Anti-‐Corruption in the Philippines
Situation Update -‐ July 2012
This publication by the Partnership for Research in International Affairs and Development (PRIAD) provides an overview of the latest policy developments in the area of anti-‐corruption. The views reflected in this paper are entirely those of its authors.
Policy Developments
charity to ‘intelligence funds’, for which auditing is not a legal requirement. The case was filed before the special anti-‐graft court (‘Sandiganbayan’) in mid July. 2
• The Chief Justice of the Philippines Supreme Court, Renato C. Corona, was removed from office in May 2012 over allegations he did not truthfully disclose personal currency deposits worth USD 2.4 million. He was impeached by the House of Representatives and then tried in the Senate, which handed out the conviction without right of appeal. Mr. Corona is linked to the former president, Mrs. Gloria Macapagal Arroyo, now a member of the House of Representatives. Initially Arroyo’s chief of staff, he was appointed by the outgoing President after she lost the elections, flouting Constitutional provisions banning such a move. Some analysts argued that the case against Mr Corona was weak, with prosecutors providing limited evidence of his properties and undeclared assets. Conversely, the conviction was also hailed as a victory for the country’s justice system, particularly in showing that top officials are not shielded from punishment. His impeachment was also seen as a political move by supporters of President Benigno Aquino to remove a potential obstacle in the government’s far-‐reaching anti-‐ corruption campaign. So far, Mr. Corona has not been formally prosecuted, with some fearing that he will be allowed to continue pursuing his professional career in the private sector. • The Office of the Ombudsman recently filed plunder charges against former President Arroyo as well as officers and directors 1 of the Philippine Charity Sweepstakes Office (PCSO). Charges leveled against Mrs. Arroyo include diverting approximately P366 million from the state-‐run Other co-‐accused include a number of former officials of the PCSO, including the general manager, the board chairman, board members, the budget and accounts manager, former chairman of the Commission on Audit (COA), and former head of the COA’s intelligence fund.
1
• On July 25, former President Arroyo was granted bail and walked out of the military Veterans Memorial Hospital where she had been held under house arrest since December 2011 after attempting to leave the country. A Passay City Court ruled that there was insufficient evidence against her for sabotaging senatorial elections in 2007 by conspiring with a warlord, a crime punishable with life imprisonment. Mrs. Arroyo has been banned from leaving the country 3. Despite numerous charges against her, she has yet to be formally convicted.
Issues to watch
• Recent tensions involving China, Vietnam and the Philippines over the contested Spratly Islands and Scarborough Shoal have spurred the Government’s plan to acquire new military equipment. This could pose important corruption risks for an institution in which corruption is known to be rampant. While defence purchases are published, this is not done systematically. There also is ample evidence of corruption in procurement involving both the Department of National Defence (DND) and the Armed Forces of the Philippines (AFP), as well as collusion in military procurement between the Commission on Audit and the Department of Budget Management, charged with managing The Manila Times, 17 July 2012, GMA, 9 others face plunder complaint over PCSO intel scam, http://www.manilatimes.net/index.php/news/top-‐ stories/27068-‐gma-‐9-‐others-‐face-‐plunder-‐complaint-‐over-‐pcso-‐intel-‐scam (July 2012) 3 Manila Times, 25 July 2012, Ex-‐PH leader Arroyo wins bail, http://www.manilatimes.net/index.php/news/breaking-‐news/27643-‐ex-‐ph-‐ leader-‐arroyo-‐wins-‐bail (July 2012) 2
Anti-‐Corruption in the Philippines. Situation Update, July 2012
Government resources4. Several corruption-‐related formally charged for their involvement in illegal incidents have recently rocked the AFP. In 2011, activities. former comptroller Major General Carlos Garcia was accused of stealing millions of pesos from the • There is simmering tension between the AFP’s funds. Later, former Lt. Col George Rabusa Commission on Audit (COA) Commissioner Heidi blew the whistle on what he described to be a Mendoza, and Vice-‐President Jejomar Binay. His pervasive culture of corruption within the AFP. camp is accusing the COA, and particularly Mendoza, of pursuing a personal vendetta against • Wikileaks cables show that corruption scandals him and his record as mayor of Makati City for 23 involving former President Arroyo and her relatives years 7 . Mendoza’s formal appointment by the escalated the fragile situation in the South China Commission on Appointments (CA) is still pending, Sea. Through her husband, Arroyo is accused of with the process allegedly being stalled by the having received multi-‐million dollar kickbacks in Senate 8. Mendoza has now been appointed ‘ad-‐ return for facilitating a deal between the Chinese interim’ by the President several times. ZTE Corporation and the Philippines' National Other news in short Broadband Network (NBN). This, alongside other scandals involving Chinese interests, led to charges -‐ Early January 2012, President Benigno Aquino in Congress and the media accusing the Arroyo approved a four-‐year (2012-‐2016) good administration of pocketing substantial sums. governance and anti-‐corruption plan. As part Allegations emerged that the Arroyo of this, a national payroll system is to be administration allowed a seismic exploration deal rolled-‐out across different sectors. Purchase with China and Vietnam while taking a cut from cards will also be used in an attempt to stem Chinese loans and trying to slow-‐down the irregularities. Moreover, a stronger whistle-‐ adoption of legislation upsetting Chinese interests, blowing protection law is poised to be such as the U.N Convention on the Law of the Sea implemented9. 5 (UNCLOS). -‐ May 2012 saw the publication of the Civil • The Bureau of Customs is widely regarded as one Society Review of the Philippines’ compliance of the most corrupt institutions in the country, and with UNODC 10 . The report finds that the it is coming under increased pressure after it was Philippine’s legal and enforcement regime is found that a number of employees in Mindanao only “partially in compliance with the are involved in smuggling and collusion with illegal standards and principles of the UNCAC”. Some loggers. This is happening just as the Aquino laws have been adopted to implement the administration is enacting new legislation to Convention, but enforcement is generally support mining investments. On 2 July, President insufficient, the report states. The UNCAC Aquino signed Executive Order 79, which aims to review process is underway. institutionalise reforms in the mining sector by “providing policies and guidelines to ensure -‐ In an attempt to increase transparency and in environmental protection and responsible its commitment to further increase its multi-‐ mining” 6 . Approximately 30 personnel from the Department of Environment and Natural Resources have recently been suspended, and another 34 Reyes, F, 31 July 2012, COA probe on Makati housing project part of 7
See Glenda M. Gloria, Aries Rufo, and Gemma Bagayaua-‐Mendoza, The Enemy Within: An Inside Story on Military Corruption, Quezon City: Public Trust Media Group, 2011 5 See for example Cable Reference 08MANILA1838 http://www.cablegatesearch.net/cable.php?id=08MANILA1838 (July 2012) 6 Executive Order No 79, s 2012, http://www.gov.ph/2012/07/06/executive-‐ order-‐no-‐79-‐s-‐2012/ (July 2012) 4
‘demolition plan’ vs Binay –spokesman, Inquirer News, http://newsinfo.inquirer.net/240289/coa-‐probe-‐on-‐makati-‐housing-‐project-‐ part-‐of-‐demolition-‐plan-‐vs-‐binay-‐spokesman (July 2012) 8 Villanueva, M, 11 June 2012, P-‐Noy ready with pink slips, The Philippine Star, http://www.philstar.com/Article.aspx?articleId=816004&publicationSubCatego ryId=64 (July 2012) 9 Manila Standard Today, 4 January 2012, Anti-‐Corruption Action Plan Approved http://manilastandardtoday.com/www2/2012/01/04/anti-‐corruption-‐action-‐ plan-‐approved/ (July 2012) 10 Ma Flora May Cerna, Vincent Lazatin, May 2012, UN Convention Against Corruption, Civil Society Review: Philippines 2012, Transparency and Accountability Network and the UNCAC Coalition
Anti-‐Corruption in the Philippines. Situation Update, July 2012
stakeholder engagement, the Armed Forces of the Philippines (AFP) presented the Internal Peace and Security Plan (IPSP) Bayanihan’s first year assessment. The two-‐day conference provided an opportunity for different national and local government units as well as civil society and academia to assess the work of the military, particularly in building peace in the country. The forum also provided an opportunity to publicly air critical security and development issues. -‐ Two laws were passed in June: An Act To Further Strengthen The Anti-‐Money Laundering Law and The Terrorism Financing Prevention And Suppression Act of 2012. These will provide authorities with broader powers to investigate bank accounts and financial institutions. The government presented these as a tool to fight against trans-‐national crime and terrorism as well as improve accountability and transparency. The passing of these laws meant that the Philippines avoided being black-‐listed by the Financial Action Task Force, which would have had wider implications for the millions of Filipinos who depend on remittances and overseas markets. It remains to be seen to what extent these laws will loosen up Philippines’ stiff banking secrecy laws. -‐ Following the sacking of Justice Corona, the Judicial and Bar Council (JBC) is currently interviewing a number of potential candidates to the vacant position live on television. Six of them are sitting members of the Supreme Court. During his audition, Supreme Court Associate Justice Arturo Brion defended the opaqueness within which the Judiciary operates, which he considers key to protecting the institution’s independence. -‐ The Philippine Senate recently passed the Freedom of Information (FOI) bill 11 . Its text would make it easier for the public to access most of government records. The Bill enjoys widespread support from civil society organisations, but is now being reviewed by
the House of Representatives’ Committee on Public Information.
-‐ On July 23, President Aquino gave his yearly State of the Nation Address, in which he called on Congress to pass a third amendment to the Anti-‐Money Laundering Act. This would increase the number of predicate crimes covered by the law. -‐ The United States Department of Justice is investigating the representative of the party-‐ list group AngGalingPinoy, Juan Miguel “Mikey” Arroyo and his wife on charges of money laundering. The son of Gloria Arroyo, he faces a 73 million pesos tax-‐evasion case in the Philippines. The U.S and the Philippines signed a Mutual Legal Assistance Treaty (MLAT) in 1996, providing a legal framework for cooperation by States in the investigation and prosecution of criminal offenses. Through this agreement, approximately USD 140,000 was recovered in 2011, from the sons of former military comptroller Major General Carlos Garcia and others12. -‐ Wynn Resorts, a US-‐based casino developer and operator was enmeshed in a dispute with a major shareholder and a non-‐executive director, Japanese tycoon Kazuo Okada. The company filed a lawsuit against Mr. Okada in the U.S, accusing him of bribing and providing gifts to officials of the Philippine gaming regulator, the Philippine Amusement and Gaming Corp (Pagcor) in a bid to build a rival gaming resort. Allegedly, Okada acted in violation of the U.S Foreign Corrupt Practices Act and was subsequently sacked as a director. In his defence, Okada claims that gift-‐giving is common in the gaming industry in Asia.13
11
Freedom of Information Bill http://www.gov.ph/foi/ (May 2012) J. Aurelio, 20 April, 2012, Again, Mikey Arroyo, wife enter no plea in tax evasion case, Inquirer, http://newsinfo.inquirer.net/179549/again-‐mikey-‐ arroyo-‐wife-‐enter-‐no-‐plea-‐in-‐tax-‐evasion-‐case (July 2012) 13 Beh Li Yi, 24 February, Wynn Macau ousts Japanese tycoon Okada over alleged PHL corruption, GMA News, http://www.gmanetwork.com/news/story/249273/economy/companies/wynn -‐macau-‐ousts-‐japanese-‐tycoon-‐okada-‐over-‐alleged-‐phl-‐corruption (July 2012 12
Anti-‐Corruption in the Philippines. Situation Update, July 2012