Tuesday, April 10, 2007

Corruption ‘pervasive’ in RP — US gov’t report

Graft index worse under GMA compared to Erap’s RP 1999 ranking

Corruption ‘pervasive’ in RP — US gov’t report


By Chito Lozada Business Editor

Daily Tribune 04/10/2007

Corruption in the Philippines remains “pervasive” and constitutes a major trade barrier, according to the latest National Trade Estimate (NTE) report of the US Trade Representatives (TR) office that is submitted annually to the United States Congress.

The report said corruption is a long-standing problem in the Philippines.

The USTR report came on the heels of a similar report by the Hong Kong-based Political and Economic Risk Consultancy (Perc) ranking the Philippines as the most corrupt country in Asia.

The report details significant barriers to US trade and investment and the broad array of US actions to reduce and eliminate such barriers.

The US agency noted the Philippines’ score in Transparency International’s annual Corruption Perceptions Index survey has averaged 2.5 to 2.6, out of a best score of 10, since 2002, “down from 3.6 in 1999” during the term of detained President Joseph Estrada.

It said corruption remains pervasive despite the country having enough laws against it.

“The Philippine Revised Penal Code, the Anti-Graft and Corrupt Practices Act, and the Code of Ethical Conduct for public officials are intended to combat corruption and related anticompetitive business practices,” it noted.

It added foreign and domestic investors express concern over the propensity of local courts and regulators to stray beyond matters of legal interpretation into policymaking functions and about the lack of transparency in these decision-making processes.

“In addition, there are many reports that courts influenced by bribery improperly issue temporary restraining orders impeding the conduct of legitimate commerce,” the report said.

Also noted in the report are concerns over some appointees of Mrs. Arroyo that are indicative of their being political appointees who may have been appointed out of political considerations rather than their expertise, as they are seen as officials who are hardly qualified for the jobs they have taken.

“Investors also have raised concerns that regulators rarely have any background in economics, business or a competitive economic system, which enables entrenched interests to manipulate the legal system and regulatory process, whether by bribery or through exploiting the lack of expertise among regulators, to protect market positions,” it said.

It was also made clear in the report that despite the many anti-corruption agencies in the government and the existence of many anti graft and corruption laws, the enforcement or the application of the laws is inconsistent and selective.

It said the Office of the Ombudsman investigates cases of alleged graft and corruption involving public officials while the Sandiganbayan or the anti-graft court prosecutes and adjudicates cases filed by the Ombudsman.

“In addition, a Presidential Anti-Graft Commission is tasked with investigating and hearing administrative cases of presidential appointees in the executive branch and government-owned and controlled corporations,” the report added.

Under Philippine law, soliciting or accepting any offering and giving a bribe are criminal offenses, punishable by imprisonment of between six and 15 years, a fine, and/or disqualification from public office or business dealings with the government.

“As with many other laws, however, enforcement of anti-corruption laws has been inconsistent,” the USTR report said.

While it cited the government launching an initiative to strengthen public and private governance, including anti-corruption efforts, in cooperation with bilateral and multilateral aid donors in May 2000, “results of this initiative have been mixed and have not reached a critical mass to improve public perception appreciably.”

The USTR cited efforts to re-invigorate government’s anti-corruption drive.

“In December 2003, the President issued an executive order creating an anti-corruption watchdog - the Revenue Integrity Protection Service (RIPS) - in the Department of Finance that has worked closely with the Ombudsman to help curb corruption in revenue collection agencies,” according to the report.

President Arroyo has articulated her desire to strengthen the Office of the Ombudsman to become as efficient as Hong Kong’s Independent Commission Against Corruption, and each year since 2005 has made significantly higher budget requests for this office.

To date, however, the Ombudsman has been noted to have sat on corruption cases filed against Arroyo officials and allies, some examples of which are the money-laundering/extortion case filed against Mrs. Arroyo’s former Justice Secretary Hernando Perez and former Agriculture Undersecretary Jocelyn “Joc-Joc” Bolante, who stands accused by the Senate and other private parties of diverting some P3 billion in public funds into the campaign kitty of Mrs. Arroyo in 2004.

Bolante is now in a Chicago prison as he awaits his appeal case for political asylum in the US.

In November 2004, the Philippines became eligible for the Millennium Challenge Account Threshold Program and in June 2006, the Millennium Challenge Corporation approved a two-year $21 million grant to implement the Philippines Threshold Country Plan which focuses on strengthening the anti-corruption capabilities of the Office of the Ombudsman and tax collection agencies, including RIPS, the USTR said.

Perc’s survey of businessmen called the Philippines under Mrs. Arroyo’s watch as “The Most Corrupt” economy in Asia, with the country falling to a 9.4 grade from a 7.8 rating last year, on a scale of zero to 10, zero being the best possible score.

The Philippines was just short by .6 to earn a 10, the worst possible score.

“It is bad and has been bad all along,” the Hong Kong-based Perc said in its report. “People are just growing tired of the inaction and insincerity of leading officials when they promise to fight corruption.”

On the Perc survey and its tag of the Philippines being the most corrupt economy in Asia, Mrs. Arroyo again claimed that Perc, aside from relying on old data, also relied on mere newspaper articles, saying another anti-corruption watchdog, Transparency International, also does the same, which is the reason for the Philippines being tagged as a corrupt country.

Singapore and Hong Kong were seen as the cleanest economies, while China, Indonesia and Vietnam posted improvements, Perc said in a summary made available to Agence France Presse.

“The Philippines has the distinction of being perceived in the worst light this year,” Perc said after polling 1,476 expatriate business executives in 13 countries and territories across the region in January and February.

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