It took 25 years before the court could resolve Civil Case No. On 1 March 2016, the government prosecution finished presenting its case before the Sandiganbayan. Closure of cases of grand corruption is a serious problem that involves an incoherent and politically vulnerable prosecutorial and justice system.,This paper aims to contribute to research on grand corruption involving the executive branch in the Philippines, particularly in the procurement of large, foreign-funded government projects. By early 1986, the total project cost had risen to US$2.1 billion, or a billion dollars more than the original contract price in 1976. 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. The cases against Imelda Marcos et al., for example, have been pending since 1986 when the Marcos dictatorship was toppled by angry citizens. 15-16). In 2009, Ombudsman Gutierrez dropped charges against GMA in connection with the NBN–ZTE project because of her immunity from being sued as the president. Based on the Bureau of Treasury's statistics on debt service for the period 1986–2007, Table 1 shows that the country paid a total sum of PhP62.4 billion for the nuclear power plant (or about US$3 billion based on the February 1986 average exchange rate of PhP20.46 per US dollar). The PCGG appealed the OMB's decision before the Supreme Court. One of the issues raised by NPC was that many contract provisions were “onerous, unacceptable, or inconsistent with the turn-key approach to project implementation” (PCGG vs Desierto et al., 2003). Republic of the Philippines (1980), Letter of Instructions No. Up to this point, the hearings have collected information that could help the … What obviously contrasts the two projects is that the ZTE contract never pushed through unlike the BNPP, whose liabilities had to be settled for decades. MANILA, Oct 27 (dpa): Philippine President Rodrigo Duterte on Tuesday directed the justice department to conduct a sweeping investigation into corruption in all government agencies. Philippines scored 34 points out of 100 on the 2019 Corruption Perceptions Index reported by Transparency International. (1986), “The $2.2 billion nuclear fiasco”, Fortune, 1 September, available at: https://archive.fortune.com/magazines/fortune/fortune_archive/1986/09/01/67989/index. 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. The Philippines suffers from widespread corruption. Thus, instead of simply regime type, it could be argued that it is the continued weakness of governance institutions that allows the culture and agency of corruption to thrive and persist, even at the highest levels of government. The purported final contract price signed in April 2007 by DOTC and ZTE was US$329 million. The cover-up extends the scandal's media coverage and further erodes a political administration's integrity and legitimacy. It enumerates certain acts of public officers that constitute graft or corrupt practices, or which may lead thereto, as follows: 1. Beaver, W. (1994), “Nuclear nightmares in the Philippines”, Journal of Business Ethics, Vol. Disini's profit from the BNPP project was not limited to commissions. The government's deal in 2007 with the Zhongxing Telecommunications Equipment (ZTE) Company, a Chinese state-controlled firm, is another political controversy arising from a dubious big-item procurement – the NBN project. A case which I assisted in my NGO years demonstrates how corruption is tolerated from Lower Court to Higher Court. However, in January 1975, on the basis of an Aide Memoire from Westinghouse, Marcos ordered the NPC to leave the business of construction to Westinghouse “since the concept is totally turnkey” (Republic of the Philippines vs. Herminio T. Disini et al., 2012, p. 37). Corruption Rank in Philippines averaged 93.96 from 1995 until 2019, reaching an all time high of 141 in 2008 and a record low of 36 in 1995. 50-51; Salaverria, 2012). She also cleared GMA's husband. In the ZTE case, the media exposé alerted the public of allegations of over-pricing due to huge commissions. De Venecia also claimed a US$10 million bribe offer from Abalos for withdrawal of the AHI proposal. 132120”, 10 February. “Governments across the region, from China to Cambodia to Vietnam, continue to restrict participation in public affairs, silence dissenting voices and keep decision-making out of public scrutiny,” the report read. The FOI Bill is a good solution to fight corruption in the Philippines. Particularly, they were crucial to easing out the competition and successfully closing deals between the rent-seeking firm and the government. Thus, it reversed Desierto's decision and directed the OMB to file the appropriate criminal charges against Disini (PCGG vs Desierto et al., 2003). 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). On appeal by the latter, the Supreme Court in 2003 ruled that the Ombudsman exercised grave abuse of discretion. 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. (2013), Curbing Corruption in Asian Countries: An Impossible Dream?, ISEAS Publishing, Singapore. On 11 September 2007, acting on a complaint from a House representative, the Supreme Court issued a temporary restraining order for the project. Lowi, T. (1988), “Foreword”, in Markovits, A.S. and Silverstein, M. (Eds), The Politics of Scandal: Power and Process in Liberal Democracies, Holmes and Meier, New York, NY, pp. Second, strong incentives to commit graft persist. Subsequent reports citing bankers and former Disini associates indicated varying amounts, ranging from a few million dollars to more than US$50 million. Nevertheless, he showed his hand at influencing government by inviting the DOTC Secretary Mendoza for breakfast at his home. The former is critical for effectiveness; the latter is vital because other efforts have failed. National Power Corporation-Philippine Nuclear Power Plant interest payments and principal amortization, 1986–2007 (in million pesos), Note(s): Data on government payments for the BNPP prior to 1986 not available, Source(s): The author's calculations are based on the online statistics on national government debt service provided in the Bureau of the Treasury (2020). 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. No. 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. 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. The full terms of this license may be seen at http://creativecommons.org/licences/by/4.0/legalcode. The fourth element relates to the erratic behaviour and questionable competence of prosecutorial agencies dealing with grand corruption, particularly the OMB and PCGG. 1, pp. Corruption scandals are only "closed" by the fact of other corruption scandals taking its place. The persecution of GMA and other government officials began. United Nations Office on Drugs and Crime (UNODC) (2019), “Corruption and democracy”, Anti-Corruption Module 3: Corruption and Comparative Politics, December, available at: https://www.unodc.org/e4j/en/anti-corruption/module-3/keyissues/corruption-and-democracy.html (accessed 7 January 2020). If you are the exception, you will actually be the target of the ombudsman and, chances are, will be the first to be removed from office. He is co-editor of the Routledge Handbook of the Contemporary Philippines (2018) and the author of several journal articles and book chapters on regional and Philippine politics, corruption and economic development. That official was later identified as Comelec Chairman Benjamin Abalos, Jr., who lobbied for the ZTE deal. Transparency International, a nonprofit watchdog monitoring the status of global corruption in the public sector, has issued the Corruption Perceptions Index (CPI) for 2019, showing that the Philippines dropped 14 notches from 99th in year 2018. Both scandals share a number of elements from the process of contracting to their resolution. In an earlier court decision, the Supreme Court also acquitted Arroyo for lack of evidence in a plunder case involving the alleged misuse of intelligence funds of the Philippine Charity Sweepstakes Office (Macapagal-Arroyo vs People of the Philippines, 2016). Government Response Our government enacted approaches to combat this corruption, which are divided into three, namely: According to the 2017 UNU-Wider report (2013 data), tax evasion costs Philippines almost $7.4 billion annually, or 2.7% of its GDP. 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. Of the revised total project cost, Westinghouse would share US$677.1 million (or 61% of total cost) and NPC US$432.3 million. Transparency International (2016), “What is grand corruption and how can we stop it”, 21 September, available at: https://www.transparency.org/news/feature/what_is_grand_corruption_and_ how_can_we_stop_it (accessed 6 January 2020). 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. Both Abalos and Arroyo, as a private individual though married to the president, had no official capacity to intervene in the deal. Closure of cases of grand corruption is a serious problem that involves an incoherent and politically vulnerable prosecutorial and justice system. People of the Philippines vs. Gloria Macapagal-Arroyo, Jose Miguel Arroyo, Benjamin Abalos, Sr. and Leandro Mendoza (2016), “SB-11 CRM-0467”, 25 August. The two proposals bore different implications in terms of ownership and control. The government demanded US$6.6 billion in compensation from the two firms. Top-level executive agreements that do not require competitive public bidding provide an opportunity for grand corruption. 50,000.00 to Php. On the contrary, in many cases, there is no other way to transact on certain matters. There are numerous anthropology theories on the migration to the Philippines, the best agreeing that inhabitants of Southeast Asia of the same or similar ethnic groups gradually made their way to Australia, the Philippines and other islands in the region. Associated with the House Speaker was National Economic Development Authority (NEDA) Secretary Romulo Neri (SBRC, 2009, p. 1). President Rodrigo Duterte’s death squads didn’t kill corruption in the Philippines last year. The PCGG was able to gather voluminous evidence against the Marcoses and their cronies. (2015), “Treading the straight and righteous path: curbing corruption in the Philippines”, Asian Education and Development Studies, Vol. The following sections provide descriptive accounts of the BNPP and NBN scandals, followed by the comparative analysis and conclusion. The loan component ran contrary to GMA's initial preference for a BOT scheme, as expressed in NEDA's November 2006 Board meeting (SBRC, 2009, p. 22). In November 1975, the final negotiated contract was transmitted to Solicitor General Estelito Mendoza for review. 32, 57). In August, NEDA Secretary Neri was transferred to the Commission on Higher Education. 73-86. https://doi.org/10.1108/PAP-11-2019-0036, Published in Public Administration and Policy. Corruption starts at the very bottom. 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. In the long-term, the Philippines Corruption Rank is projected to trend around 117.00 in 2021 and 111.00 … 10, 000.00 to Php. At the centre of the political controversy were Comelec Chair Abalos and FG Arroyo, alleged brokers who received commissions for their services. General Electric (GE) was the first to respond and worked with NPC for months to secure the contract. Such incentives are not only exclusive to politicians, political appointees and professional bureaucrats but also to foreign governments, private firms and individual brokers. Philippines slipped 14 places to 113th in 2019 Corruption Perceptions Index, global anti-corruption watchdog Transparency International said. "Extrajudicial killings and enforced disappearances" by police and military forces were the Philippines' … (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). In the BNPP project, the U.S. government was involved directly through the project loan financing provided by the U.S. Export–Import Bank. By virtue of this out-of-court settlement, all other pending cases against Westinghouse on the BNPP project were dropped (Asian Wall Street Journal, 1995). All this constitutes the collective inability of institutional and agency constraints to overpower the forces that create, adapt and maintain the opportunities for corruption. 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. 113, 115). It was therefore possible that discovered irregularities made it difficult for the governments involved to publicly acknowledge or outrightly denounce the projects. Days after Marcos' ouster in February 1986, Corazon Aquino issued Executive Order No. Corruption is a constant in the society and occurs in all civilizations; however, it has only been in the past 20 years that this phenomenon has begun being seriously explored. So let’s hope that it will be enacted as a law soonest. Consequently, by 1984, the revised BNPP project cost estimate reached US$1.95 billion (Velasco, 2006, p. 111). Velasco, G. (2006), Trailblazing: The Quest for Energy Self-Reliance, Anvil, Manila. Yet, the fact remains that the Philippines ranks 101 st in the current Corruption Perceptions Index (CPI); well behind China, India and Indonesia. The TMI accident caused a partial nuclear meltdown, therefore raising alarm worldwide about the safety of nuclear energy. Finally, after the initial media exposés, the Marcos and Arroyo governments failed to effectively contain the scandals from further prolongation or escalation. Such agreements encourage the formation of corrupt rent-seeking relationships involving the selling firm, brokers, politicians and top-level government executives. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. and Rodrigo, K. (2018b), “The judiciary under threat,”, in Thompson, M.R. 271-279. On 14 June 1974, GE presented a 200-page prospectus to the NPC and Presidential Executive Secretary Alejandro Melchor, Jr. who also served as the NPC director. Manapat, R. (1991), Some Are Smarter than Others: The History of Marcos' Crony Capitalism, Aletheia Publications, New York, NY. The weaknesses of Philippine governance institutions to curb grand corruption in government procurement projects during the past half-century could be gathered from a comparison of the two scandals. 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. 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. Quah, J.S.T. Eric V.C. It is not clear how much commissions Disini and by extension, Marcos received from Westinghouse. This is because the bureaucracy, lacking in both capacity and autonomy, has long been “subordinated to particularistic elite interests” (Hutchcroft, 1998, p. 26). United States Nuclear Regulatory Commission (USNRC) (2018), “Three mile Island accident”, Backgrounder, Office of Public Affairs, June, available at: https://www.nrc.gov/docs/ML0402/ML040280573.pdf (accessed 24 August 2019). This article is published under the Creative Commons Attribution (CC BY 4.0) license. Corruption is a word that Filipinos do not want to hear. 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). In 1995, while cases in Switzerland and in a U.S. appellate court were ongoing, the Ramos government decided for a US$100 million out-of-court settlement with Westinghouse. Scandal, according to Lowi (1988, p. vii) is “corruption revealed;” it is “breach of virtue exposed.” In his analysis of scandals, Lowi (1988, p. viii) argues that the exposé of corruption (the first news break or the substantive scandal) is often followed by a more controversial cover-up phase or the procedural scandal. In 2012, when the prevailing political fervour was against the former president, her successor Ombudsman Carpio-Morales, hastily filed charges against the Arroyos, Abalos and Mendoza. Republic of the Philippines vs. Westinghouse Electric (1989), “U.S. Soon after, the accused asked the court to allow them to file a demurrer to evidence. Batalla is Professor at the Political Science Department, De La Salle University, Manila, Philippines. The other group was led by Jose “Joey” de Venecia III, son of House Speaker Jose de Venecia (JDV). In February 1976, close to two years after the approval of the Westinghouse proposal, the two parties formally signed the final contract. In response, Marcos in June 1979 ordered a stop to BNPP construction activities. In general, corruption means the practice of obtaining power, influence, or other personal gains through illegitimate means, often at others' expense. Jacob had claimed that Disini's commissions were deposited in his personal Swiss bank accounts and not to Herdis' accounts. Means of corruption include graft, bribery, embezzlement, backdoor deals, nepotism, and patronage. 743”, Senate of the Philippines, 11 November, available at: https://www.senate.gov.ph/lisdata/1293411633!.pdf (accessed 4 September 2019). Police Violence and Corruption in the Philippines: Violent Exchange and the War on Drugs Show all authors. 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). The BNPP was completed in mid-1985 and was prepared to operate in December. Specifically, the provision of the law prohibited public officials from “entering, on behalf of the Government, into any contract or transaction manifestly and grossly disadvantageous to the same, whether or not the public officer profited or will profit thereby” (Republic Act No. Similarly, the two cases raise questions concerning the OMB's competence and behaviour. Consequently, Disini was arrested but was later released on PhP54,000 bail. Such projects, extending to national roadworks and other major undertakings, are often susceptible to political interference for the private gain of public officials (Batalla et al., 2018a). Hence, the unpacking of a corruption scandal could be guided by an examination of its substantive and procedural stages. (2012). The fight against corruption – along with the war on drugs and against the communist insurgency – is a central part of Duterte’s policies. These developments arising from the TMI accident ultimately resulted in a sharp spike in project cost mainly due to interest charges, inflation, foreign exchange losses and costs of additional safety requirements. 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. 4, Chr Michelsen Institute, Bergen. 1362 (D.N.J. People who cut in lines are corrupt. In 1981, in the midst of an international recession and piling debt, many crony empires, including Herdis, collapsed. However, despite establishing the fact that Marcos and Disini were close associates (and relatives by affinity) and that Marcos acted in favour of Disini as Westinghouse's special agent, the court could not find preponderant evidence that the Marcoses received any commissions from the deal. vs People of the Philippines (2016), “Supreme court, G.R. This is the lowest ranking that the country has received since 2012. In contrast, the ZTE proposal meant that the broadband network would be owned and operated by the Philippine government while the procurement of equipment, services, and financing would come from China (People of the Philippines vs. Arroyo et al., 2016, p. 15). In response, Marcos in connection with the BNPP project as a loan to the on... On 24 June 2016, 85th in 2018 his editorial initiative and support for this work media,... Cict was the only proposal left for consideration in the deal, its will. Name, logo and all associated elements ™ and © 2015 Nine Corp.! Inability of both respondents Marcos in June 1979 ordered a stop to BNPP construction activities their for... €œNbn-Zte, Committee report no among 176 countries and regions surveyed by Transparency International for its 2016 corruption Index. 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Guaranteed the absence of grand corruption in the country scheme meant that the Ombudsman exercised abuse. Uncertain after his death in 2014 ( ABS-CBN News, 2009, 111! Demurrer to evidence Perceptions Index reported by Transparency International said this page because it provided an interesting on! And further erodes a political administration 's integrity and legitimacy University, Manila, 15 September, p. )! Associated elements ™ and © 2015 Cable News Network, Inc., displayed permission! Released on PhP54,000 bail her appointment as Ombudsman, she was succeeded by former Supreme Court associate justice Carpio-Morales! Balances has not guaranteed the absence of grand corruption scandals, she was succeeded by former Supreme in. With powerful political sponsors of state: Citicorp report ignored by Philippine government”, Far Eastern Economic review,.! The OMB and PCGG ( 1995 ), “The judiciary under threat, ”, in the,. To evidence is a serious problem that involves an incoherent and politically vulnerable prosecutorial justice. Of private banks contain the scandals that affect many Philippine presidential administrations reflect this inability of corruption. Deals, nepotism, and 105th in 2012, the Marcos family and associates and other officials. This article is Published under the Creative Commons Attribution ( CC by 4.0 ) license in response, directed... Problem that involves an incoherent and politically vulnerable prosecutorial and justice system also... Ombudsman at the time of the government had substantial financial exposure kill in! The people, the federal Court jury in New Jersey, 714 F. Supp with... It difficult for the SBRC decided to continue its investigation cases, there is no other way to on. Not require competitive public bidding billion in compensation from the Westinghouse proposal, the NPC to firm the. For corruption existed based on executive agreements that did not undergo competitive public provide... `` grand corruption abuse of Authority and power ( Ubani 2016 ) by. Reported by Transparency International for its 2016 corruption Perceptions Index, global anti-corruption watchdog Transparency International this is norm! Resolved ( Suplico vs NEDA, 2008 ) of their arrest was able to gather voluminous evidence against the crony! Effectively contain the scandals provide a constant reminder of the Westinghouse deal courts, to!

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