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How Much Corruption Is There in Our Government at Present?

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How Much Corruption Is There in Our Government at Present? ReportNo. 20369-PH Philippines CombatingCorruption in the Philippines Public Disclosure Authorized May3, 2000 PhilippineCountry Management Unit EastAsia and PacificRegion Public Disclosure Authorized um Public Disclosure Authorized Public Disclosure Authorized Documenf of tbe World Bank CURRENCY EQUIVALENT (as of May 3, 2000) Currency Unit = Peso (PhP) US$1.00 = PhP41.27 FISCAL YEAR January 1 - December 31 Vice-President Mr. Jemal-ud-din Kassum, EAPVP Country Director Mr. Vinay Bhargava, EACPF Sector Manager n.a. Task Team Leader Mr. Vinay Bhargava, EACPF GLOSSARY OF ACRONYMS ABC Anti-Bribery Covenants ADB Asian Development Bank ASEAN Association of Southeast Asian Nations AusAID Australian Agency for International Development BI Bureau of Immigration BIR Bureau of Internal Revenue BOC Bureau of Customs BOT Build-Operate-Transfer CDF Countrywide Development Fund CESO Career Executive Service Officers CG Consultative Group CIA CongressionalInitiative Allocations CIDA Canadian International Development Agency COA Commission on Audit CODE-NGO Caucus of Development NGO Networks CSC Civil Service Commission DBM Department of Budget and Management DECS Department of Education, Culture and Sports DENR Department of Environment and Natural Resources DILG Department of Interior and Local Government DOH Department of Health DOJ Department of Justice DOLE Department of Labor and Employment DPWH Department of Public Works and Highway GATT General Agreement on Tariffs and Trade GOP Government of the Philippines GTZ German Development Foundation HIID Harvard Institute for Intemational Development HRD Human Resource Development IICAC Independent Commission Against Corruption, Hong Kong ICCGC Inter-Agency Consultative Committee on Graft and Corruption IPD Institute of Popular Democracy IT Information Technology LGSP Local Government Support Program LGU Local Government Unit MNC Multinational Company MTPDP Medium-Term Philippine Development Plan NBI National Bureau of Investigation NEDA National Economic and Development Authority NGO Nongovernmental Organization NIA National Irrigation Administration NPC National Power Corporation OMB Office of the Ombudsman PALS Philippine-Australia Local Sustainability Program PCAGC Presidential Commission Against Graft and Corruption PCGG Presidential Commission on Good Governance PCIJ Philippine Center for Investigative Journalism PIDS Philippine Institute for Development Studies PTTAF Policy Training and Technical Assistance Facility SAL Statement of Assets and Liabilities SWS Social Weather Stations TI Transparency International UNDP United Nations Development Programme USAID United States Agency for International Development VAT Value-added Tax I.. I COMBATING CORRUPTION IN THE PHILIPPINES FOREWORD................................................................................... i EXECUTIVE SUMMARY .................................................................................. ii WHY A STRONGERANTICORRUPTION PROGRAM Now? .................................................................................. ii PREVALENCE OF CORRUPTION IN THE PHILIPPINES.................................................................................. ii GOVERNMENT'S STRATEGY AND PLANS FOR COMBATING CORRUPTION ......................................... ............................ Vi LESSONS FROM ASIAN AND GLOBAL EXPERIENCE ........................... ....................................................... vi A PROPOSED NINE-POINT APPROACH TO FIGHTING CORRUPTION IN THE PHILIPPINES ............... ............................... Viii IMPLEMENT1NGAN ANTICORRUPTION PROGRAM .............................. .................................................... xiii 1. INTRODUCTION:WHY FIGHT CORRUPTION?.................................................................................. 1 2. CORRUPTIONIN THE PHILIPPINES ........................... ....................................................... 3 PREVALENCE OF CORRUPTION.................................................................................. 3 SPECIFIC ISSUES OF CORRUPTION .................................................................................. 9 3. KEY INSTITUTIONSENGAGED IN THE ANTICORRUPTIONPROGRAM IN THE PHILIPPINES.................................................................................. 16 GOVERNMENTSTRATEGY PLANS FOR COMBATING CORRUPTION ............................................................................... 16 GOVERNMENTINSTITUTIONS .................................................................................. 16 CIVIL SOCIETY ........ .......................................................................... 18 DONORS .................................................................................. 19 4. RECOMMENDEDELEMENTS FOR A COMPREHENSIVEANTICORRUPTION PROGRAM IN THE PHILIPPINES.................................................................................. 22 LESSONSFROM INTERNATIONAL EXPERIENCE .................................................................................. 22 A PROPOSEDNINE-POINT APPROACH TO FIGHTINGCORRUPTION IN THEPHILIPPINES ................ ...............................30 5. IMPLEMENTINGA COMPREHENSIVEANTICORRUPTION PROGRAM ............. .........................36 ANNEX A: A HISTORY OF ANTICORRUPTION EFFORTS IN THE PHILIPPINES ............. ...........................41 ANNEX B: THE PHILIPPINES' GOVERNANCE IMPROVEMENT AGENDA ................ ..................................43 ANNEX C: PROFILESOF CORRUPTION.................................................................................. 45 ANNEX D: KEY GOVERNMENT ACTORS IN COMBATING CORRPUTION ................... ..............................59 ANNEX E: SURVEY OF DONOR PROGRAMSFOR GOVERNANCE AND ANTICORRUPTION IN THE PHILIPPINES.................................................................................. 64 ANNEX F: CIVIL SOCIETY INSTITUTIONS IN ANTICORRUPTION WORK ................ .................................70 ANNEX G: PERCEPTIONSAND ATTITUDES REGARDING CORRUPTION .................... ..............................73 ANNEX H: CORRUPTION AND THE PRIVATE SECTOR.................................................................................. 78 ANNEX I: THEROLE OF CONGRESS IN THE FIGHT AGAINST CORRUPTION .............. ..............................87 BIBLIOGRAPHY.................................................................................. 98 This paper was prepared under the leadership of Vinay Bhargava, Country Director, Philippines, with inputs from the following World Bank Staff: Robert Beschel, Bernard Funck, Nick Manning, Murray Proctor, Katherine Marshall, William Rex, Sonya Woo, Rajashree Paralkar, Ross Advincula, Sergio Lozoya. Edgardo Campos (ADB) and Vineeta Shanker (Consultant) also made valuable contributions to the report. F. Herrera-Lim, M Lozada and A. Tria assisted in document processing. COMBATING CORRUPTION IN THE PHILIPPINES FOREWORD Early in 1999, H.E. President Joseph Ejercito Estrada's administration asked the World Bank to make recommendationsto help the government strengthen its fight against corruption in the Philippines. The World Bank agreed as the links between corruption and a country's development are becoming increasingly clear, and the World Bank is now actively helping a growing number of countries to address corruption problems. We now know that corruption reduces the effectiveness of poverty reduction strategies and hinders growth. Corruption is also known to affect the poor disproportionately, for it is the poor who lack the resources and information to demand services that are their due or to hold officials accountable. Combating corruption is therefore an important element in the World Bank's Country Assistance Strategy for the Philippines which calls for helping the Government reduce poverty. During the course of writing this report, many Filipinos have argued that corruption is not only an economic problem but also a profoundly ethical one. This report does not address the ethical dimensions of combating corruption, not only because such issues extend beyond the mandate of the World Bank but also because ethical issues need to be debated and addressed by the people of the Philippines and their elected representatives. The World Bank submitted its preliminary summary of findings and recommendations (as a draft paper on work in progress) to President Estrada on November 5, 1999. President Estrada announced that he planned to carry out its recommendations, and requested the Development Academy of the Philippines to produce a detailed national anti-corruption program and strategy. With the government's consent, the preliminary summary of findings and recommendations were published in December 1999 in the media, posted on the internet, and made available to the public on request. Since then, numerous articles have appeared in the press, supporting stronger public action against corruption, an issue of great concern to almost every Filipino. This final version of the report has benefited from the participation and feedback of many individuals, and I would like to express my thanks to all of them for giving generously of their time and knowledge. In particular I would like to thank the member agencies of the Inter-Agency Anti-Graft Coordinating Council for their helpful comments on the draft report. It is my hope that this report might make a contribution not only to government actions but also to increase the public's involvement on combating corruption in the Philippines since, as
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