World Bank lists sources of corruption in the Philippines

This is from the Inquirer. Special Purpose Funds?
Isn't that a euphemism for vote-buying funds? A good example is the fertilizer fund some of which was distributed to urban areas!
I guess the success of drive against tax evasion doomed it since many of the evaders were probably Arroyo supporters!
As for those accused of corruption being punished. It is rare. Even Estrada who was found guilty has been pardoned. He is not supposed to run again for president though. He might win!


SPECIAL REPORT : World Bank lists sources of corruption in Philippines


By Doris Dumlao
Philippine Daily Inquirer

Posted date: April 01, 2008


(First of two parts)
Summary and Lessons for Philippine Corruption Cases

Citing lessons from a number of large-scale corruption cases from the mothballed nuclear power plant in Bataan province to the national broadband network (NBN) scandal, the World Bank has called for tough reforms in the budget system to plug governance loopholes in the Philippines.

A country report prepared for the Philippine Development Forum (PDF) proposes abolishing “poorly controlled” special purpose funds, reforming the civil service system amid perceived vulnerability to political patronage and low compensation, and deepening of reforms on state procurement either during the sale of public assets or awarding contracts, among others.

The World Bank also laments in the report a “dramatic” slowdown in the government’s crackdown on big tax evaders in the last quarter of 2007 as opposed to 2006, when tax revenues were at an all-time high as the strategy of filing tax evasion cases under the Run After Tax Evaders (RATE) drive led to an unprecedented increase in personal and corporate income taxes.

The World Bank report, titled “Accelerating Inclusive Growth and Deepening Fiscal Stability,” a copy of which was obtained by the Philippine Daily Inquirer, lists various grand corruption cases in the Philippines in which no senior government official or private-sector perpetrator had been convicted. (See table on this page.)

“While proving a corruption charge is technically difficult and may take time even in a successful case, there is a perception of impunity in the Philippines, in spite of the recent conviction of former President [Joseph Estrada] on a plunder charge,” the report says.

Without credible enforcement, corruption will continue to be encouraged in the Philippines, the World Bank warns.

“The issue of governance in the Philippines presents an interesting paradox,” it says. “In spite of a strong civil society presence, an open media, and highly capable individuals working in public administration, most governance indicators in the Philippines have fallen substantially over the last decade and are also lower than the average for middle income East Asian economies.”

Special purpose funds

The World Bank presents in the report arguments why the government must stop the proliferation of poorly controlled Special Purpose Funds (SPFs):

• There is no clear legal basis for the creation of some SPFs, or for their inclusion in the general budget. Some are created by legislation, others by executive order. Initially the SPFs were meant to highlight some key expenditure priority items for Congress, control some expenditure items in the budget and allow for contingencies, but over the years this clarity has been eroded. The fluid way with which some of these funds are created weakens the ability of the government to have a simple unified and transparent budget.

• SPFs are not broken down by programs/activities/projects, making them difficult to trace and account for. They offer tempting opportunities to officials to use their discretion in misusing these resources.

• Extensive reallocations of the approved budget between line agencies and SPFs during the year add to the difficulty of matching budget allocations with budget execution.

• SPFs aggravate the problem of deviations from the budget. Deviations between expenditure outcomes and approved spending in SPFs occasionally reach a variance of more than 20 percent.

“The elimination of SPFs will improve the credibility of the budget, improve transparency in budgeting and ensure that there is stability and predictability in the policymaking process,” the report says.

Such a reform, the bank stresses, would have a considerable impact on the perception of transparency in budgeting.

Public procurement

Public procurement is cited in the report as a big business in the Philippines (accounting for more than 16 percent of government expenditure and about 2.8 percent of domestic output), but likewise is considered as the government activity most vulnerable to corruption.

Many Filipinos believe that a significant portion of grand corruption and political corruption occurs during procurement, either during the sale of public assets or simply the process of awarding contracts, the report says.

Grand corruption involves theft of large sums by top politicians or other officials, while political corruption, also called “clientelism” or “state capture,” is defined as the misuse of state power by officials to shape the rules of the game for their own benefit and the benefit of those who pay them.

(To be continued)

Edited by INQUIRER.net





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