Perception audit for Aquino
MANILA - Philippine President Benigno Aquino promised on last year's campaign trail that as leader he would take a ''straight path'' and prioritize uprooting the country's endemic culture of corruption. Now in power for nearly nine months, he's finding it difficult to fulfill that clean government pledge and maintain momentum behind his wider reform agenda.
The Philippines is often labeled as one of the most corrupt countries, a distinction that has long scared away foreign investors and hampered its economic growth prospects. The country's reputation has arguably never fully recovered from the
corruption of late strongman Ferdinand Marcos, his family and business cronies, when alleged billions of dollars were pilfered from the national coffers.
Aquino, whose politician parents were Marcos' main rivals and known for their comparatively clean images, has self-styled himself as a graft-buster - though critics note his corruption-fighting credentials are thin judging by his lackluster tenure as a congressman and senator. Yet certain appointments to the top of key agencies have strengthened at least perceptions of his commitment.
In particular, he tapped two no-nonsense executives for the Bureau of Customs (BOC) and the Bureau of Internal Revenue (BIR), the government's two biggest sources of revenue and widely viewed as among its most corrupt. Foreign investors have long carped that tax payment and customs collection lack in consistency and transparency and prone to abuse by corrupt officials.
Aquino also recently appointed respected whistle-blower Heidi Mendoza as the Commission on Audit's (COA) new commissioner. Mendoza brought to light large-scale anomalies in Armed Forces of the Philippines (AFP) procurements and other practices during recent congressional hearings.
Despite the reform rhetoric and high-profile appointments, outsiders continue to view the country as a bastion of corruption. The Hong Kong-based Political and Economic Risk Consultancy (PERC) recently ranked the Philippines third from the bottom of its corruption perception poll among 16 Asian nations. The ranking was consistent with the Philippines' standing during the last year of Gloria Macapagal-Arroyo's scandal-plagued administration.
The Philippines was also ranked the second least attractive country for investors over the next three years among the 10-member Association of Southeast Asian Nations (ASEAN) based on findings commissioned by the ASEAN-Business Advisory Council (BAC) and conducted by the National University of Singapore. The Philippines ranked behind even military-run Myanmar, ranked in other global surveys as among the world's most corrupt. (Vietnam, Singapore and Thailand ranked as the most attractive to investors in the BAC survey.)
In the annual Index of Economic Freedom, a global ranking conducted by the Heritage Foundation think tank and Wall Street Journal newspaper, the Philippines slipped to 115 out of 179 economies this year, down from last year's ranking of 109. The report urged the Philippine leadership to establish deeper institutional reforms in four areas, namely business freedom, investment freedom, property rights and freedom from corruption.
Consistent with that ranking, consultancy firm Pacific Strategies and Assessments (PSA) said in a report released this month that corruption is still the top deterrent to US investment in the country. Citing the latest US Trade Representative report, it pointed out that corruption is still common across government agencies in the Philippines.
In particular, the USTR report highlighted irregularities in many government transactions, the tendency of courts to be influenced by bribery and to issue temporary restraining orders that impede commerce, the propensity for regulators to stray beyond matters of legal interpretation and into policymaking, and the lack of transparency in judicial and regulatory processes.
Those problems are acute at the local government level, where corruption is a way of life and nearly impossible to avoid when doing business in provincial areas of the country. It has become standard practice in the provinces for suppliers to overprice goods or services by as much as 30 times to accommodate bribes made to local officials involved in government tendered contracts, say people familiar with the situation.
All of these corruption complaints have hurt the country's reputation among foreign investors, notably at a time when regional competition for foreign funds has intensified. Despite a global economic recovery, foreign direct investment (FDI) to the Philippines last year shrunk by 13% to US$1.71 billion from $1.96 billion in 2009, according to central bank statistics. The PSA report warned that even under the most optimistic reform scenario it will likely take most of Aquino's six-year term to accomplish meaningful increases in FDI.
Independent business consultant and political analyst Peter Wallace has said that the biggest challenge the Aquino administration faces is winning the interest and confidence of foreign investors. One way to do that, he suggested, would be to convict and imprison several ''big fish'' corrupters to show that the politically powerful are not untouchable. Filing court cases against them will not be enough to change investor perceptions, Wallace said.
But therein lies a big part of the Philippines' problem. Aquino's early efforts to uproot corruption have allegedly been stymied by the Supreme Court, whose 15 members, save one, are all appointees of former president Arroyo and the Office of the Ombudsman, whose head, Merceditas Gutierrez, is a known staunch Arroyo ally.
Gutierrez faces an impeachment trial next month for betraying the public trust through her alleged underperformance as head of the government's anti-corruption agency and her alleged inaction on following up several corruption charges filed against Arroyo and her family. If found guilty, Gutierrez will be dismissed from office.
The impeachment motion gained momentum following recent revelations that her office forged a questionable deal with dismissed Major General Carlos Garcia, a former military comptroller who amassed ill-gotten wealth of over $6 million from AFP funds and budgets. It was revealed during congressional investigations that millions of pesos were given as send-off money to a number of former AFP chiefs of staff.
The controversy led to the suicide of ex-AFP chief and defense secretary Angelo Reyes. Following the revelations, the military and police are now viewed by the public as among the most corrupt government institutions. Aquino's government has blamed the high-profile hearings for the low PERC and BAC rankings and insinuated the public revelations of military graft are a sign that its anti-corruption push is making significant progress.
It's not clear yet Aquino has leveraged effectively the momentum of last year's election win to tackle entrenched vested interests, particularly those associated with his own political camp. But as public frustration shifts from corruption concerns to rapidly rising fuel and food prices, some political analysts wonder if Aquino hasn't already squandered the best chance in a generation to rehabilitate the country's corruption-tainted image and political culture.
