Windmills of corruption and racing to the bottom

windmills of corruption and racing to the bottom - Windmills of corruption and racing to the bottom

In two parts, we discussed in our column in another broadsheet the Philippines’ deficit in public governance in the context of managing the pandemic crisis and navigating through a sensitive trade-off between health and economic recovery (“Of substance and spirit,” Manila Bulletin, Oct. 15 and Oct. 22).

It is the same deficit that breeds “untrammeled corruption in government,” something that President Rodrigo Duterte bewailed two days ago. The President ordered Justice Secretary Menardo Guevarra to lead the investigation of the entire bureaucracy through the so-called “mega task force” with expanded powers until the end of his term on June 30, 2022.

With less than two years in office, the President sadly wasted four years fighting the windmills of corruption with very little to show for it.

For public governance and administration of justice in the Philippines, unlike COVID-19 facilities, have hundreds of rooms for improvement. Let’s talk about numbers. Not everyone knows that the NEDA (National Economic and Development Authority) maintains a website, though it needs some updating, to monitor the Philippines’ performance in relation to various international indices that measure how we fare in relation to governance and administration of justice. The NEDA monitors the country’s ratings in the Open Budget Index, Ease of Doing Business, Economic Freedom, Global Competitive Index, Corruption Perceptions Index, Worldwide Governance Indicators and World Justice Project-Rule of Law Index.

If we want to move as one whole society, it is hardly enough to get the bad eggs in government, prosecute them, and shame them. There are other equally crucial aspects of governance that have to be improved if we are to advance fast.

Focusing first on the Open Budget Index is important because that would tell us about the transparency of the budget process. For 2019, the Philippines ranked 10th out of 107 countries representing an improvement from its 2017’s ranking of 19th out of 115 countries. The country’s score surpassed those of Indonesia, Thailand, Malaysia, Timor-Leste, Vietnam, Cambodia and Myanmar.

Ease of Doing Business covers the simplicity of business regulation and implementation. For the 2020 report, the country managed to land 95th out of 190 countries, a big leap from 124th last year. However, we are the lowest among the five founding ASEAN countries.

In terms of the Economic Freedom Index, the Philippines ranked 70th freest in the 2020 rating based on its performance in the rule of law, regulatory efficiency, government size and open markets. We are 14th among the 42 countries in the Asia-Pacific region with a score well above the regional and world averages.

A big let-down was seen in the country’s Global Competitiveness Index for 2019, dropping from 56th out of 140 countries to 64th out of 141 countries. Almost all the components of the Philippines dropped specifically on infrastructure and delays in delivery of public services. We are behind Singapore’s 1st, Malaysia’s 27th, Thailand’s 40th and Indonesia’s 50th.

An interesting performance of the country was in Worldwide Governance Indicators for 2018, as updated last year. The Philippines scored the lowest in the control of corruption and rule of law. We were high in government effectiveness and regulatory quality.

Finally, the last two governance indicators — Corruption Perceptions Index and World Justice Project – Rule of Law — mirror the indicators on corruption control and rule of law in the Worldwide Governance Indicators.

In anti-corruption watchdog Transparency International’s ranking for 2019, the Philippines slipped 14 notches, scoring 34 and placing 113th in the Corruption Perceptions Index (CPI) out of 180 countries, from its previous 99th spot. Our CPI score was lower than the average of 45 among Asia-Pacific countries.

In terms of the World Justice Project – Rule of Law Index, we scored lowest in fundamental rights, order and security and criminal justice. Out of the participating 113 countries, we ranked 88th. We bested only Cambodia and Myanmar in the ASEAN 10.

What these numbers are telling us is undeniably clear. In most of these metrics of public governance and administration of justice, the Philippines is lagging behind ASEAN even as our macroeconomic performance in the last 20 years has been quite stellar. We can just imagine how we could have consolidated our good economic fortunes with only a small deficit in public governance, and not as huge as these numbers show, to produce a role model of an economy that did its homework in pursuing policy and structural reforms, as well as in trying to do big in infrastructure.

It is not helping that some were cynical about the latest directive of the President for the Department of Justice (DoJ) to investigate everyone in government. Very few gave credence to the previous directive for the DoJ to investigate alleged corruption in PhilHealth because even before the exercise began, the Health Secretary was already exonerated. The latest judicial exercise is no less unnecessary. While ordering the investigation of the Public Works department, the Department Secretary was simultaneously declared innocent. Both the Health and Public Works Secretaries are men of great means and integrity and therefore, they do not need the Palace to shield them from any congressional inquiry or action by the Ombudsman.

There is little wisdom for the Palace to substitute itself for the proper public agencies tasked to establish the truth. In the case of the Health Secretary, for example, despite the presidential clemency supporting him, two House committees decided to recommend the filing of charges against him and other PhilHealth executives. The Ombudsman also suspended five Health Department officials for the delay in the release of the health workers’ benefits during the lockdown and eight PhilHealth officials for the alleged irregular release of P2.7 billion from the insurer’s interim reimbursement mechanism.

Prudence dictates silence on the part of the Palace after issuing its directive. Secretary Guevarra with his impeccable record of integrity and straight thoroughness can be relied upon to take it from there.

No one can argue with the timely action of the President especially in the twilight of his constitutional term. Corruption seems to be mushrooming and metamorphosing even to “pastillas.” Thus, the Ombudsman suspended for six months 44 Bureau of Immigration officials and personnel for allegedly “allowing the unchecked entry of foreigners, mostly Chinese, into the country in exchange for bribes.”

What is most bothersome is the best-kept secret of some congressmen’s reported involvement in extracting pork from the national budget. The 2021 budget, even before it completes the legislative mill, has been torn apart by so many competing demands. Money is needed to finance our health measures including the long-awaited vaccines as much as social safety nets and infrastructure. Since public revenues are challenged this year and the next, our Treasury can fund the budget only with more loans and bond floats. Every peso counts and therefore appropriating the national budget for private gains is unconscionable.

We read with so much trepidation last Monday, the broadsheets’ report of the Presidential Anti-Corruption Commission’s announcement that they have a list of some congressmen involved in “corruption in the Department of Public Works and Highways” that they would submit to the President and appropriate agencies for proper disposition. This report is not alone in its allegation.

Two days ago, last Wednesday, PhilStar columnist Jarius Bondoc cited a figure of P532 billion in the 2021 budget, or more than 11%, as “plunderable.” These are “lump sums and rehashed items from (2020) public works program.” Bondoc quoted Senator Ping Lacson saying “Legislators make the laws; Executive officials enforce (them). But every budget year congressmen and bureaucrats collude to break the law.”

Putting these instances of alleged corruption in the public domain is just the first step. It will not define our commitment to good governance. It will not enhance our ratings in the CPI. Investigation, presentation of evidence and prosecution will.

Not that corruption is something new; it has been with us since ancient times. Vito Tanzi of the IMF, writing in 2002, cited Kautilya, the prime minister of an Indian kingdom writing about corruption 2,000 years ago in his book Arthashastra. Who can forget Dante of the Medieval Age who assigned those guilty of bribery in the deepest parts of hell? Shakespeare made corruption as popular as many of his plays.

Corruption is simply the abuse of public power for private benefit. Reading Tanzi’s article in the book Governance, Corruption, Economic Performance by George T. Abed and Sanjeev Gupta, should give us some historical perspective. The Philippines’ score in the CPI in 1998 was 56th out of 85 countries which means there were 55 countries with higher ranking or some 66% of the sample countries. About 20 years later, we were 113th out of 180 countries. There were 112 other countries that scored higher than the Philippines or around 63%. It was also during this period that we saw the Philippines’ excellent performance of 20 years of sustained, uninterrupted growth.

The Fund also presented some econometric results that corruption reduces investment and economic growth as well as expenditure on education and health. It also pushes up public investment because “public investment projects lend themselves easily to manipulations by high-level officials to get bribes.”

If President Duterte’s campaign proves credible and inspires support from the whole of civil society especially those with propensity to bad governance, perhaps our economic managers do not have to revise their prognosis and forecast of grim scenarios for this year and the next. There would be no need to race to the bottom.


Diwa C. Guinigundo is the former Deputy Governor for the Monetary and Economics Sector, the Bangko Sentral ng Pilipinas (BSP). He served the BSP for 41 years. In 2001-2003, he was Alternate Executive Director at the International Monetary Fund in Washington, DC. He is the senior pastor of the Fullness of Christ International Ministries in Mandaluyong.

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