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Studies, Papers, Research

Documents presenting research and studies about corruption in the country

Ali Baba is gone

but thieves still around, thriving

By Fernando del Mundo, Philippine Daily Inquirer,

February 17, 2010

The late Jaime Cardinal Sin famously said after the ouster of the dictator Ferdinand Marcos in the 1986 People Power revolution that while Filipinos had driven out Ali Baba, the 40 thieves remained.

The crooks not only stayed, they multiplied. It is a problem the next president certainly will have to address.

Today, the perception is widespread that corruption pervades every level of Philippine society.

This is evident from the anarchy in the streets, abetted by policemen who turn a blind eye to traffic infractions for a fee, to wheeling and dealing in the corridors of power.

The cost boggles the mind.

The World Bank, in a study in 2004, cited estimates from the Philippine Commission on Audit (COA) in 2001 that a whopping $4 billion—roughly P200 billion—had been lost annually to corruption.

Badly needed funds to lift the nation from chronic poverty go to individual pockets instead of public services, keeping the poorest of the poor severely marginalized and without access to education and health care.

The business sector, in particular, has also been wary of the problem.

Most corrupt gov’t agencies

A survey conducted by Social Weather Stations (SWS) in 2008 in Metro Manila, Cebu and Davao cities showed that seven out of 10 companies reported having been asked for a bribe, a record high since 2005.

The eighth such survey by SWS since 2000 also found that public perception of the malaise had not improved, with three in five seeing “a lot” of corruption.”

It also found that “feelings that the government can be run without corruption” were “weakening” and that “feelings of efficacy in fighting corruption” among managers “declined a bit.”

The Bureau of Internal Revenue, Bureau of Customs and the Department of Public Works and Highways were described as the most corrupt agencies.

RP highly corrupt

Transparency International, a global civil society organization, placed the Philippines’ corruption perception index at 2.4 in its 2009 CPI table. This ranks countries on a scale of 0 (highly corrupt) to 10 (low). Out of 180 countries, the Philippines is ranked 139th, along with Pakistan, Bangladesh and Belarus. New Zealand is No. 1 in the list, perceived to be least corrupt.

Malacaņang has, time and again, downplayed these survey results as mere “perceptions.”

Peter Wallace, an Australian businessman and longtime Philippine resident, says corruption is either No. 1 or in the top three concerns in every business survey.

“I am working with a company at the moment to get a government contract,” he says in an interview at the Philamlife Tower Club commanding a magnificent view of Makati City.

“They are not going to pay a bribe to get it, so the problem is not them, it’s somebody else they are competing against, not on fair grounds. That’s why corruption is such a big issue,” he says.

2 types of corruption

Government economists say there are two types of corruption bedeviling the Philippines. One involves expenditures and the other government revenues.

The first is revealed in the various scams hounding the Arroyo administration.

Revenue corruption—smuggling, tax evasion and undervaluation of goods coming into the country—is much more pervasive.

Former Sen. Ralph Recto, who had served as socioeconomic planning secretary and is seeking reelection in the May 10 balloting, points as an example of expenditure corruption to a COA report in 2008.

The COA says P49 billion in funds disbursed in 2007—an election year—to local government units (LGUs), foundations and public organizations remained unaccounted for.

The report says that P24.81 billion of these funds went to state agencies—of which P17.45 billion went to the Department of Agriculture. The department had been up to its eyeballs in the P728-million fertilizer scandal in 2004.

LGUs got P16.58 billion and foundations and public organizations received P7.61 billion.

Recto says it is possible the funds went to projects, but that they might not have been liquidated. “There is no system of tracking,” he laments.

Graft democratized

Before the 1986 Edsa People Power Revolution, there was only one reputed thief in the country that Cardinal Sin referred to. Marcos gained notoriety as one of the world’s top kleptocrats that included the late Mobutu Sese Seko of the Democratic Republic of Congo, previously known as Zaire, and Robert Mugabe of Zimbabwe.

Today, there are thousands of such thieves after the late President Corazon Aquino ordered that acceptance of public works projects should be signed by barangays, mayors, governors and congressmen.

Up to 30 percent of the cost of projects which are subject to bidding and undertaken by national agencies goes to kickbacks, according to local and provincial officials.

“With democracy, corruption was democratized,” says an economist.

In a study funded by the Asia Foundation and the US Agency for International Development, Transparent Accountable Governance (TAG) puts “traditional personalistic system of governance” as the context in which corrupt and collusive practices have been deeply entrenched.

Whistle-blowers prosecuted

“Influenced by extensive patronage networks, the bureaucracy feeds on cumbersome and opaque procedures that allow for too much discretion,” TAG says, adding that instead of rewarding it, the “sophisticated culture of corruption” even harms those espousing non-corrupt behavior.

“Individuals or companies that speak out against corrupt behavior fear negative treatment from government agencies. The institutional mechanisms for monitoring and reducing corruption are weak,” it notes.

Witness businessman Jose “Joey” de Venecia III and IT expert Rodolfo Lozada Jr. blew the whistle on the scuttled $329-million NBN-ZTE deal in 2007. They face the prospects of prosecution.

‘More ultimate factors’

In a 2000 study for TAG by University of the Philippines School of Economics, professors Emmanuel S. de Dios and Ricardo D. Ferrer point out that elections—particularly the huge money needed to win an election—have encouraged corruption.

The two say that corruption’s “disproportionate role” in the country “must be traced to more ultimate factors.”

“These include the system of patronage in politics, at both local and national levels; the lack of information among the majority (originally due to poverty, ignorance and alienation); the manipulation of government by powerful outside vested interests (originally based on landownership and relations of dependency); the entrenchment of a stratum of political opportunists and big money politics; and a political system used as means of wealth accumulation based on manipulations of the electoral process,” they say.

“The pervasiveness of corruption in bids and purchases is traceable to the customary function of government,” they say, noting that “much of this type of corruption has become virtually established practice among contractors.”

De Dios and Ferrer say that the sheer amount of money needed to win an election has encouraged corruption.

No credible guidelines

“The large amounts of funds required to run for public office itself in the absence of clear and credible guidelines on campaign spending and contributions ... [motivate] corruption in office either to raise sufficient amounts for future campaigns and contests, or to recoup huge expenditures raised from one’s own pockets or by third parties,” they say.

Professor Amado M. Mendoza of the UP Department of Political Science says in another study that the presidency itself is an important feature of the “bigger picture” that breeds corruption in the country.

“The vast powers enjoyed by the Philippine president to approve and finalize contracts should be carefully reviewed in the effort to reform the overall sociopolitical environment that fosters corruption,” he says.

Clarita Carlos, the first civilian female president of the National Defense College of the Philippines, says the 1.5 million-strong bureaucracy no longer matches the requirements of society.

“That bureaucracy is really energy at rest and you need tremendous force to move energy at rest,” she says. “The best crafted policy will not find meaning if the bureaucracy will compromise it. The corruption that we see all around now has pervaded the bureaucracy. In a way corruption has been institutionalized.”

Where are we going?

Carlos recalls a survey several years ago conducted among students of the University of the Philippines in Diliman, Quezon City.

Majority of these children of democracy—those born after 1986—wanted to join either the Bureau of Customs or the Bureau of Internal Revenue upon graduation, she says.

“If UP students are in that mainstream, if they no longer represent the noble and the good, supposedly, then where is our country going?” Carlos asks.

“These are very young people, fresh graduates, wanting to get into institutions where they can get rich quickly. Because that is what we are demonstrating, that it does not pay to work hard. It does not pay to be honest.”

When even whistle-blowers are harassed, then Filipinos are in trouble, she says. “Here is where the troika of the requirements for transparency, accountability and the rule of law will have to come in."

Transparency International Country Study Report: Philippines 2006

GRAFT AND CORRUPTION: THE PHILIPPINE EXPERIENCE by Nelson Nogot Moratalla, Deputy Director / Dean of Academic, Philippine National Police Academy, Philippine Public Safety College, Philippines.

Webliography: Graft and Corruption in the Philippines (websites as of 2005)

The Philippines Fights Corruption Laws, Agencies, and Other Initiatives Used in the Philippine Fight

The Philippines: Corruption and the Economy Tuesday, PBS, January 10, 2006

US State Department 2008 Human Rights Report: Philippines

Center for Media Freedom and Responsibility Philippine Press Freedom Report 2008


TOWARDS IMPROVED CORPORATE GOVERNANCE: A Handbook on Developing Anti-Corruption Programs, AIM Hills Governance Program, 2005 (PDF,202pp.)

Whistleblowing in the Philippines: Awareness, Attitudes and Structures, AIM Hill Governance Program,2006 (PDF,217 pp.)

Assessing Vulnerabilities to Corruption: Indicators and Benchmarks of Government Performance by Michael Johnston (PDF, 39 pp.)




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