.



(c) Consequently, it has the great ADVANTAGE of avoiding or minimizing the disgraceful and debilitating LOSSES of BILLIONS upon BILLIONS of PESOS in government funds from rampant corruption.



What the WHOLE ANTI-CORRUPTION GOVERNMENT MACHINERY will normally unsuccessfully attempt to do for years AFTER consummation of a particular big-time corruption—recover the loot from big-time grafters--ONE or TWO resident COA AUDITORS in the government agency/corporation can do much better within days or weeks BEFORE government disbursements are made—through selective pre-audit of substantial government transactions. Partial COA pre-audit can DETECT staggering corruption on a timely basis and PREVENT its consummation, thereby avoiding large-scale losses in precious government funds.



(d) Under selective COA pre-audit, there is simply NO great DISADVANTAGE that can override the foregoing great ADVANTAGE under it.



(e) Therefore, under the past prolonged total LACK of COA pre-audit that made possible grand scale corruption in government, COA Commissioners may be held liable for monumental WRONGDOING--including betraying the people’s trust--by way of their continuing FAILURE to RESTORE selective COA PRE-AUDIT even with their full knowledge of its ABILITY to nip in the bud anomalous transactions, as impliedly admitted in COA’s misguided rationalization of 100% COA post audit in February 2004 (COA News, Vol. 5, No. 1, January-March 2004, posted to COA website), coupled with their stubborn pursuit of 100% COA post audit even with their actual experience and full knowledge of its INABILITY to stop corruption.







6. COA’s newly reinstituted selective pre-audit should focus on the most common form of big-time corruption in government—overpriced contracts for procurement of goods, services, and infrastructures.



One factor that induces rampant corruption in major government procurement and infrastructure contracts is that these are the most fertile and practical means of recovering from public funds the huge election overspending incurred by elected government officials. Therefore, the anti-corruption program should include the prompt plugging of these main source of cost recovery by overspending elected officials. COA has to take the lead in thwarting staggering corruption in government procurement contracts.











THE EVOLVING ANTI-CORRUPTION MEASURES AGAINST THE MOST COMMON MODE OF BIG-TIME CORRUPTION—OVERPRICING IN PROCUREMENT CONTRACTS FOR GOODS, SERVICES, AND INFRASTRUCTURES


1. Counteract corruption regularly committed in the course of recovering from public funds the election overspending of elected government officials, by plugging the main source of cost recovery—overpriced contracts for procurement of goods/services and construction of infrastructure projects—through COA’s verification of purchase prices of goods/services and setting of cost standards for infrastructure construction.



Democracy in the Philippines is made a sham by vicious elements in society—traditional politicians—who serve their selfish interests and perpetuate themselves in power at the expense of more worthy and patriotic candidates. They do so through the foul means of vote-buying and election overspending, which they have no qualms in doing—-because they ultimately recover many times over from public funds their multi-million-peso election “investments” through corruption.



Almost always, the mode of overspending recovery is corruption in government through bribes or kickbacks in overpriced procurement contracts and infrastructure projects. Classic example of proven procurement scam was the P200-million cash advance to Governor Luis “Chavit” Singson for the purchase of tobacco equipment, a major part of which was, as admitted by him, absconded—-yet the whole cash advance was liquidated or accounted for through overpriced equipment.



On infrastructure projects, we have the outrageous construction cost of a length of the P1.1-BILLION Diosdado Macapagal Boulevard in Pasay City, which was way above the cost of the next segment of the same boulevard built by a different contractor. Just like the dramatic difference in bid rates between the Ayala and Lopez groups that COA ignored in the 1997 MWSS privatization—leading to Maynilad’s undoing---COA similarly disregarded the major variation in cost-per-kilometer winning bids on the different segments of the Diosdado Macapagal Boulevard, resulting in utterly wasted taxes. What COA takes for granted or does haphazardly---review of agency cost estimate before opening of bids in public bidding and review of purchase prices--are actually far-reaching solutions that can ultimately address the problem of election overspending being recovered through overpriced government contracts.







2. In line with the internal control rule that no one person (or group of persons under one command) should have complete control of transactions, we have to go one step further by removing complete CONTROL of major government transactions from key GOVERNMENT OFFICIALS and then sharing such CONTROL to the PEOPLE themselves, through their select representatives acting as PUBLIC OBSERVERS in all stages of the procurement process pursuant to Section 13 of the Procurement Law, or RA 9184 approved on January 10, 2003. This law applies to procurement of infrastructure projects, goods, and consulting services.



Under 100% COA post audit, internal control is weak because complete control of government transactions is entrusted to the graft-ridden government bureaucracy itself.



Under selective COA pre-audit, internal control is still weak because while complete control of transactions is entrusted not only to the graft-ridden government bureaucracy but also to the anti-corruption COA, some COA auditors may still succumb to temptation and become corrupt themselves.



Therefore, pursuant to the Procurement Law, to substantially strengthen control over public bidding of major government procurement and infrastructure projects, the PEOPLE themselves (through their PUBLIC OBSERVERS in public bidding), have to take matter into their hands and protect the integrity of the procurement process.



If we, the PEOPLE, will still fail to do our share in the anti-corruption war because we are waiting for a new and really honest President to take the lead in fighting corruption—which really honest President may or may not come--then failure to lick corruption lies not only in our responsible government officials but also in ourselves.









PART II

THE ROLE OF COA

IN AN ALL-OUT WAR AGAINST CORRUPTION



COA’s role in the scheme of things against corruption is presented in a separate paper. It includes its proper role in the PROCUREMENT PROCESS as well as its need to conduct intensified and sustained MANAGEMENT AUDIT of government agencies/entities, to be partly undertaken by a special audit group based in the COA head office.









PART III

THE ROLE OF CIVIL SOCIETY GROUPS





1. THE ROLE OF PUBLIC OBSERVERS IN THE GOVERNMENT’S PROCUREMENT PROCESS



Government agency officials and COA auditors have respective roles to play in the government’s procurement process. The basic role of PUBLIC OBSERVERS is to ensure that both government agency and COA personnel properly perform their role in the said process, and to report any derogatory findings to their mother civil society groups and appropriate authorities.

If COA will refuse to perform its crucial role in the proper evaluation of agency cost estimate prior to opening of bids, civil society groups have to find ways and means of constraining COA to do it, such as through having the weight of public opinion brought to bear upon it, or through seeking moral and financial support from local and foreign pressure groups towards the preparation of independent project cost estimate.







2. OTHER RECOMMENDATIONS TO CIVIL SOCIETY GROUPS



Civil society organizations have to serve as watchdog of anti-corruption government officials and do whatever they can to constrain them to faithfully discharge their responsibilities.



a. Petition COA and other government offices to implement known anti-corruption measures, as well as conduct annual anti-corruption symposium



As a first step, concerned civil society groups have to come up with, then communicate to the highest government officials concerned—the President, Senate President, Speaker of the House, Ombudsman, PAGC Chair, and COA Commissioners—the broad, logical, and doable solutions to corruption, the most basic of which are presented in this paper and other writings. They have to impress upon all government officials concerned the existence of doable solutions. Thereafter, if the government officials—especially COA Commissioners—will refuse to implement the known solutions, they would be committing intentional wrongdoing.



I wish civil society groups would likewise conduct annual forum where anti-corruption government officials will be invited, as well as requested to brief the public on the status of the government’s anti-corruption campaign. Certainly, the government officials will be ashamed to report the same work status year after year, so they will be constrained to attain progress in their anti-corruption program, for reporting in the next annual forum.





b. Commission the writing of books on corruption cases that will make grafters go down in disgrace in history as the corrupt people that they are.



So that future generations will know that not all of their forebears in our time were sleeping on the crucial issues of corruption and poor governance, civil society organizations with means have to finance and commission journalists to write books on what is happening today on corruption and governance. Through the books, let government officials who committed or abetted corruption, despite the supplication to the contrary by civil society groups and concerned citizens, go down in history as the corrupt government officials that they are. Complimentary copies of the book should be donated to libraries of the national government, local government units, and public and private educational institutions.









PART IV

PROVIDING WHEREWITHALS

FOR THE ANTI-CORRUPTION WAR





1. Why past government anti-corruption measures, including foreign-assisted programs, were simply deficient, inefficacious, and a huge waste of foreign assistance.



In the past, I wrote World Bank president Paul Wolfowitz and propounded that the bank might have been wasting its anti-corruption financial assistance to developing countries like the Philippines, because the grants-in-aid were given for not-so beneficial purposes, like strengthening of INTERNAL AUDITS that can take care of PETTY corruption but not of hard-to-stop big-time MANAGEMENT FRAUD, committed by high agency officials themselves, against whom agency INTERNAL AUDITORS are helpless and powerless. In its reply, World Bank spelled out the progress that has been achieved, including the passage of the local Procurement Law that provides for PUBLIC OBSERVERS in the public bidding process. World Bank’s reply was not totally convincing, and my take against it still stands. However, a very important point dawned on me then: that the private sector's PUBLIC OBSERVERS in all stages of the government’s procurement process are allowed not as a CONCESSION of the government to complaining civil society groups, but as a MATTER of RIGHT under the law. (Having such law enacted suggests that our lawmakers are not a totally hopeless case.) We can then formulate anti-corruption measures on this basis.



This topic is further expounded on in ANNEX A.





2. Staggering corruption in major government procurement and infrastructure contracts—the focus of herein recommended anti-corruption measures—constitutes MANAGEMENT FRAUD, the hardest-to-stop form of corruption because it is generally done with the direct or indirect participation of very high government agency officials, otherwise it cannot be successfully perpetrated. Under the situation, subservient and powerless Internal Audit units in graft-ridden government agencies cannot stop the problematical MANAGEMENT FRAUD, only the no-nonsense PRE-AUDIT by the constitutionally independent and powerful Commission on Audit can prevent it.



Without COA pre-audit, INTERNAL CHECK in government disbursements CEASES TO FUNCTION once the protectors become the attackers, or when high government officials entrusted with anti-corruption responsibility are the ones corrupt, for they have undue influence and moral ascendancy over lowly government employees in charge of verifying and processing payments. Consequently, COA has created a monumental loophole and WEAKNESS in INTERNAL CONTROL under its previous 100% post audit, resulting in unabated corruption that plagues the nation.



If even independent and powerful COA Commissioners appear hesitant to cross swords with high national government officials on astounding cases of inefficiencies and corruption, if they do not suspend the salaries and check signing authorities of high government officials who collectively accumulated multi-billion-peso unliquidated cash advances, if they do not impose sanctions against high government officials whose multi-million-peso equipment and other asset accountabilities cannot be accounted for, if they have not taken the bold stance of stopping blatant corruption and irregular government contracts through restoration of partial COA pre-audit, who else will—and can—render these crucial services to the nation? Certainly, not government Chief Accountants and Internal Auditors, who are not independent of, and are powerless against, their corrupt superior government officials. Therefore, the COA Commissioners' past misguided abolition of pre-audit, exacerbated by their prolonged unjustified refusal to restore it, have created a risky and harmful void in the government's overall internal control system.



Belatedly mindful of the foregoing vulnerability to corruption repeatedly communicated to it since 2005, the COA Commission Proper has restored the conduct of selective COA pre-audit of corruption-prone government transactions effective August 1, 2009.







3. If so, if past anti-corruption foreign grants are merely wasted in the Executive Branch of the government because the purposes of the grants do not address the hardest-to-stop and most rampant form of big-time corruption—MANAGEMENT FRAUD in huge government procurement and infrastructure contracts—and if only the supreme audit institution COA is in the best position to stop it, then COA should be asked to stop MANAGEMENT FRAUD and it should be the one given the wherewithal—especially foreign grants-in-aid—in doing it.



Only the constitutionally independent and powerful Commission on Audit can neutralize problematical MANAGEMENT FRAUD, therefore it should be asked to do so, through the sustained implementation of selective COA pre-audit of government transactions most susceptible to corruption.



COA should be given the necessary additional annual budget for the pursuit of its expanded mission. It should likewise be recommended as the DONEE or beneficiary of anti-corruption grants-in-aid from foreign governments and institutions, to be used principally in the conduct of its selective PRE-AUDIT, as well as timely and intensified MANAGEMENT AUDIT, including comprehensive review of the government’s vulnerabilities to corruption and formulation of remedial anti-corruption measures.



If COA will receive grants-in-aid from foreign governments and institutions, it would be under pressure to properly perform the pre-audit and management audit programs financed by the foreign grants, as spelled out in the agreement with the foreign donors--and the Filipino people will benefit from the situation, a case of having our colonial mentality work to our advantage in this rare instance.





MARCELO L. TECSON





martecson@yahoo.com,

martecson@gmail.com,

September 14, 2009





==========================





ANNEX A





COMPONENTS OF THE DEFICIENT

NATIONAL ANTI-CORRUPTION PROGRAM

THAT DOES NOT PUT TO MOST BENEFICIAL USE

FOREIGN GRANTS-IN-AID





Following are the components of the Philippine government’s anti-corruption program over the years. While the good-governance and anti-corruption measures forming part of it are generally laudable, the overall program itself is deficient because it does not include a most basic anti-corruption system that could have contained recurring corruption in the government bureaucracy: partial COA pre-audit complemented by all-out COA management audit.





A. Anti-Corruption Measures as Recommended by World Bank Sometime in 2002



According to former Senator Ernesto Herrera (“Policy Peek: Trying to succeed where Estrada failed,” The Manila Times, January 27, 2003), the Estrada administration commissioned the World Bank (WB) to do a study of corruption in the Philippines . The WB study, entitled “Combating Corruption in the Philippines ” recommended nine key measures in the government’s fight against corruption, as follows:



1) reducing the opportunities for corruption by policy reforms and deregulation;

2) reforming campaign finance;

3) increasing public oversight;

4) reforming the budget processes;

5) improving meritocracy in the civil service;

6) targeting selected departments and agencies;

7) enhancing sanctions against corruption;

8) developing partnerships with the private sector; and

9) supporting judicial reforms.



B. World Bank’s June 2005 Anti-Corruption Grant to the Philippines, aimed

at Curbing Corruption in Government Procurement Through Internal Audits



As shown in its website, the WB grant would fund the following activities:



1) Quality assessment of the internal audit function in selected agencies and

development of a quality assurance program for internal audit units;

2) Development of an internal audit manual with appropriate focus on procurement

review and monitoring;

3) Development of national training programs for internal auditors;

4) Development of an effective and efficient procurement records management and

monitoring system for national agencies; and

5) Strengthening the role of the Presidential Anti-Graft Commission as the oversight

agency in monitoring the performance of Internal Audit Service units.





C. Thrust of US Millennium Challenge Corporation’s $21-Million Threshold

Program for Fighting Corruption in the Philippines



As disclosed in the US Embassy’s website in July 2006, the $21-million grant to the Philippines under the US government’s Millennium Challenge Account (MCA) program is aimed at tackling corruption in the nation’s tax and customs administration. The two-year program seeks to improve revenue administration and anti-corruption efforts.



D. ADB Project: Promotion of Good Governance



“A key element of ADB’s efforts to improve public services is its anti-corruption initiative. In the Philippines , ADB assistance in the field of good governance mainly aims at improving the functioning of the COA in order to enhance the productivity and accountability of public expenditures and to prevent corruption. Particular attention is paid to transparency in public procurement.” (ADB/OECD Anti-Corruption Initiative website)



E. From the President’s State of the Nation Addresses, the Philippine Government’s

Anti-Corruption Thrusts and Targets:



As of November 2001 (from www.inq7.net):

1) Fight corruption in the Bureau of Internal Revenue.

2) Fight corruption in the Bureau of Customs.



As of June 2004 (from www.gov.ph):

1) Implement the e-procurement program.

2) Make the Bureau of Internal Revenue a showcase against corruption.

3) Make the Bureau of Customs a showcase against corruption.

4) Put in jail persons committing corruption, tax evasion and smuggling.

5) Investigate and prosecute motu propio cases of corruption.

6) File cases against judges involved in corruption.

7) Grant additional pay for government prosecutors and state counsels.



As of July 2006 (“Scorecard: GMA’s first SONA promises,” Philippine Daily Inquirer, July 30, 2006, page A12):



1) Reduce corruption in the Executive Branch.

2) Prosecute motu propio corruption in high places.

3) Make the Bureau of Internal Revenue and Bureau of Customs showcases in the fight against graft and corruption.

4) Reduce red tape by cutting in half the number of signatories needed for transactions ith government.

5) Implement e-procurement.

6) Encourage LGU’s to streamline operations and slash red tape.







WHY HALF OF THE WAR

AGAINST CORRUPTION IS NOT WAGED AT ALL



From the punitive-fixated way the Philippine government combats corruption and the deficient national anti-corruption program, we can observe that, at this late date, the government has yet to launch an all-out war against corruption.





One of Two Types of Corruption is Overlooked:

Focus is on Graft in Revenue Collections, No Conscious

and Meaningful Effort Against Fraud in Fund Disbursements



Based on the natural classification of the sources of corruption, there are two main types of corruption in government, as follows:



1) Fraud in collections of revenues--taxes, duties, and fees--by the BIR, Customs,

and other revenue generating government agencies and offices, and



2) Fraud in disbursements of the national and local government units’ annual budget, more than a TRILLION PESOS, the fertile source of easily half or more of graft in the government.



In the government, parts of revenues are lost from corruption while in the process of collection, then from whatever amount is collected—perhaps, together with foreign loans and grants--parts are again lost from corruption upon disbursement. However, a look at the various measures under the preceding components of the Philippine government’s anti-corruption program will show that it is fixated on anti-graft measures in COLLECTIONS, as well as on many other concerns, but not on fraud prevention in DISBURSEMENTS--the main source of the usual staggering cases of corruption reported but not prevented by COA, the 12,000-strong government behemoth that seems to have been reduced from fraud-prevention auditor to mere chronicler of corruption.



The glaring omission probably stemmed from the fact that those overseeing the government’s anti-corruption program are not control-oriented professionals. They could not discern that the reported government fund hemorrhages from corruption flowed mainly from the government’s TRILLION-PESO annual disbursements and should be frontally attacked there.







One of Two Modes of Fighting Corruption

Is Not Employed in the Anti-Corruption Drive :

Thrust is on Punitive System, No Real Effort on Preventive Aspect



Based on their functional nature, the control measures or methods of waging war against corruption maybe classified into:



(1) Reactionary PUNITIVE system--an indirect way of fighting corruption. It refers to the gathering of evidences, investigation, and prosecution by lawyers of the Presidential Anti-Graft Commission (PAGC) and the Office of the Ombudsman of suspected grafters in government, as well as punishment by Sandiganbayan of proven criminals—which can indirectly discourage future grafters who may fear being similarly caught and punished. Punitive system deals with graft perpetrated in the last 20 years or earlier. As indirect control, it may or may not discourage future grafters, who may or may not commit further frauds—and usually they still do, they just become more discreet in the commission and concealment of their crimes.



(2) Proactive or Visionary PREVENTIVE system---a direct mode of controlling corruption. It consists of the installation of new and strengthening of existing internal control systems in all government agencies and corporations, aimed at stopping graft before execution. It has to be handled not by lawyers or other professionals but by internal-control-practitioner CPA’s (and, lately, Certified Internal Auditors as well), to be assisted by systems experts. Preventive system addresses fraud that will be committed in the next hundred years and beyond, unless everything ends sooner. As direct control, it removes from grafters the choice or ability to perpetrate corruption—through detection of anomalies prior to consummation and consequent stopping of illegal payments. The responsibility for operating the system is currently lodged principally on agency and corporate accountants, assisted by internal auditors if any. However, as part of the government agency or corporation that they serve, they are not independent of it and can be unduly influenced or coerced by their high officials, as concretely shown by recurring corruption that government accountants and internal auditors might have detected but not prevented.



As can be observed, the government’s past effort against corruption was handled mainly by PAGC and the Ombudsman, and their thrust was to prosecute suspected grafters, hence their work was mainly punitive in nature. In effect, at this late date, the government has not waged in earnest half of the all-out war against corruption—its preventive aspect--to be pursued through fraud prevention, in the form of partial COA pre-audit and strengthened internal control systems in one of two major areas of corruption: disbursements of the government’s more than trillion-peso annual budget.







One of Two Anti-Corruption Weapons

Is Intentionally Held Back in the Anti-Corruption War:

COA Does 100% Post Audit, it Totally Cast Aside Pre-Audit



After commission of corruption by grafters who hide and squander their loot, the existing punitive-oriented anti-corruption war is waged through lifestyle checks, investigations of suspected cases of corruption by PAGC and the Office of the Ombudsman, and prosecution by the latter of suspected grafters before the Sandiganbayan—a long winding process that takes years to produce results, if results are produced at all, and therefore does not really teach an intimidating lesson to would-be grafters. On the contrary, for the very apparent failure to expeditiously and forcefully act against big-time suspects like Ex Secretary Nani Perez, former Undersecretary Joc-joc Bolante, and other high government officials, the message conveyed is something else: crime does pay.



In effect, the efficacy as preventive measure of the punitive scheme depends on the grafters themselves, that is, whether or not they will be intimidated and prevented from committing their crimes. In that sense, it is an utter failure as deterrent to corruption, as eloquently shown by corruption after corruption reported by media in increasing intensity and frequency. In which case, a more effective preventive system is badly needed.



The people have to act if they want to lick corruption. They should no longer allow grafters to commit corruption with impunity. Whether grafters want to cooperate or not by voluntarily stopping or not stopping the commission of their crimes based on efficacy or inefficacy of lessons sought to be taught by the punitive action of PAGC and the Office of the Ombudsman, the decision to stop them from committing corruption should rest on the people’s representatives in COA, who should neutralize grafters through the only available weapon—or direct preventive measure—in the government arsenal that can stop grafters in their tracks: selective COA pre-audit, which can detect and prevent anomalous transactions prior to payment or before consummation of corruption.





NOTE: While COA has reinstituted selective PRE-AUDIT effective August 1, 2009, we have yet to see if it will implement it on a no-nonsense basis.