MANILA (UPDATED)- The Philippines is losing around P700 billion, or around 20 percent of the country's total budget appropriation, yearly, due to corruption, an official said. Lastly, the contract changed the scope of work for Westinghouse. November 26, 2020 BY: Daphne Galvez. The design and cost of the original ZTE proposal submitted to the CICT was not clearly established during the Senate investigation or during the Sandiganbayan trial. ... through mediation or if the transgression carries fines above PHP 5,000 or more than one year in prison will the case be referred to the Philippine … Butterfield, F. (1988), “Westinghouse, Jersey firm sued by the Philippines”, New York Times, 2 December, available at: https://www.nytimes.com/1988/12/02/business/westinghouse-jersey-firm-are-sued-by-the-philippines.html (accessed 3 September 2019). © 2015 Nine Media Corp. CNN name, logo and all associated elements ™ and © 2015 Cable News Network. Grand corruption refers to the “abuse of high level power that benefits the few at the expense of the many” (Transparency International, 2016). Constantly, been the dominant issue of the country. Third, the lack of transparency in government contracting made the projects susceptible to public allegations of improprieties, which served to bolster the political opposition. Police Violence and Corruption in the Philippines: Violent Exchange and the War on Drugs Show all authors. 91 No. The cases against Imelda Marcos et al., for example, have been pending since 1986 when the Marcos dictatorship was toppled by angry citizens. (Eds), Routledge Handbook on the Contemporary Philippines, Chapter 10, Routledge, London, pp. It was also involved indirectly through the support of its nuclear export industry and support of private banks. It was also during his term that criminal charges were filed against GMA. Later that month, President Arroyo suspended the NBN project and then, on 2 October during her state visit to China, cancelled the ZTE contract (SBRC, 2009, p. 32). Why Indonesia's Anti-corruption Commission Succeeds where Others Don't – a Comparison with the Philippines' Ombudsman, Crony capitalism' blamed for economic crisis, National Government Debt Service, Historical Series, Marcos, facing criticism, may end $1 Billion Westinghouse contract, Westinghouse, Jersey firm sued by the Philippines, Sources of corruption in authoritarian regimes, Part 3, Philippine Center for Investigative Journalism, Grand corruption and government change: an analysis of partisan favouritism in public procurement, European Journal of Criminal Policy and Research, Booty Capitalism: The Politics of Banking in the Philippines, Anti-corruption strategies for authoritarian states, The Politics of Scandal: Power and Process in Liberal Democracies, Holmes and Meier, Some Are Smarter than Others: The History of Marcos' Crony Capitalism, Marcos orders seizure of wealthy friends' companies, In post-Marcos Philippines, corruption still a way of life. Macapagal-Arroyo, G.M. 127-132). As some Filipino processes differ from the way we do things in the western world, that doesn’t necessarily mean it’s corruption in the true sense of the word. It is a complicated case arising from the quarrel for profit and commissions between two competing groups with powerful political sponsors. Mathews, J. and Wideman, B. The DOTC later rejected the AHI's proposal because according to Secretary Mendoza, AHI was insufficiently capitalized to undertake a massive government project (SBRC, 2009, p. 54). First, an opportunity for corruption existed based on executive agreements that did not undergo competitive public bidding. Research Paper About Corruption In The Philippines. David-Barrett, E. and Fazekas, M. (2019), “Grand corruption and government change: an analysis of partisan favouritism in public procurement”, European Journal of Criminal Policy and Research, 16 June, doi: 10.1007/s10610-019-09416-4 (accessed 6 January 2020). The index noted that of the 31 countries assessed in the Asia Pacific, the regional average was at 45, illustrating “general stagnation” in control of corruption in the region. Deputy Ombudsman Cyril Ramos said the Philippines ranked the 6th most corrupt among Asia Pacific countries. 1-18, available at: https://www.u4.no/publications/anti-corruption-strategies-for-authoritarianstates.pdf (accessed 7 January 2020). Immediately following Marcos's approval, Melchor signed a letter of commitment giving approval for Westinghouse and NPC to firm up the project contract. 2-3). The failure of closure of past scandals encourages corrupt practices by top officials, who regard government as a lucrative source of private wealth and power. Later, Joey De Venecia led in exposing anomalies in the deal. In November 1975, the final negotiated contract was transmitted to Solicitor General Estelito Mendoza for review. Second, that executive agreements could be made without competitive public bidding encouraged the formation of corrupt rent-seeking relationships at the top levels of government. It took 25 years before the court could resolve Civil Case No. 271-279. The NPC approval was in accordance with Marcos' decision during a cabinet meeting on 6 June to give the contract to Westinghouse (PCGG vs Desierto et al., 2003). New scandals take over and the old ones are left hanging and unresolved. Duterte on cop who killed mother and son in Tarlac: Lock him up, Locsin, Galvez: PH to receive 30M COVID-19 vaccine doses from Novovax, PH not yet ready to handle Pfizer COVID-19 vaccine doses by January – Romualdez. According to the 2017 UNU-Wider report (2013 data), tax evasion costs Philippines almost $7.4 billion annually, or 2.7% of its GDP. It took more than 20 years before the Philippines could fully settle the NPC's BNPP financial obligations. Since the initial exposé broke out in late April 2007, the Arroyo government attempted to minimize the scandal's impact by moving certain officials and personalities involved in the deal (SBRC, 2009, pp. This point raised contrasting legal opinions yet to be resolved (Suplico vs NEDA, 2008). Six years later, the Supreme Court reversed the 1997 OMB order and directed the OMB to file in the appropriate court the appropriate criminal charges. Salaverria, L. (2012), “Sandiganbayan orders Marcos crony to return $50-M loot in nuclear plant deal”, Philippine Daily Inquirer, 13 April, available at: https://newsinfo.inquirer.net/175813/ sandiganbayan-orders-marcos-crony-to-return-50-m-loot-in-nuclear-plant-deal#ixzz5uMzLke00 (accessed 20 August 2019). With the exception of the conviction of President Estrada for plunder (though later pardoned by Arroyo), no other high-ranking official above the position of provincial governor has ever been convicted of corruption (Bolongaita, 2010). Particularly, they were crucial to easing out the competition and successfully closing deals between the rent-seeking firm and the government. The Philippines is an archipelago (group of islands) of more than 7,100 islands just north of the Equator in the Pacific Ocean. Consequently, the accused individuals separately filed their motions for dismissal. Last month, the Philippine leader ordered the Department of Justice, which plays the role of public prosecutor, to investigate the “entire government” for corruption until the end of his term in 2022. The following sections provide descriptive accounts of the BNPP and NBN scandals, followed by the comparative analysis and conclusion. htm (accessed19 August 2019). 57-71. That explanation did not stop U.S. media criticisms of corruption and rising crony capitalism, as represented by the BNPP, as well as the spectacular rise of the Disini business empire through presidential influence. After Benigno Aquino III assumed the presidency in 2010, the winds of Philippine politics shifted. As such, the ZTE was the only proposal left for consideration in the NBN project. Despite negative views across the region about the entrenchment of corruption in government, Bangladesh, the Philippines, Malaysia and Indonesia scored highly – 86 percent, 82 percent, 74 percent and 67 percent – when respondents were asked whether their countries’ anti-corruption agencies were doing a good job. It is the cause of many problems between the government and the public. Consequently, by 1984, the revised BNPP project cost estimate reached US$1.95 billion (Velasco, 2006, p. 111). The media is literally sinking in reporting scandals to try and ensure closure Corruption in the Philippines … “Governments must urgently address the corrupting role of big money in political party financing and the undue influence it exerts on our political systems,” said Transparency International chair Delia Ferreira Rubio. Turner Broadcasting System, Inc. All rights reserved. Suplico, R. vs. National Economic Development Authority, Department of Transportation and Communications, and ZTE Corporation, Amsterdam Holdings, and All Persons Acting in their Behalf (2008), “Supreme Court G.R. The persecution of GMA and other government officials began. Published by Emerald Publishing Limited. Described as a national agency suffering from ’systemic corruption’, an in-depth qualitative case study analysis of one of its programmes is imperative. 178830”, 14 July. The Sandiganbayan and the Supreme Court decided on the Disini case during President Benigno Aquino's term. Bribery of public officials is penalized under Articles 210 to 212 of the Revised Penal Code.There are other laws that penalize corrupt acts/practices and prohibit the giving of gifts to public officers under certain circumstances.Republic Act No. A revised ZTE proposal, incorporating the DOTC's suggestions of increased coverage and technical requirements, was endorsed by the NEDA at a contract price of US$379 million. NPC general manager Ramon Ravanzo claimed that during the meeting Westinghouse only provided standard advertising brochures without any detailed costs and specifications (Butterfield, 1978). In this regard, the government had to take utmost care of relevant, confidential information in order to prevent scandals from erupting and harming diplomatic relations. The weaknesses are revealed in the description and analysis of two major scandals, namely, the construction of the Bataan Nuclear Power Plant during the Marcos era and the National Broadband Network project of the Arroyo presidency. Soon after the announcement, the National Power Corporation (NPC), as the main implementing agency, began the work of undertaking the necessary technical studies as well as negotiate with vendor and financing institutions. The PCGG appealed the OMB's decision before the Supreme Court. 56 Ferdinand Marcos. no. 113, 115). On 25 August 2016, the Sandiganbayan issued its resolution exonerating the Arroyo spouses, Abalos and Mendoza for lack of evidence to establish allegations of overpricing, the existence of a conspiracy and the disadvantages of the ZTE–NBN contract (Macapagal-Arroyo vs. People of the Philippines and Sandiganbayan, 2016). In April 1974, Westinghouse sent a turn-key proposal to Marcos. Presidential Commission on Good Government (PCGG) vs. Desierto, Ananiano, Herminio T. Disini, Paciencia Escolin-Disini, Angel E. Disini, Liliana L. Disini, and Lea Disini (2003), “Supreme Court G.R. In August, NEDA Secretary Neri was transferred to the Commission on Higher Education. Photograph: Noel Celis/AFP via Getty Images A g e n c e F r … Despite the contract's cancellation, the SBRC decided to continue its investigation. (2012), “Sandiganbayan, Civil Case No. Why Indonesia's Anti-corruption Commission Succeeds where Others Don't – a Comparison with the Philippines' Ombudsman, U4 Issue, August, No. 1, creating the Presidential Commission on Good Government (PCGG) to recover the ill-gotten wealth of the Marcos family and associates. People who cut in lines are corrupt. (2020), "Grand corruption scandals in the Philippines", Public Administration and Policy: An Asia-Pacific Journal, Vol. His Herdis Management and Investment Corporation (Herdis), which was established in 1969 with a bank loan of only US$3,500, was ranked 15th amongst the country's top 1,000 corporations in 1976, with consolidated assets amounting to US$140 million (Manapat, 1991, p. 316). The cover-up extends the scandal's media coverage and further erodes a political administration's integrity and legitimacy. Soon after, the accused asked the court to allow them to file a demurrer to evidence. Going above the practical matters, the huge lost of the government due to corruption might have served better purposes if only handled well. Westinghouse out-manoevered GE by employing Herminio Disini as its special sales representative. In February 1976, close to two years after the approval of the Westinghouse proposal, the two parties formally signed the final contract. Corruption scandals are only "closed" by the fact of other corruption scandals taking its place. 3, pp. The Philippines suffers from widespread corruption. 10, 000.00 to Php. Consequently, the new Ombudsman at the time of the Supreme Court decision filed graft charges against the Marcos crony. In July 1973, based on a feasibility study conducted by the International Atomic Energy Association (IAEA), President Ferdinand Marcos announced his decision to build the country's first nuclear power plant in the Bataan province. Surprisingly in 1997, the OMB then headed by Ananiano Desierto cleared Disini of graft charges for lack of prima facie evidence (PCGG vs Desierto et al., 2003). Top-level executive agreements that do not require competitive public bidding provide an opportunity for grand corruption. At the time of the scandal, the unpopular GMA administration was already beleaguered by other election-related controversies, such as the Hello Garci scandal and the Fertilizer Fund Scam. The former is critical for effectiveness; the latter is vital because other efforts have failed. 132120”, 10 February. (1977), “Martial law benefits Marcos' friends”, Washington Post, 19 December, available at: https://www.washingtonpost.com/archive/politics/1977/12/19/martial-law-benefits-marcos-friends/38bfac37-6c3d-4b5c-9e50-6864629680ef/ (accessed 21 August 2019). (2013), Curbing Corruption in Asian Countries: An Impossible Dream?, ISEAS Publishing, Singapore. Batalla, E.V.C. A. These included former Herdis president Rodolfo Jacob, former Asia Industries president Jesus Vergara, former vice president Angelo Manahan and former legal vice president and cousin, Jesus Disini. 13 (Republic of the Philippines vs. Disini et al., 2012; PCGG vs Desierto et al., 2003). TRADING ECONOMICS 196 Countries 20 Million Indicators Some senators including Juan Ponce Enrile, Ramon Revilla Jr. and Jose Ejercito Jr. were jailed in connection with the Napoles pork barrel scam but have been either released on bail or acquitted of plunder charges. Negative public opinion to the project of an already politically beleaguered Arroyo presidency prompted an inquiry from the Senate leading to the project's cancellation. Republic of the Philippines (1980), Letter of Instructions No. In hindsight, the claims advanced by the Ombudsman in its case reflected the bias favouring the previous Senate testimonies of de Venecia and others in the opposition. However, no amount of damage control could erase the image of the BNPP project as a symbol of Marcos' corruption. Corruption is a pervasive and longstanding problem in the Philippines. Apparently, the OMB erred in its reliance on the evidence provided by the opposition during GMA's term. The purpose of this article is to analyse the weaknesses of governance institutions in constraining grand corruption arising from the government procurement of large foreign-funded infrastructure projects in the Philippines. 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In 2012, the Sandiganbayan ruled in favour of the government. It was there that JDV introduced Mendoza to his son, Joey and informed Mendoza of Joey's DOTC project (SBRC, 2009, p. 48). The ZTE project cancellation was the product of the system of checks and balances in post-Marcos democracy, with pressure exerted by the mass media, Congress, the courts and public opinion. New Zealand and Denmark topped the corruption index, with scores of 87 each, followed by Finland with a score of 86, Singapore with 85, Sweden with 85, and Switzerland with 85. 38-39, 42). Philippines slipped 14 places to 113th in 2019 Corruption Perceptions Index, global anti-corruption watchdog Transparency International said. People of the Philippines vs. Gloria Macapagal-Arroyo, Jose Miguel Arroyo, Benjamin Abalos, Sr. and Leandro Mendoza (2016), “SB-11 CRM-0467”, 25 August. Mathews, J. and Wideman, B. In 1982, Disini fled to Austria, a country without an extradition treaty with the Philippines. A review of recent literature suggests that all levels of corruption, from petty bribery to grand corruption, patronage and state capture, exist in the Philippines at a considerable scale and scope. 110-118). It separates the people, the greater number wants conviction through impartial trial while the opposing few supports the innocence of both respondents. On the contrary, in many cases, there is no other way to transact on certain matters. Such incentives are not only exclusive to politicians, political appointees and professional bureaucrats but also to foreign governments, private firms and individual brokers. To construct the narratives of each case, primary and secondary sources are utilized, including court decisions, laws published in the Official Gazette, Senate committee reports, journal articles, biographies and newspaper reports. Testimonial evidence established Abalos' lobbying and bribery attempts. There, he allegedly acquired citizenship and a castle. It is also creating more opportunities for its government to be corrupted by the very nature of … It was therefore possible that discovered irregularities made it difficult for the governments involved to publicly acknowledge or outrightly denounce the projects. Batalla, E.V.C., Romana, M.S. Subsequent reports citing bankers and former Disini associates indicated varying amounts, ranging from a few million dollars to more than US$50 million. The scale of corruption appears to be massive on the basis of the cases and issues discussed. The FOI Bill is a good solution to fight corruption in the Philippines. 3019 (The Anti-Graft and Corrupt Practices Act) is the main anti-corruption law. The Sandiganbayan's ruling on the ZTE case, issued in the early days of the Duterte presidency, favoured the Arroyos and other co-accused. Estrada, Villar and stock market—something in common? Internationally, corruption has been found to undermine economic development: • Since corruption weakens the state’s capacity to raise revenue and perform its core functions, it increases tax evasion. The OMB cleared GMA and her husband but recommended the filing of administrative and criminal charges against Abalos and Neri. Republic of the Philippines vs. Westinghouse Electric (1989), “U.S. Similarly, the level of corruption varies across authoritarian systems, with monarchies and single-party systems tending to be less corrupt than military and personalistic regimes; in fact, as Kukutschka (2018, p. 4) points out, “a small number of non-democratic countries perform relatively well in international corruption indices.” In either democratic or authoritarian systems, the commission of grand corruption is typically driven by personalistic and patronage-clientelistic motivations that benefit rulers and the dominant political elite, political parties and allies, cronies and friends, as well as families and relatives (David-Barrett and Fazekas, 2019; Chang and Golden, 2010). You can join in the discussion by joining the community or logging in here.You can also find out more about Emerald Engage. For its part, in August 1980, the Philippine Atomic Energy Commission (PAEC), the country's nuclear regulatory body, submitted its own re-evaluation study, which recommended the lifting of the construction suspension order. Following the theme of this special issue of Public Administration and Policy, this article examines and compares two corruption scandals involving large infrastructure projects of government, namely, the Bataan Nuclear Power Plant (BNPP) of the Marcos era and the National Broadband Network (NBN) project of the Arroyo presidency. Consequently, Disini was arrested but was later released on PhP54,000 bail. and Batalla, E.V.C. Coronel, S. and Tordesillas, E. (1998), “Grandmother of all scams”, Part 3, Philippine Center for Investigative Journalism, 20 March, available at: https://old.pcij.org/stories/the- grandmother-of-all-scams-3/ (accessed 11 November 2019). Corruption is a word that Filipinos do not want to hear. In September 2006, China's Export–Import Bank indicated its intention to fund the project as a loan to the Philippines. Finally, there is the perceived failure of closure to past scandals by the justice system, as there continues to be a “low risk” of punishment (Quah, 2013, p. 129). The SBRC argued that both he and his son attempted to commit graft since by law, relatives of the House Speaker up to the third civil degree, were not supposed to intervene or engage in a business, transaction or contract with the government. In 2012, the Sandiganbayan ruled against Disini, ordering the return to the government his commissions, deemed as ill-gotten wealth, amounting to US$50,562,500 (Republic of the Philippines vs Disini et al., pp. Bureau of the Treasury (2020), National Government Debt Service, Historical Series, Manila, available at: https://www.treasury.gov.ph/?page_id=4221 (accessed 6 January 2020). Upon the suggestion of financing institutions such as the World Bank and the Asian Development Bank, corruption has taken centre stage in policy discourse, making corruption the locus of many re-engineering efforts in Philippine governance (Transparency and Accountability Network, internal documents, 2005). ' ownership of the accused in August 2016 agreed date of transfer to the Philippines suggests deeper problems politics. Last 50 years established a presidential Commission to enquire into the safety nuclear! 12 and 13, respectively his term that criminal charges against Abalos and Arroyo. Day, the New Ombudsman at the Senate Jersey also reached a verdict the! August 2016 denounce the projects was based on an earlier report of foreign.... Of ownership and control joining the community or logging in here.You can also find out more about Emerald Engage Kong! Inquirer, 15 September, p. A13 the graft charges led to Sandiganbayan. 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