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Transparency and Accountability Network Corruption and Anti-Corruption in the Philippines A Paper Prepared byTransparency and Accountability Networkfor GTZ PhilippinesMarch 2011

Corruption and Anti-Corruption in the Philippines Transparency and Accountability Network, March 2011 2 TABLE OF CONTENTS ACRONYMS 3LIST OF TABLES, FIGURES AND BOXES 4EXECUTIVE SUMMARY 5I. Forms of Corruption 7II. Scale of Corruption 11III. The Political Economy of Corruption in the Philippines 15IV. Anti-Corruption Efforts 26V. Recommendations 33REFERENCES 35 Corruption and Anti-Corruption in the Philippines Transparency and Accountability Network, March 2011 3 ACRONYMS AFP Armed Forces of the PhilippinesBIR Bureau of Internal RevenueBOC Bureau of CustomsCHR Commission on Human RightsCOA Commission on AuditCOMELEC

Commission on ElectionsCSC Civil Service CommissionDA Department of AgricultureDBM Department of Budget and ManagementDENR Department of Environment and Natural ResourcesDEPED Department of EducationDILG Department of the Interior and Local GovernmentDOF Department of FinanceDOH Department of HealthDOJ Department of JusticeDOTC Department of Transportation and CommunicationDPWH Department of Public Works and HighwaysDSWD Department of Social Welfare and DevelopmentDTI Department of Trade and IndustryGSIS Government Service Insurance SystemHOR House of RepresentativesKBL Kilusang Bagong Lipunan (New Society Movement)Lakas Lakas ng Bansa (Nations Power)LAMP Laban ng Masang Pilipino (Strugge of the Pilipino Masses)LDP Laban ng Demokratikong PilipinoLP Liberal PartyLTO Land Transportation OfficeNAPC National Anti-Poverty CommissionNP Nacionalista PartyNPC Nationalist Peoples CoalitionNSA National Security AdviserNTC National Telecommunications CommissionNUCD National Union of Christian DemocratsOMB Office of the OmbudsmanOP Office of the PresidentPAGC Presidential Anti-Graft CommissionPAGCOR Philippine Amusement and Gaming CorporationPCGG Presidential Commission for Good GovernancePCSO Philippine Charity and Sweepstakes OfficePDIC Philippine Deposit Insurance CorporationPDP-Laban Partido Demokratikong Pilipino-Lakas ng Bayan (Philippine DemocraticParty-Peoples Power)PMP Partido ng Masang Pilipino (Party of the Philippine Masses)PnM Pwersa ng Masa (Force of the Masses)PNP Philippine National PolicePPC People Power CoalitionPRP Peoples Reform PartyReporma-LM Partido para sa Demokratikong Reporma-Lapiang Manggagawa (Party forDemcratic Reforms-Workers Party)SSS Social Security SystemSWS Social Weather StationsTAN Transparency and Accountability NetworkTI Transparency InternationalUMDP Union of Muslim Democrats of the PhilippinesUNIDO United Nationalist Democratic Organization Leave a Comment You must be logged in to leave a comment. Submit Characters: 400 Mayel Gregorio I am a dependent of a veteran and i am claiming the accrude benefits of my father. The money was already in his ATM account but he passed away without even withdrawing the money due to him. The PVAO instructed us to return the money to PVAO and proceed to the process they required us. We submitted all the needed documents. the processing and everything is already finished but up to now we cannot 04 / 15 / 2011 Upload a Document Search Documents

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Copyright 2012 Scribd Inc. Language: English Corruption and Anti-Corruption in the Philippines Transparency and Accountability Network, March 2011 2 Corruption and Anti-Corruption in the Philippines Transparency and Accountability Network, March 2011 4 LIST OF TABLES, FIGURES AND BOXES Table 1. Summary of Philippine Anti-Corruption Laws 7Table 2. The Philippine AntiCorruption Agencies 10Table 3. How Much Corruption Is there in the Public Sector 13Table 4. Do Companies in your line of Business Need to 13Give Bribes in Order to Win Government ContractsTable 5. Estimated Financial Losses Due to Corruption, 1995-2000 14Table 6. 2005 Budgetary Allocations of Different Agencies 15of the Philippine Government, Total Re-enactedBudget Php907.56 BillionTable 7. 2001 Arroyo Appointees 17Table 8. Corruption Scandals that Challenged the 19Arroyo Governments LegitimacyTable 9. Select Cases with Arroyos Interest and the Supreme Court 20Table 10. Select Big Fish Cases Before the Office of the Ombudsman 21Table 11. Arroyo Appointees to Constitutionally Independent Bodies 22Table 12. Political Party Coalitions in 2001, 2004, 2007, and 2010 23Table 13. Public Perception of the Arroyo Presidency and 24Political Wins in the 2001, 2004, 2007, 2010 ElectionsTable 14. Government Anti-Corruption Efforts 27Table 15. Philippine UNCAC Roadmap 28Table 16. Summary of CSO Initiatives by Objective 29Table 17. List of CSO Initiatives by Objective 30Table 18. Summary of Donor Initiatives related to Anti-Corruption 31Figure 1. Philippine Corruption Perception Index rating, 20012010 11Figure 2. Philippine CPI Ratings and Other Asian Countries, 2001-2010 12Figure 3. Public Perception of the Arroyo Presidency and 24Political Wins in the 2001, 2004, 2007, and 2010 ElectionsBox 1. NBN-ZTE Controversy 25Box 2. OMBs Lack of Funds? 26

Corruption and Anti-Corruption in the Philippines Transparency and Accountability Network, March 2011 5 EXECUTIVE SUMMARY The Philippines has a fairly advanced anti-corruption legal framework. The Philippinegovernment has passed nine anti-corruption laws and established ten institutions designed tofight corruption. Even with this, however, the Philippines corruption record is a dismal high,according to international and local perception surveys.According to the Political and Economic Risk Consultancy (PERC 2010), the Philippines isthe fourth most corrupt country in Southeast Asia, next to Vietnam, Cambodia, and Indonesiarespectively. The Philippines was considered to be at its most corrupt state in 2008, hitting itslowest mark of 2.3 (10 being least corrupt and 1 being most corrupt) on TransparencyInternationals (TI) Corruption Perception Index. On TIs Global Corruption Barometer, thePhilippine governments anti-corruption efforts are seen to be ineffective (48%), and some69% think that corruption has, in fact, increased (Global Corruption Barometer, 2010).Local perceptions also confirm these findings. The Social Weather Stations (2008) said threeout of five Filipinos perceive a lot of corruption in the public sector. The business sector shares the same opinion. In a 2007 SWS enterprise survey, 44% of those surveyed said thathe/she has personal knowledge of a corrupt transaction with government (2007 SWSenterprise survey).Corruption has taken its toll on the countrys development. The World Bank (2001) estimatedthat more than 20 per cent of the national budget is annually lost to corruption. In moneyterms, this is an estimated US$12 billion from the period 19952000. The Ombudsman addsthat an estimated 30 per cent of government contracts are diverted to corruption annually.Corruption in the country has deep roots in the political economy. Political and economic powers are monopolized by the elites of Philippine society. This consolidation of power blursthe public-private divide through the interplay of public and private interests, an environmentconducive to corruption. Corruption becomes an accumulation strategy that the elites adopt toentrench their private interests in the public sphere.The Philippine government system is a considerably important factor in the configuration of corruption in the country. The Philippines has a strong presidential system that affords the president wide and vast powers, including and most importantly the power of the purse andthe power to appoint. This makes the presidency a most sought after position of power amongelite groups. Institutionally, the President (or the executive branch) is balanced by thelegislature and the judiciary. In reality, however, this system of checks and balance is notfunctional.The legislature is unable to balance competing interests of society because of its currentconfiguration. It is captured by local elites. Further, the legislatures behavior towards thePresident is weakened by weak party discipline and budgetary needs. The President, on theother hand, is tied to local interests because of his/her dependence on local elites to muster electoral support. This is attributed to weak political parties.Other constitutionally independent bodies, including the judiciary, have also been weakened by unchecked/ unbalanced appointments, apparent in President Gloria Macapagal-Arroyosnine-year administration. Arroyo maximized her use of the power to appoint to dispelopposition, legitimize government policies, strengthen power hold and protect her politicaland economic interests.The dysfunctional system of checks and balance has allowed some individuals andinstitutions to freely pursue rent-seeking activities as independent monopolists. This has

Corruption and Anti-Corruption in the Philippines Transparency and Accountability Network, March 2011 6 increasingly happened as globalization and democratization (including decentralization anddevolution) efforts began. New sources of and opportunities for corruption appeared and new players emerged.Corruption has far-reaching impact on the countrys development (political, socio-economic,and societal). To address this, government, civil society groups and the donor communityhave pursued ways to minimize the effects of corruption.Governments anti-corruption efforts in the past decade have mostly focused on improving its prosecutorial function. The donor community has also supported government programs withcapacity-building efforts and the introduction of information technology aimed at improvinggovernment systems and processes. Civil society efforts, also donor-supported, on the other hand, are focused at opening or expanding spaces for public participation. These efforts rangefrom direct participation such as monitoring (ex: procurement, budget, projectimplementation) to indirect participation such as campaigns for greater transparency ingovernment systems and process (ex: appointments).President Benigno Aquino III and his government could draw lessons from the politicaleconomy and the corruption footprints left by the Arroyo government. An analysis of the political economy has shown the critical role of the Office of the President to rein in power and power abuses. The interplay of political and economic forces in Philippine society and itsimpact on government institutions (e.g. legislature) may be tempered by the tactical use of thePresidents budgetary powers to negotiate for difficult reforms that require legislative support.The President should also use his appointment powers more carefully to strengthenconstitutionally independent institutions, specifically the Supreme Court, Office of theOmbudsman, Commission on Audit, and the Commission on Elections. Further, Aquinocould initiate institutional safeguards to make the appointments process more transparent andaccountable. These institutional safeguards could survive even beyond the Aquinogovernment, as it sets a precedent difficult to reverse.Anti-corruption efforts necessary to reduce corruption significantly:1. Strengthening the prosecution of corrupt individuals and institutions. Improving theconviction rate of the Office of the Ombudsman would send the message to publicofficials that corruption is a high risk, low reward activity. Lifestyle check investigations should continue as a strong deterrent against corruption; this wouldentail the appointment of a credible Ombudsman, and2. Strengthening partnerships and engagements between government and civil societygroups. This includes, of course, expanding spaces for public participation andincreasing transparency of government systems and processes.The passage of the Freedom of Information Law is critical in so many levels. Not only wouldan FOI law give life to the constitutional right of the people to access public information; itwould also help strengthen democratic and political accountability of government. Corruption and Anti-Corruption in the Philippines Transparency and Accountability Network, March 2011 7

FORMS OF CORRUPTION Corruption comes in different forms and functions. As Robert Klitgaard puts it, corruptionembraces a wide array of illicit behaviors, including bribery, extortion, fraud, nepotism,graft, speed money, pilferage, theft, embezzlement, falsification of records, kickbacks,influence-peddling, and campaign contributions. 1 In the Philippines, corrupt practices range from as simple as lagay (bribery) or speedmoney for faster release of a government license to a convoluted system of rent-seekingactivities in politics and such other practices that abuse public office and functions. Theculture of patronage in the country has been embedded in its governance systems andinstitutions with public office abuses committed from low ranking government officers to thehighest levels of public authority. This has thus resulted in a weak state engaged in rent-seeking activities that cause corruption and mismanagement of the Philippine politicaleconomy. (Abad, 2010: 3-4) The Legal Environment The Philippines suffers from a long history of corruption entrenched in its governancesystems and institutions. Despite efforts to counter corruption through various legislation, thelack of enforcement and application of these laws remain a gargantuan task and enormouschallenge for government. According to Abad, While there is no dearth of laws andinstitutions, they have been reduced to mere formalities. Clientelism and bureaucratic capturecontinue to characterize governance institutions in the country. (Ibid: 13) Instead of publicinterest in mind, governance institutions are not driven by public good but are captured bytheir own political and economic interests.(Ibid) The 1987 Philippine Constitution provides the framework for accountability in public officewith Article XI defining public office as a public trust and that public officials andemployees must at all times be accountable to the people, serve them with utmostresponsibility, integrity, loyalty, and efficiency, act with patriotism and justice, and leadmodest lives. The same Article provides that the President, Vice President, members of theSupreme Court, Members of the Constitutional Commission, and the Ombudsman may beremoved from office for graft and corruption or betrayal of public trust.Various Philippine laws define acts considered as corrupt practices ranging from receiving of gifts to acquisition of illgotten wealth. The corresponding penalties for committing thesecorrupt acts and practices range from aresto mayor (imprisonment of one month and one dayto six months), to perpetual disqualification from public office, to forfeiture of properties, to reclusion perpetua (lifetime imprisonment). Some of the anti-corruption laws in the countryinclude the Ombudsman Act of 1989, Anti-Graft and Corrupt Practices Act, Code of Conductand Ethical Standards for Public Officials, Forfeiture Law, Plunder Law, and the Anti-RedTape Act. The Philippine anti-corruption laws are summarized in the following table:Table 1. Summary of Philippine Anti-Corruption Laws 2 Philippine Law Summary Penalty/Sanction

Republic Act 6770(The Ombudsman Actof 1989)This Law provided the powers and structure of the Office of the Ombudsman. The Law states that as protectors of thepeople, the Office shall act promptly on complaints filed 1 See Robert Klitgaard, Strategies Against Corruption,http://unpan1.un.org/intradoc/groups/public/documents/CLAD/CLAD0035 403.pdf 2 This table is based on the Compilation of Anti-Corruption Laws in the Philippines as primary reference. Other references include the Chan Robles Virtual Library and the LawPhil Project of the Arellano Law Foundation

Corruption and Anti-Corruption in the Philippines Transparency and Accountability Network, March 2011 11 SCALE OF CORRUPTION IN THE PHILIPPINES Despite a fairly advanced legal framework and the existence of independent commissions andaccountability bodies, the Philippines suffers from a very high perception of corruption asreflected in international and domestic surveys.The Transparency Internationals Corruption Perception Index (CPI), which measures the perception of the degree of corruption as seen by business people and analysts, constantlyshows the Philippines as one of the worst in the Asia-Pacific region. From 2001-2010, thecountrys performance shows a downward trend with the highest score of 2.9 in 2001, to itslowest in 2008 with a rating of 2.3. 13 Figure 1. Philippine Corruption Perception Index Rating, 2001-2010 The CPI 14 in 2008 was 2.3, down from 2.5 in the previous year. Among more than 180countries surveyed, the Philippines ranked 141 st

in 2008, lagging behind most of itsneighboring countries such as Singapore which ranked 4 th place with an index of 9.2,Malaysia in 47 th place with 5.1; and Thailand in the 80 th spot with 3.5. The neighboringcountries closest to the Philippines were Vietnam in the 121 st spot with a score of 2.7 andIndonesia that landed on the 126 th place with a score of 2.6. 15 The 2009 Philippine CPI rating improved slightly after having scored 2.4 and ranked 139 th among 180 countries. Despite the slight improvement however, the country continues to perform behind most of its Asian neighbors. Indonesia for example, which ranked lower thanthe Philippines from 2001 to 2003, overtook the Philippines in 2008 and has been rating better than the country since then with a score of 2.8 in 2010. Thailand and Malaysia have been performing better than the Philippines with an average rating of 3.4 and 4.9 respectivelyfor the past ten years as compared to the Philippine average of 2.5. 16 13 www.transparency.org 14 Rates countries from 0 to 10 where a grade of 10 means the country is perceived as very clean while a rating of 0 means the country is perceived as very corrupt. 15 See http://www.transparency.org/news_room/in_focus/2008/cpi2008/cpi_2008_table 16 www.transparency.org. 2.5 is the Philippine average based on 2001-2010 computation. 012342 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 05 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 Philippines

Corruption and Anti-Corruption in the Philippines Transparency and Accountability Network, March 2011 12 Thailand Figure 2. Philippine CPI Ratings and Other Asian Countries, 2001-2010 The Philippine corruption image reflected in the CPI findings seems to be validated by other survey findings such as that of the Political and Economic Risk Consultancy (PERC). In aPERC survey released in March 2010, the Philippines is 4 th most corrupt country in SoutheastAsia with a score of 8.06 next to Vietnam with 8.07, Cambodia with 9.10, and Indonesia with9.27. This annual survey conducted by PERC uses a scoring system ranging from 1-10 with10 being the worst in terms of corruption.

17 The Global Corruption Barometer 2010 on the other hand reports that 48 percent of respondents believe that the Philippine governments action against corruption is ineffective.Furthermore, only six percent of those surveyed think that corruption in the country declined,25 percent think it is the same, while 69 percent think corruption has increased. The 2010Global Corruption Barometer reflects the views of more than 91,500 people in 86 countriesand territories surveyed. 18 Local Findings Confirm CPI and PERC Results International surveys are commonly criticized for reflecting mere perceptions rather thanactual levels of corruption. Additionally, these surveys reflect the perceptions of foreignrespondents. In the Philippines however, the findings of international perception surveys arewell corroborated by local surveys that try to capture levels of corruption as viewed and asexperienced by people in their dealings with the government. An example of which is theSocial Weather Stations Survey of Enterprises where Filipino business managers are surveyrespondents.In addition to considering perceptions of corruption, SWS Enterprise surveys attempt tocapture business managers actual experience with corruption such as bribery. In 2007 for example, forty-four percent of those surveyed have personal knowledge of a corrupttransaction with government by a company in their own line of business (in the last 3 monthsfrom the conduct of the survey). (Social Weather Stations, 2007: 7) When asked how muchcorruption do they think there is in the public sector, 65.7 percent 19 of the business managers 17 Seehttp://www.mb.com.ph/articles/247016/corruption-worsens-indonesia 18 www.transparency.org 19 This is based on the average ratings from 2000-2007. 0123456789102 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 Philippines Indonesia Thailand Malaysia Singapore Vietnam

South Korea

Corruption and Anti-Corruption in the Philippines Transparency and Accountability Network, March 2011 13

surveyed think that there is A lot, from 2000 to 2007. The highest perception of corruptionwas recorded at 77 percent in 2001 and lowest in 2002/03 with 60 percent during the 8-year period (2000-2007). (Ibid)In 2008, the perception of corruption in the public sector also did not improve with three outof five seeing a lot of corruption in the public sector, according to SWS. (Social Weather Stations, 2008)Table 3. How Much Corruption is there in the Public Sector? 2000 2001 2002/03 2003/04 2005 2006 2007A lot 63% 77% 60% 66% 66% 67% 61%Some 25 19 29 26 28 28 33 A little 10 4 10 6 5 5 5 None 2 0 1 2 1 1 .3 ( Source:The 2006-2007 SWS Surveys of Enterprises on Corruption) The Survey also shows that bribery is still believed to be highly pervasive in governmenttransactions with a great percentage of Filipino managers thinking that almost all/most companies need to give bribes in order to win government contracts (from 2000-2007). Thefollowing table shows that most number of managers who think that almost all/most companies in their line of business need to give bribes to win government contracts was atrecord high of 57 percent in 2002/03 and 2003/04 during the eight-year period and lowest in2006 with 47 percent.Table 4. Do companies in your line of business need to give bribes in order to wingovernment contracts? 2000 2001 2002/03 2003/04 2005 2006 2007Almost All Companies 23% 15% 22% 23% 21% 17% 18%Most Companies 32 41 35 34 33 30 30 Almost All/Most Sub-total 55 56 57 57 54 47 48 Few CompaniesHardly Any CompaniesNone of the Companies 24811258102371224711257132781727914 (Source:The 2006-2007 SWS Surveys of Enterprises on Corruption) As to how much of a public sector contract is allotted for bribery, the 2007 Enterprise Surveyis said to have a median response of 20 percent. Bribery-allotment is also said to vary with 37 percent of managers putting it at 10 percent or less, 25 percent putting it between 11-20 percent, and 32 percent of those surveyed putting it at 21 percent or more of a governmentcontract. (Ibid) Furthermore, the government transactions where bribes are prevalent includeslocal and national government permits and licenses, payment of income taxes, compliancewith import regulation, and supplying government with goods and services, among others.(Ibid: 10)The Survey of Enterprises also rates the sincerity of government agencies in fightingcorruption. In 2008, agencies with good net sincerity included the Social Security System(SSS), Department of Trade and Industry (DTI), Supreme Court, and city/municipalitygovernments while Department of Health (DOH), Commission on Audit (COA), Departmentof Finance (DOF) had moderate ratings. Agencies with poor net sincerity includedGovernment Service Insurance System (GSIS), Department of Agriculture (DA), Departmentof Justice

(DOJ), Philippine National Police (PNP), Department of the Interior and LocalGovernment (DILG), Presidential Anti-Graft Commission (PAGC) 20 , Department of the 20 PAGC was dissolved by President Benigno Aquino III in November 2010

Corruption and Anti-Corruption in the Philippines Transparency and Accountability Network, March 2011 14 Environment and Natural Resources (DENR), Commission on Elections (Comelec),Department of Transportation and Communication (DOTC), and Office of the President (OP)and agencies with bad/very bad ratings were Land Transportation Office (LTO), PresidentialCommission on Good Governance (PCGG), House of Representatives (HOR), Bureau of Internal Revenue (BIR), Department of Public Works and Highways (DPWH), and Bureauof Customs (BOC). 21 Agencies that were classified as mediocre in terms of sincerity were Department of Education(DepEd), Armed Forces of the Philippines (AFP), Sandiganbayan, Office of the Ombudsman,Trial Courts, Senate, and Department of Budget and Management (DBM). 22 Cost of Corruption Over the years, a number of studies have tried to measure the amount of public funds lost dueto corruption. Former Ombudsman Aniano Desierto in 1999 declared that about P1.4 trillionhas been lost due to graft and corruption or about P100 million everyday since the creation of Tanodbayan in 1988. (Batalla, 2000: 7) The World Bank on the

other hand estimated thatabout 20 percent of the national budget is lost to corruption. Following the Banks estimate, itcould be concluded that about 3.8 percent of the countrys GNP yearly is lost due tocorruption from 1995-2000. (Ibid: 8)Table 5. Estimated Financial Losses Due to Corruption, 1995-2000 Particulars 1995 1996 1997 1998 1999 2000 Total Budget, Php Billion 372.1 445.7 476.2 506.1 593.7 651.0Nominal Gross National Product, PhPbillion1,958.9 2,261.3 2,522.9 2,794.1 3,100.8 3,478.4Total Budget as % of GNP 19.0% 19.7% 18.9% 18.1% 19.1% 18.7%Losses Due to Corruption, % based on WBEstimate20% 20% 20% 20% 20% 20%Estimated Losses Due to Corruption, PhPBillion74.4 89.1 95.2 101.2 118.7 130.2Six Year Total Losses, Php billion 609.0Estimated Losses as % of GNP 3.8% 3.9% 3.8% 3.6% 3.8% 3.7%Average Annual Loss as % of GNP 3.8% (Source: De-institutionalizing Corruption in the Philippines: Identifying Strategic Requirements for ReinventingInstitutions by Eric Batalla, 2000, p. 8) The countrys losses due to corruption however cannot be simply quantified in financialterms because it also affects other economic factors and indicators such as prices and productivity, incomes and employment, etc. (Ibid) Corruption likewise adversely affects thecountrys development because of the diversion and misuse of government funds meant todevelop national systems crucial to economic development such as transportation systems,infrastructure, etc. (Ibid)Another important point Batalla raised is how corruption damages the national psyche. (Ibid)The extent to which corruption is prevalent in the country generates apathy among thecitizens backed up by the fact that public officials seldom get sanctioned for corrupt practices.This also results in weakened trust relationships between government and citizens thatconstitute the basis of all social interaction. (Abad, 2010: 13) 21 See http://www.tag.org.ph/pdf/2008SWS%20_entSurvey.pdf. 22 See http://www.tag.org.ph/pdf/2008SWS%20_entSurvey.pdf.

Corruption and Anti-Corruption in the Philippines Transparency and Accountability Network, March 2011 18 Vicky Garchitorena Presidential Management Staff Supported People Power 2Ging Deles NAPC Supported People Power 2 COPA supporters Lingoy Alcuaz PCSO Director Supported People Power 2Pastor Boy Saycon PIDC Supported People Power 2Marine Gen. EdgardoEspinosaManila Economic Coordinating Office Supported People Power 2 Ramos Boys Arturo Valdez Usec. Of DOTCRet. Maj. Gen. Leo Alvarez Presidential assistant for militaryaffairsRene Villa Presidential assistant for WesternMindanaoJesus Dureza Presidential assistant for EasternMindanao; OIC of Mindanao EconomicDevelopment CouncilAvelino Cruz Chief Presidential Legal Counsel The Firm 29 ; Ramos lawyer in 1992electionsAntonio Carpio Supreme Court Justice The FirmSimeon Marcelo Solicitor General The Firm; Principal private prosecutor inthe impeachment trial; Ramos lawyer in1992 elections Other supporters Ephraim Genuino PAGCOR Behind the production of records usedagainst EstradaMar Roxas DTI Secretary Quit with GMA in Estradas cabinet amid jueteng scandalChavit Singson DILG unofficial consultant on jueteng 30 Whistleblower on Estradas involvement in juetengHoward Dee Presidential Adviser for IndigenousPeopleLeader of a business group who supportedEDSA 2Renato Corona Presidential spokesperson; ChiefJustice of the Supreme CourtArroyos chief of staff when VP Supreme Court personalities*

Hilario Davide United Nations envoy Swore her into officeArtemio Panganiban Chief Justice succeeding Davide Talked Davide into swearing Arroyo asPresident of the Philippines (Source: TAN 31 ) *These appointments were made in 2005 when Davide retired as Chief Justice of theSupreme Court. The political environment was polarized and became further intensified because of theelections in May 2001. Arroyo immediately replaced over 4,000 Estrada appointees amidst preparations for the May 2001 contest 32 . She was juggling both reorganizing government andorganizing her political team for the elections. At the height of public clamor for reform andchange, Arroyo was held back by political debts.The May 2001 election results showed a divided nation. In the senatorial race alone, voteswere closely split between administration and opposition candidates 50.8% (administration)vs. 45.8% (opposition) 33 . Nine hundred of 1500 municipal mayors withdrew their support for the Arroyo government 34 . Even the military was split between Philippine Military Academy batch 1969 and batch 1970 35 . With only three years away from national and presidentialelections, Arroyo had to consolidate her hold of government through stern policies and keyappointments. 29 Carpio, Villaraza, Cruz, Marcelo & Angangco law firm was dubbed The Firm because of its perceivedinfluence with those in power. (Pazzibugan, 2010) 30 Later on, this consultancy post of Singson was denied by DILG Secretary Lina, when news reports came outthat Singson was negotiating with jueteng lords in behalf of the department. 31 Various news stories fromwww.newsflash.org 32 Echeminada, P. (2001) 4,000 Estrada appointees to be replaced Retrieved January 29, 2011 fromhttp://www.newsflash.org/2001/02/hlframe.htm 33 Teehankee, J. Undated: 175 34 Vanzi, S. (2001) 900 mayors shift support to Estrada Retrieved January 29, 2011 fromhttp://www.newsflash.org/2001/05/hlframe.htm

35 Vanzi, S. (2001) Military split confirmed by AFP Brass Retrieved January fromhttp://www.newsflash.org/2001/01/hlframe.htm; Lopez, J.P. (2001) Infighting among brass in Armed Forcesominous Retrieved January fromhttp://www.newsflash.org/2001/01/hlframe.htm

Corruption and Anti-Corruption in the Philippines Transparency and Accountability Network, March 2011 19 Stern policies . The Arroyo government met destabilization plots with a firm hand. On May 1,2001 protesters, mostly supporters of former President Estrada, were forcefully dispersed andthe alleged protest organizers were arrested without warrants. The so-called Oakwoodmutineers (July 2003) were forced to surrender after hours of standoff with government. Evenafter the May 2004 elections, the government maintained an all-out war policy againstdestabilization plots, such as the coup detat attempt in 2006 and the Manila Peninsularebellion in 2007. The government declared a state of rebellion in 2006 and a state of national emergency in 2007. It also issued a calibrated preemptive response policy (CPR),which meant that government had limited tolerance for mass demonstrations and protests. Nostalgic of the Martial Law days, these actions received much flak from the opposition andthe general public. 36

Politics of survival . The kind of corruption scandals that broke out in the Arroyo governmentis characteristic of a government scrambling for control and bent on staying in power. Thefirst corruption scandal faced by the Arroyo government was of a typical rentseekingactivity. The First Gentleman Mike Arroyo was accused of receiving bribe money (P50million) to get the President to recall her veto of a telecommunications franchise 37 . As this got public attention as with other related controversies (military-Abu Sayyaf collusion,government legitimacy) Arroyos trust ratings dipped 38 . Corruption controversies thatfollowed reflected a government caught in its own web of traps. (Table 8)The politics of survival set in.Table 8. Corruption scandals that challenged the Arroyo governments legitimacy Corruption scandals Details Hello Garci (2004) Arroyo appointed (ad interim) Virgilio Garcillano in 2004 asCommissioner of Comelec. Garcillano, allegedly, ensuredArroyos victory in the May 2004 electionsFertilizer Fund Scam (2004) Department of Agriculture Undersecretary Jocelyn Bolante isaccused of diverting P728 million fertilizer fund to theelection campaign of Arroyo in the 2004 presidentialelections.Brown bag bribery (2007) Malacanang allegedly distributed brown bags of monies(P20,000 to P500,000) to local officials (mayors, governorsand Congressmen) after a meeting. The money is meant tobuy their support for GMA (vs. impeachment; for charterchange). (Source: TAN 39 ) These scandals illustrate the Arroyo governments alleged efforts to secure power. These alsoshow the thin ice on which the Arroyo governments legitimacy stood. The Power of Appointments . In a politically tactical manner, Arroyo shrewdly used her appointment powers to maintain a hold on constitutionally independent institutions.Arroyo was sworn to office by Supreme Court Chief Justice Hilario Davide, Jr. in January2001. The court became embroiled in politics, with the Chief Justice sanctioning Arroyos 36 Various news stories fromwww.newsflash.org 37 Vanzi, S. (2001) First Gentleman a liar says former Malacanang Secretary Retrieved February 1, 2011 fromhttp://www.newsflash.org/2001/07/hlframe.htm; Vanzi, S. (2001) Senate building Mikes case RetrievedFebruary 1, 2011 fromhttp://www.newsflash.org/2001/07/hlframe.htm; Romero, P. (2001) GMA willing to faceCongressional probe Retrieved February 1, 2011 fromhttp://www.newsflash.org/2001/07/hlframe.htm; Arquiza,R. & M. Villanueva (2001) Mike ready to face accusations; was in U.S. for back problems Retrieved February 1,2011 fromhttp://www.newsflash.org/2001/08/hlframe.htm 38 Arroyo began her Presidency with a net satisfaction rating of +24. This fluctuated in the following months andreached a negative rate in March 2003 (-14). (www.sws.org.ph

) 39 Various news stories fromwww.newsflash.org

Corruption and Anti-Corruption in the Philippines Transparency and Accountability Network, March 2011

20 takeover of government and the court deciding on the Arroyo governments legitimacy. TheSupreme Courts political disposition became key in installing the Arroyo government.In her power to appoint members of the high court, Arroyo carefully picked individualscommonly perceived to be allies. Amongst the first appointments made by Arroyo to the highcourt was Antonio Carpio from The Firm. By perhaps a stroke of luck, Arroyo in her nineyears in power appointed all fifteen justices of the high court save one, earning the court thename GMA court. Just days before the end of her term, Arroyo insisted on naming thereplacement for the retiring Chief Justice, triggering the controversy of midnightappointments. Because of controversies surrounding the GMA appointees to the SupremeCourt, the courts independence has been questioned as it decided cases involving Arroyo -constitutionality of Proclamation 1017, Executive Privilege, Peoples Initiative, MidnightAppointments, Calibrated Preemptive Response, among others. (Table 9)Table 9. Select cases with Arroyos interests and the Supreme Court CASES Arroyo appointees who voted infavor of GMA positionArroyo appointees who votedagainst the GMA position Presidential Proclamation 1017 Government declared a state ofnational emergency and renderedwarrantless arrests.Ruling: PP1017 is constitutionalinsofar as it constitutes a call of thePresident on the AFP to suppresslawless violence. Enforcement of lawsnot related to lawless violence isunconstitutional.Arroyo appointees: Carpio, AustriaMartinez, Carpio-Morales, Callejo, Sr.,Azcuna, Chico-Nazario, Garcia (7); Tinga, Corona, Velasco, Jr. (3)[11 concurring (complete list): Sandoval-Gutierrez, CJ Panganiban, Puno,Quisumbing, Ynares-Santiago, Carpio, Austria-Martinez, CarpioMorales, Callejo,Sr., Azcuna, Chico-Nazario, Garcia][3 dissenting - Tinga, Corona, Velasco, Jr.]Puno (on leave)Calibrated Preemptive Response This policy replaced the maximumtolerance policy towards rallies andmass demonstrations.Ruling: CPR and no permit, no rally isunconstitutional(0)Azcuna, CJ Panganiban, Austria-Martinez, Corona, Carpio- Morales,Callejo, Sr., Tinga, Garcia, Velasco, Jr.(8)[13 - Azcuna, CJ Panganiban, Puno,Quisumbing, Ynares-Santiago,Sandoval-Gutierrez, AustriaMartinez,Corona, Carpio-Morales, Callejo, Sr.,Tinga, Garcia, Velasco, Jr.]On leave Chico-Nazario, CarpioExecutive Order 464 This policyrequired heads of departments tosecure the consent of the Presidentbefore appearing in Congressionalhearings. Heads of departments mayalso invoke executive privilege whichis a rule of confidentiality forconversations with the President.Ruling: EO 464 partly valid (Sections 1and 2a). Sections 2b and 3 are void prior consent needs to be securedfrom the President before officialscan show before Congressionalhearing;s.Carpio-Morales, CJ Panganiban, Carpio, Austria-Martinez, Corona, Callejo, Sr.,Azcuna, Tinga, Chico-Nazario, Garcia, Velasco, Jr.(10)[14 - Carpio-Morales, CJ Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Callejo, Sr., Azcuna, Tinga, Chico-Nazario, Garcia, Velasco, Jr.]Puno (on leave)Peoples Initiative This is one of themodes in which the Constitution canbe amended. The government pushedfor this method to be allowed by theSupreme Court even in the absence ofan enabling lawRuling: Peoples initiative is dismissedCorona, Tinga, Chico-Nazario, Velasco,Jr., Garcia (5)[Puno, Quisumbing, Corona, Tinga,Chico-Nazario, Velasco, Jr., Garcia (7)]Carpio, CJ Panganiban, Austria-Martinez, Carpio-Morales, Callejo, Sr.,Azcuna (6) [Carpio, CJ Panganiban, Ynares-Santiago, Austria-Martinez, Carpio-Morales, Callejo, Sr., Azcuna (7)]Midnight Appointments This is onthe controversy on whether

Arroyocan appoint the Chief Justice during aperiod prohibited by the ConstitutionBersamin, De Castro, Brion, Peralta,Del Castillo, Abad, Villarama, Perez,Mendoza(9)Carpio- Morales(1)

Corruption and Anti-Corruption in the Philippines Transparency and Accountability Network, March 2011 21

Ruling: Petition for certiorari andmandamus is dismissed. There is nomidnight appointment.[Bersamin, Velasco, Jr., Nachura, DeCastro, Brion, Peralta, Del Castillo,Abad, Villarama, Perez, Mendoza (9)]Nachura, Velasco Case is prematureCarpio, Corona inhibitedPuno did not vote (Source: TAN 40 ) From the select cases shown above, it appears that Arroyo appointees delivered' for Arroyoin the midnight appointments issue. One case showed a split position between Arroyoappointees. Two cases showed partial victories for the Arroyo government PP1017 and EO464. In the calibrated preemptive response case, the Arroyo appointees were united and struck down the CPR and the no permit/no rally policy of government.Arroyo also made key appointments to the Office of the Ombudsman in 2002 and 2005. In2002, the much distrusted Aniano Desierto retired and was replaced by Solicitor GeneralSimeon Marcelo, also from The Firm. Unexpectedly, Marcelo exhibited independence andtrue to the mandate of his office, he seriously pursued big fish cases, including the Garcia plunder case 41 . After just three years in office, Marcelo resigned reportedly due to healthreasons. Marcelo was replaced by the former Department of Justice Secretary and Chief Presidential Legal Counsel, Merceditas Gutierrez.Gutierrez displayed amicable relations with key personalities in the Arroyo administration.Big fish cases involving close affiliates of the Arroyos were dropped, if not weakly pursued. (Table 10) With a friendly Ombudsman in place, many accusations of corruptionand/or impropriety against people perceived to be close to the president simply did not prosper. Because of her constitutionally protected term, 42 Gutierrez will stay in office a fewyears beyond GMAs term as president, which strategically places her in a position toprotect her principal even when she (Arroyo) is no longer in office.Table 10. Select big fish cases before the Office of the Ombudsman Case (Personality/ies) Ombudsman Action/Inaction (Updates) Sec. Nani Perez bribery case(DOJ Secretary Hernando Perez, FirstGentleman Mike Arroyo, PresidentGloria Macapagal-Arroyo)2006 The Ombudsman recommended filing of extortion, graftand falsification charges against Perez before the Sandiganbayanfor the $2-million bribe (of the $14 million bribe) of Manila Rep.Mark Jimenez.The Sandiganbayan dismissed the case because the informationsubmitted by the Office of the Ombudsman was found fatallydefective. Robbery charge against Perez was also dismissed forviolation of Perezs right to speedy trial.NBN-ZTE case(NEDA Sec-General Romulo Neri,Comelec Chairman Benjamin Abalos,First Gentleman Mike Arroyo,President Gloria Macapagal-Arroyo)April 21, 2009 resolution recommending the filing of graft chargesagainst NEDA Sec-Gen. Romulo Neri and Comelec Chair BenjaminAbalos. The Ombudsman cleared the First Gentleman Mike Arroyoand President Gloria Macapagal-Arroyo. Neri was orderedsuspended six months without pay.Ombudsman also filed cases against whistleblower Jun Lozada malversation and graft cases while Lozada was with the PhilippineForest Corporation.Fertilizer Fund Scam(DA Undersecretary Jocelyn Bolante,DA Secretary Luis Lorenzo, PresidentGloria Macapagal-Arroyo)Task Force Abono was created to investigate the 181 transactionsrelated to the fertilizer project.In July 21, 2010, the Ombudsman ordered

the suspension (sixmonths) of 8 provincial government officials for their involvementin the purchase of P5M worth of fertilizers in 2004.General Carlos Garcia Plunder Case(General Carolos Garcia, AFP generalsThe Ombudsman entered into a plea bargain agreement withGeneral Garcia, reducing his plunder case into direct/indirectbribery with forfeiture of properties. The plea bargain agreement isbefore the Sandiganbayan, awaiting approval. It is currently the 40 http://sc.judiciary.gov.ph/jurisprudence/decisions/index.php 41 Ombudsman Simeon Marcelo initiated the investigation of General Carlos Garcias plunder case. 42 The Ombudsman can only be removed from office by impeachment.

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despite-flood-of-fundsManila Bulletin (2006) Drilon: Supreme Court has final say on Comelec case Retrieved February 25,2011 from http://www.mb.com.ph/node/95560Mendoza, A. (2001) The industrial anatomy of corruption: Government procurement, bidding andaward of contracts Retrieved January 29, 2011 fromhttp://unpan1.un.org/intradoc/groups/public/documents/apcity/unpan01313 4.pdf Office of the Ombudsman, Compilation of Laws on Graft and Corruption, Manila, Philippines, 2004(rev. ed)Office of the Ombudsman, Annual Report 2008Office of the Ombudsman, Annual Report 2009Pazzibugan, D. (2010) The Firm asks DOJ to dismiss libel suit Retrieved February 2, 2011 fromhttp://services.inquirer.net/print/print.php?article_id=20100619276436Philippine Daily Inquirer (2010) Fertilizer scam fallout: 8 suspended Retrieved February 25, 2011from http://www.inquirer.net/specialreports/thebolantecase/view.php? db=1&article=20100828-289291Punay, E. (2008) More lawmakers may face raps over fertilizer fund scam Retrieved February 25,2011 from http://www.philstar.com/Article.aspx?ArticleId=417871Quimson, G. (2006) National Integrity Systems: Philippines 2006 Retrieved February 6, 2007 fromhttp://www.transparency.org/content/download/15151/162883/file/NIS_ph ilippines_2006.pdf Republic Act 6770, Ombudsman Act of 1989Romero, P. (2001) Corona designated as Palace Spokesman Retrieved January 29, 2011 fromhttp://www.newsflash.org/2001/01/hlframe.htmRomero, P. (2001) GMA willing to face Congressional probe Retrieved February fromhttp://www.newsflash.org/2001/07/hlframe.htmRomero, P. (2008) Voting pattern of Supreme Court Justices Retrieved February 25, 2011 fromhttp://www.abs-cbnnews.com/research/10/23/08/voting-pattern-supremecourt-justicesRomero, Segundo (2010). Social Audit Toolbox, Transparency and Accountability Network Corruption and Anti-Corruption in the Philippines Transparency and Accountability Network, March 2011 37 Rufo, A. and G. Bagayau (2007) Glorias Mark: big corruption cases involving her family andassociates remain unresolved Retrieved February 25, 2011 fromhttp://www.newsbreak.com.ph/index.php? option=com_content&task=view&id=2398&Itemid=88889066Social Weather Stations (2007), The 2006-2007 SWS Surveys of Enterprises on Corruption, July 2007Social Weather Stations (2008), "2008 Survey of Enterprises on Corruption: Anti-Corruption SincerityRatings Improvide for only 8 out of 30 Agencies", Media Release, 21 November 2008, retrieved 4February 2011 from http://www.tag.org.ph/pdf/2008SWS%20_entSurvey.pdf.Teehankee, J. Undated.Electoral Politics in the Philippines in Electoral Politics in Southeast and EastAsia pp. 149-202. Retrieved February 18, 2011 from http://www.quezon.ph/wp-content/uploads/2006/09/Electoral%20Politics%20in %20the%20Philippines.pdf Tordesillas, E. (2011) Ombudsman still running after NBN-ZTE star witness Retrieved February 25,2011 from http://verafiles.org/main/focus/ombudsman-still-running-after-nbn-zte-starwitness/Ursal, S. (2011) Ominous clouds over the Commission on Audit Retrieved March 2, 2011 fromhttp://www.transparencyreporting.net/index.php?

option=com_content&view=article&id=171:ominous-clouds-over-thecommission-on-audit&catid=44:stories&Itemid=94Vanzi, S. (2001) GMA fasttracks Cabinet selection process Retrieved January 29, 2011 fromhttp://www.newsflash.org/2001/01/hlframe.htmVanzi, S. (2001) More cabinet appointees announced Retrieved January 29, 2011 fromhttp://www.newsflash.org/2001/01/hlframe.htmVanzi, S. (2001) Noel Cabrera is Acting Press Sec; More Ramos Boys appointees RetrievedJanuary 29, 2011 from http://www.newsflash.org/2001/01/hlframe.htmVanzi, S. (2001) Ephraim Genuino new PAGCOR Chief; Drilon declines Finance Chair RetrievedJanuary 29, 2011 from http://www.newsflash.org/2001/01/hlframe.htmVanzi, S. (2001) More cabinet appointments Retrieved January 29, 2011 fromhttp://www.newsflash.org/2001/01/hlframe.htmVanzi, S. (2001) GMA names more appointees, Agri, DAR, NTC, MTRCB Retrieved January 29,2011 from http://www.newsflash.org/2001/02/hlframe.htmVanzi, S. (2001) Chavit now govt jueteng consultant Retrieved January 29, 2011 fromhttp://www.newsflash.org/2001/02/hlframe.htmVanzi, S. (2001) 900 mayors shift support to Estrada Retrieved January 29, 2011 fromhttp://www.newsflash.org/2001/05/hlframe.htmVanzi, S. (2001) Govt takeover attempt foiled GMA Retrieved January 29, 2011 fromhttp://www.newsflash.org/2001/05/hlframe.htmVanzi, S. (2001) Mayors, elite ERAP supporters face arrest Retrieved January 29, 2011 fromhttp://www.newsflash.org/2001/05/hlframe.htmVanzi, S. (2001) Warrantless arrests to go on govt Retrieved January 29, 2011 fromhttp://www.newsflash.org/2001/05/hlframe.htmVanzi, S. (2001) First Gentleman a liar says former Malacanang Secretary Retrieved February 2,2011 from http://www.newsflash.org/2001/07/hlframe.htm Corruption and Anti-Corruption in the Philippines Transparency and Accountability Network, March 2011 38 Vanzi, S. (2001) Senate building Mikes case Retrieved February 2, 2011 fromhttp://www.newsflash.org/2001/07/hlframe.htmVanzi, S. (2001) Survey shows what angered masses Retrieved February 2, 2011 fromhttp://www.newsflash.org/2001/05/hlframe.htmAn Act to Improve Efficieny in the Delivery of Government Service to the Public by ReducingBureaucratic Red tape, Preventing Graft and Corruption, and Providing Penalties Therefor retrieved 5March 2011 from http://www.chanrobles.com/republicacts/republicactno9485.htmlAn Act Defining the Crime of Money Laundering, Providing Penalties Therefor and for Other Purposes retrieved 5 March 2011 fromhttp://www.lawphil.net/statutes/repacts/ra2001/ra_9160_2001.htmlwww.co a.gov.phwww.inquirer.net/specialreports/thebolantecase/www.newsflash.orgwww.p agc.gov.ph/Project.htmwww.sb.judiciary.gov.ph/about.htmlwww.rips.gov.phwww.t ransparency.orghttp://www.transparency.org/news_room/in_focus/2008/cpi2008/ cpi_2008_table"RP is 4th most corrupt in Southeast Asia Indonesia tops PERC survey", 20 March 2010, retrieved 4February 2011 from http://www.mb.com.ph/articles/247016/corruption-worsens-indonesiaEO 464http://sc.judiciary.gov.ph/jurisprudence/2006/april2006/G.R.%20No.

%20169777.htmCPR http://sc.judiciary.gov.ph/jurisprudence/2006/april2006/G. R.%20No.%20169838.htmPeoples Initiativehttp://sc.judiciary.gov.ph/jurisprudence/2006/october2006/174153.htm