Carlo's Think Pieces

Reflections of a Filipino in the Netherlands

Posts Tagged ‘corruption’

Why do Filipinos keep on Electing Idiots?

Posted by butalidnl on 11 July 2014

Why do Filipinos keep on electing idiots to public office? This is a question often heard in the country, especially whenever an official does or says something weird. A short, objective, answer to this would be: No, we don’t; most Philippine officials are not idiots. I think that if we would be able to get the IQs of all Philippine officials, at all levels; we would find out that their average IQ is significantly higher than that of the overall population.

The perception that we are being ruled by idiots (and the related perception that we must be idiots for electing them) is quite widespread. This is due to a number of reasons:

First, any political system that selects its leaders (mostly) on heredity (read: political dynasties) or other criteria than on intelligence or performance would naturally result in some officials with below average IQ. In medieval or feudal times, we remember stories of mad kings and other royalty. Nowadays, this happens quite rarely.

Second, everyone (even those with very high IQs) make stupid or inappropriate statements (or do stupid things) from time to time. In the TV series ‘The Big Bang Theory’, the character Sheldon, who is a genius, is continuously making grossly inappropriate statements. This demonstrates that a lot of bright people can act quite ‘stupid’.
These days officials are increasingly living in a ‘glass bowl’ – always with the possibility of surreptitiously taken video clips and witnesses – and news travels quite fast with social media. So, it is but natural that officials slips are noted more these days. The public should learn to live with most of these ‘slips’.

Third, peoples world views differ; and often they view those who hold other views as strange or even stupid. In the debate over the RH bill, many of those who were against it did so from a very traditional Catholic point of view. They all sounded quite archaic and so ’19th century’ to those who were in favor of the bill. In another example, Bayan Muna representatives would be viewed as having ‘looney’ ideas about many issues. I think both groups of people are quite intelligent.

Fourth, many politicians play for an audience. Be it Duterte threatening to kill all smugglers in Davao, or Mar Roxas carrying sacks of rice after a raid; these are all intended to convey a message. Some actors with showbiz backgrounds tend to be even more theatrical – like Revilla who ‘sang’ during his privilege speech.

Fifth, people’s prejudices come to play. There is, for example, an assumption among many that celebrities are brainless and have no place in politics.This is demonstrated by the aversion of many to the plan of Kris Aquino to run for the Senate. Kris is certainly quite intelligent – she is the daughter to one president and sister to another. The questions people should ask should be: ‘what are her political views? will she work full-time as senator?’
It is intellectual snubbery to assume that candidates without academic credentials, or who are showbiz personalities, are dumb or idiots.

Though many politicians are quite intelligent, a lot of them are not performing their functions well. Lito Lapid’s difficulty with debating in English should not be the issue, but rather his absence in most Senate sessions. Pacquiao’s being one of the ‘most absent’congressmen should similarly be made the issue.  Many mayors don’t even live in the municipality they are mayor of. Being a public official should require a full-time commitment to their work, be it as mayor or senator.
This is where the public often falls short: they prefer to vote for a candidate’s promises, but don’t vote them out of office if they don’t perform.

Another issue altogether is the matter of corruption. Some of the most corrupt are also the most intelligent. Marcos is the classic example of this; Arroyo a (relatively minor) recent example. It takes intelligence to be truly corrupt. An unintelligent corrupt official will readily be caught;  the bright ones are able to steal for years and years.

The challenge for the public is to elect officials who are not only intelligent, but also diligent and honest. This is tough. But I believe we can do this, eventually.

Posted in Philippine politics, Philippines, politics, Uncategorized | Tagged: , , , , | Leave a Comment »

Need to Craft new Bank Secrecy Law

Posted by butalidnl on 21 February 2012

There is a lot of interest these days on the issue of Bank Secrecy – specifically about looking at officials’ bank accounts to determine if they have some undeclared wealth. Some people have proposed that the Bank Secrecy Law be changed. I agree. But it is important to note that any new law will only apply to subsequent cases, and not to the current impeachment trial.

There are actually two Bank Secrecy Laws: the Foreign Currency Deposit Act (FCDA), otherwise known as Republic Act No. 6426, enacted in 1974; and the Bank Secrecy Law (Republic Act No. 1405) enacted in 1955. Both  need to be amended, or rather replaced by a new law. The new law is needed in order to fight corruption, tax evasion, money laundering etc, while protecting the privacy of bank accounts.

Why Secrecy/Privacy?
The law should be changed, and it should properly be renamed as a ‘Bank Privacy Law’. The basic principle of this law would be that a person’s bank account is private – i.e. known only by him and his bank. But that the government should have the capacity to access what it needs from such accounts to determine if any laws have been violated. Privacy should not provide a safe haven for those doing illegal acts. At the same time, privacy should be respected even when a person’s bank account records are accessed.

People want to have privacy in their bank accounts for all kinds of reasons. Bank accounts reflect what one does in life, and these things do not need to be known by the public. They may have special reasons why they do not want to divulge their bank account data.  Things like: donations to one’s church and other charitable causes, tuition fee payments, even the cost of a house may not be good to divulge. And there are things that are legal, but may be awkward: payment for a drug rehab treatment, a VD clinic, or even informal support payments for an ‘undeclared’ child.

Public officials should be subject to more monitoring than the rest of the public. This is to check against cases of corruption. They are required to file SALNs (Statement of Assets, Liabilities and Net worth), which naturally include their bank account balance. In order to ensure that SALNs are accurate, anti-corruption bodies should be able to verify that their declared bank account balances are accurate.

The question that policymakers should consider is: how to craft a law that protects people’s bank privacy, while ensuring that tax evaders, criminals and corrupt officials don’t use the banking system to hide their deeds?

Some provisions of the proposed law would be:
Protection of Account Privacy. Bank accounts, whether they are in peso or in foreign currency are private. Anybody violating this without legal justification will be severely punished. When an investigation makes it necessary for a Court to access some account data, the data should be limited to what is strictly needed, and the full account record should never come out in a court record.

End of Year Balance. At the end of every year, banks will provide depositors a statement of their balance as of 31 December, as well as the amount of tax withheld. This will be used as a basis for SALNs etc.

Withheld Tax. All Earnings through the banks will have tax withheld automatically. This tax will be turned over to the tax authorities. Tax on interest for foreign currency accounts will also be collected; the rate of tax will depend on the declared citizenship of the depositor. If an account holder’s country does not collect tax on interest earned, tax will be withheld based on Philippine law and collected by Philippine tax authorities.

Tax authorities can request from banks an end of year statement for persons they are investigating, which specify: total deposits, total withdrawals, total tax withheld.

Ombudsman and Sandiganbayan (anti-corruption court) have the right to request End of the Year balance, total deposits, total withdrawal and tax withheld for any official that they are investigating.  If, upon investigation of these documents, the Sandiganbayan deems it necessary, it can also ask to look at that official’s monthly bank statements.

Anti-money laundering. The NBI should be able to get access to an account in terms of the money transfers into or going outside the country, as well as large deposits and withdrawals (perhaps  amounts of P1 million or more).  The bank will provide these to them in a special form, without revealing the account holder’s other bank transactions.

Prosecution of Criminals. Courts should be able to access bank records of people being tried for financial crimes (including tax evasion and money laundering). But these records remain private – meaning that only the judge (and some select court officials) would have (temporary) access to the full records. On the basis of their examination of the actual records, they would sign an ‘extract’ from the records – which would omit all transactions not relevant to the case – as correctly reflecting the actual record. It will only be these extracts which will appear in the court record. The original records will be returned to the bank.

Bank Officials. Since bank officials have a key role in keeping bank accounts private, they have a big responsibility in their hands. Any violation of the rules by bank officials (e.g. leaking the contents of an account) should be severely punished. Before they are entrusted with these responsibilities, bank officials should be cleared by both the NBI and the BSP. The BSP will hold a regular audit of cases where bank balance data are shared with courts, to ensure that bank officials and courts correctly follow the procedures.

Some people are concerned that there would be an exodus of funds from Foreign Currency Deposits if the Bank Secrecy Laws are amended. I think that the economic effect of such new laws will be limited. It may even be beneficial, since it may result in a devaluation of the peso, which would benefit exporters and OFW families.

The main effect of new Bank Secrecy Laws will be that it would be increasingly difficult to hide ill-gotten wealth in the banking system. And this may, or it may not, lessen corruption of officials. If, in the process of doing so, we also rid the country of its reputation as a haven for tax cheats and money-launderers, then that should be all right.

Posted in Overseas Filipinos, peso-dollar rate, Philippine economics, Philippine politics, Philippines, politics | Tagged: , , , , , , , , , | Leave a Comment »

Cash or Kind?

Posted by butalidnl on 4 October 2011

In programs aimed at alleviating poverty, the question is often asked: do we give help in cash, or in kind? On first glance, people will opt to give help in kind, because it feels more concrete. Also, if you give a poor person something like rice, they will really receive rice (assuming, of course, that it doesn’t get diverted by corruption).

The whole logic of aid in kind is that the goods are actually given. but this does not necessarily mean that they will be used, or used properly. In Africa, donors found out that many anti-malaria mosquito nets they distributed free to people were not being used (being “too hot”) or even made into wedding dresses. Often enough, food aid rots in warehouses, or are not utilized properly by recipients.

Are cash gifts better, then? It is also possible to misappropriate cash. Think of the man who uses the cash family support money to buy alcoholic drinks instead of food. But it is this flexibility of use which makes cash a better form of subsidy. With cash, a family can decide to buy corn or cassava instead of rice, or grow camote and use the money to buy vegetables or fish. Or pay the fare for a daughter who goes to the city to become a domestic worker.

Market Distortion
One problem with giving aid in kind is that it distorts the market. If rice is given out for free to some recipients, these people will no longer buy rice from the local merchants, making them lose business and profit. It may end up undermining their business so much that some merchants would go bankrupt. This means that there will be no alternative distribution of rice in case the government supply stops. It also affects the supply of rice for those who are not part of the program.

If aid is given in the form of a subsidy on the price of a product, there would still be market distortion. The experience of Eastern Europe during their communist days shows this. There, the price of bread and potatoes was subsidized, but animal feed was not. So, animals were fed bread and potatoes. People also threw away their one-day old bread. And even when food shortages developed, the price for bread and potatoes remained low, and people continued with their wasteful ways.

Waste and Corruption
Giving in kind gives a lot of opportunity for corruption. Let us again take rice as an example. Rice is first bought from merchants, it is then stored, transported, stored in regional/local centers and distributed to recipients. The recipients need to be identified, ration or ID cards need to be issued. People will have to distribute it, and keep records of each step in the process.

Corruption could range from: getting payments from recipients to get in the list, distributing low-quality rice, paying merchants too much for rice, rice diverted to be sold privately, etc..

There is a also a lot of possibility for waste, especially if the product is perishable, which rice is at some point. Problems in transport and planning would cause the rice to rot in central warehouses, while distribution centers may lack rice. There was a massive over-importation of rice due to corruption, and a lot of rice was spoiled.

Distribution in cash is preferable to goods in normal situations. However, calamities are a case apart. Calamities are often accompanied by the physical disruption of the market infrastructure. It would make more sense to distribute goods in kind.

At the same time, people wanting to donate relief should preferably do so in the form of cash. Because there is the possible problem that the things donated e.g. old clothes, are expensive to transport and may be inappropriate for the need. Donating cash to a help agency which in its turn could buy the necessary products would often be a better solution. The cash should be used to buy relief goods as close to the calamity as possible, to minimize transport costs, market distortion and waste.

Posted in LGU, Philippine economics, Philippine politics, Philippines | Tagged: , , , , | Leave a Comment »

Church Should Focus on Corruption

Posted by butalidnl on 6 March 2011

The Catholic Church in the Philippines has been putting a lot of its energy on the question of the RH bill. I think that instead it should focus on the real moral question – that of corruption. Corruption is an evil in our society. It is so prevalent that we need everybody’s help in fighting it. Now that the government is starting to do something about it, it is time that the church also does its bit.

Isn’t the church going against corruption already? No, not really. If it was, I think that there will be a lot less corruption in society today. What can the church do then? Well, let us see some of the ways.

Declare Corrupt Money “Tainted”
The Muslims have a name for it: haram.  It is the opposite of halal. Haram means “tainted”, in the sense that if someone holds it, ingests it, or receives it, they commit a sin. Good Muslims avoid haram things like the plague.   Haram works: a few years ago, MILF imams declared kidnap ransom money haram. Now, the Abu Sayyaf has difficulty using ransom money, and consequently kidnap-for-ransom has dropped dramatically.

I suppose that the church could simply say that corruption money is cursed. While less emotive than haram it should serve as a dis-incentive to government officials and others to engage in corruption.

If money from corruption is “cursed”, then corrupt people will have a harder time spending their money. And this will greatly reduce the extent of corruption. The church should take the lead in this, by refusing money from known corrupt sources. They can do this by asking people who donate big money to the church to prove where they got the money, or they could set a limit on the amount donated.  If the church does this, it will indeed be brave; since it will be foregoing a lot of donations. But it is sure to have an effect. The church should also preach that knowingly receiving cursed/tainted money (from corruption) constitutes a sin in itself.

Revise the concept of Penance for Corruption
Corrupt officials often erase their sins by donating to the church, or to other charitable causes. They may even confess their sins, and get to “pray 3 Hail Mary’s” to erase their sins. If the Catholic church declares that the penance for the sin of corruption is that the money be returned, and that donations will not do anything to ensure a place in heaven, this will be another big thing towards reducing corruption.  (See: Catholicism Impedes Philippine Development)

Set a Good Example
The Church should institute internal reforms to ensure that corruption within its ranks is eradicated. It should require financial auditing of all church funds, the issuance of receipts for large donations, the publishing of financial reports on the internet.

Setting a good example is key in gaining the high moral ground in the campaign against corruption. When people see that the church is not corrupt, they will heed its calls to stop corruption.

Particular Forms of Corruption
Of course, before launching a campaign on corruption, the church should be clear exactly what kind of corruption it is campaigning against.  I suggest that it concentrate on the following:

Graft. This is the use of government money for personal gain. Or the theft of government money. It takes various forms. The most obvious would be when a portion of funds for a department or LGU are simply siphoned off. I think that what the Generals Garcia et al have done is a clear example of graft. But there are also more indirect ways. For example, Congressmen who refer projects to line agencies as part of their “pork barrel” get a kickback from that agency (e.g. Dept of Public Highways). Or, contractors are asked to shoulder an LGU executive’s “representation expenses” and in return they get some juicy contract in return.

The church should condemn graft in the strongest terms. It could even threaten (and impose) exclusion  from church services for the worst grafters.

Tax Evasion. This is rather straightforward. If you don’t pay your taxes correctly, you are guilty of corruption.  But taxes are not only income taxes. Importers often pay corrupt customs officials to under-declare the value of the things they import, in order that the tax assessment will be lower. This is called “technical smuggling”, and it is tax evasion. Or, medical doctors don’t declare the true amount of patient fees. And many people buy smuggled goods e.g. cigarettes.

The church should call for full tax compliance. And that people who evade taxes should confess this, and pay the tax due as penance.

Bribery. When you pay a policeman who caught you driving a car that should not be driven on that day due to number coding, this is bribery. When you pay a “fixer” to arrange papers for you at a government office, this is also bribery. Of course, this is small change compared to bigger cases of bribery, but they are significant in that bribery becomes the social norm if allowed to continue.

The church should condemn bribery whether it is small or big. People should pay their “number coding” fines instead of bribing policemen. Church workers could be sent to visit LTO and other such offices to “harass” fixers. The Church should also declare that both the one giving the bribe as well as the one receiving the bribe commit a sin.

Usury. The practice of “5-6” is a clear case of usury. It is corruption in that it exploits the receiver of the loan; who has to pay such a high price just in order to have money for their business or for urgent family needs. It is exploiting the other person’s tight financial situation.

The church has a lot of funds. It should set up a system to provide proper credit facilities for the poor.  The practice of “5-6” should be clearly declared as a sin.

Posted in Philippine economics, Philippine politics, Philippines, politics | Tagged: , , , , , , , , , , , , , , , , , | Leave a Comment »

Angelo Reyes’ Suicide

Posted by butalidnl on 8 February 2011

Angelo Reyes, former AFP Chief of Staff, died by suicide on 8 February.  He was recently implicated in the corruption investigation in Congress. Apparently, he committed suicide in order to spare his family the shame such an investigation brings.

He didn’t succeed, really. In the matter of killing himself, he was successful; but I don’t think he spared his family grief or shame. There is an immense taboo regarding suicide in the Philippines; and at the same time, the taint of corruption will still adhere to his family.  They can only hope that the ongoing investigation will find out that he was innocent of corruption, clearing his name and the family’s shame.

Reyes’ suicide is a unique case. It is probably the first political suicide in the country’s history (not counting Muslim suicide bombers, of course). This kind of action is more in line with the culture of Japan, for example, than that of the Philippines. But, I guess there is always a first time for everything…

Corruption Investigation
What  strikes me is that Reyes chose suicide over the usual thing that politicians do in the Philippines – which is to wait out the hearings, until eventually the issue goes away. This tactic of waiting out corruption investigations usually works. Erap Estrada DID get convicted in his plunder trial, but after a few years in jail, he was then pardoned… so it still ended better,  much better, than if Estrada committed suicide.

Reyes chose to die, because he probably calculated that he WOULD be found guilty (and probably that he will not be pardoned). So, by doing what he did, he hoped that the issue will go away, posthumously.
His death will complicate investigations into corruption in the AFP.  Nevertheless, I find it comforting that he probably considered the investigation process to have a big chance of succeeding (which says a lot about the current level of investigations).

The corruption investigation should indeed go forward, because it involved much more than Reyes. He should not be excused from being investigated, just because he died. After all, if Reyes had participated in corruption, he would have ill-gotten properties and assets; and these assets should be recovered.  I hope that death does not mean that his family is free to retain illegally gotten wealth.

On the other hand, if the investigations end up proving that Reyes did not participate in AFP corruption, then his name would be cleared.

Catholic Stand
The Catholic church seems to have softened its stand in cases of suicide. Archbishop Oscar Cruz of Lingayen/Dagupan, former president of the CBCP, said that “now, the Church is more understanding because in this state of mind that is so confused and depressed, then he is not himself..”

Formerly, no Catholic burials or masses were held in cases of suicide.

I wonder if the Catholic stance on suicide has really changed, or if it is merely that Reyes was a ranking member of the elite, and thus difficult for the Church to censure.  Or in other words, has the Catholic Church attitude to suicide really changed, or is suicide wrong if you’re poor but okay if you’re rich?

If the church stand to suicide is really changed, I applaud it. Suicide should be talked about, at least, so that people can set up intervention programs to help people contemplating suicide. Ironically, the Church softened stance on suicide may end up lessening the number of suicides in the country.

Posted in Philippine politics, Philippines, politics | Tagged: , , , , , | 1 Comment »