• Corruption hurts business – consultancy group


    The Philippines has performed poorly in a variety of international standards designed to measure corruption, making it a substantial risk for companies, a consultancy firm said.

    According to the Pacific Strategies and Assessments (PAS), the country was ranked 118 out of 137 by the World Economic Forum’s Global Competitiveness Index which measure irregular payments and bribes.

    The PSA, a consultancy firm that focuses on political and security risk and crisis management, said high levels of corruption create substantial risks for companies subject to strict regulations like the United States’ Foreign Corrupt Practices Act (FCPA) and the United Kingdom’s Bribery Act, in addition to other regulatory regimes.

    However, the PSA said the Philippines performed better than many of its neighbors, which have in some cases been cited for more violations and larger fines.

    It said two of the FCPA violations related to the Philippines involved allegations of local agents utilizing commission payments to pay government officials, a practice widespread throughout much of Southeast Asia.

    The first case involved the provision of luxury hospitality packages for the 2008 Beijing Olympic Games to government officials from a large number of countries, including the Philippines – some of whom were in a position to influence ongoing contract negotiations.

    The second involved the alleged payments to local officials by an international freight transportation company that happened in the Philippines.

    The company allegedly paid officials of the Bureau of Customs and the Philippine Economic Zone $244,000 (P12.6 million) in order to retain business and facilitate the violation of customs regulations, settle customs disputes, and reduce or not enforce fines.

    The company also allegedly paid $173,000 (P8.9 million) to officials at state-owned airlines operating in the Philippines to improperly reserve space for shipments and to consolidate shipments.

    The charges, according to PSA, resulted in $300,000 (P15.5 million) in civil penalties – a small sum in the context of FCPA violations.

    “The violations above point to inadequate internal controls and compliance systems at the violating companies.

    However, they also point to widespread practices that pose substantial regulatory risk for foreign companies operating in the Philippines,” PSA said.

    In due diligence cases based exclusively on public records searches, the group said most allegations involved
    labor issues, tax evasion and political connections.

    Allegations of tax evasion are a concern within the context of compliance because it points to an unwillingness to implement appropriate financial controls and reporting, it added.

    No surprise

    Sen. Panfilo Lacson on Friday said the report of Transparency International is not surprising because of the failure of the government to show sincere efforts to combat corruption.

    Lacson particularly cited the case of former Customs Commissioner Nicanor Faeldon, who he said could very well be the poster boy of corruption in government.

    “The kid glove treatment accorded to him by the President does not speak well of a sincere and determined effort in combating corruption,” Lacson said in a text message.

    He noted that the negative perception on the Philippines would stay despite the repeated pronouncements and threats made by President Rodrigo to corrupt officials.

    “I can only opine that words don’t really matter much unless matching action is seen by those who judge,” he added.

    But to Sen. Juan Edgardo “Sonny” Angara, the report of the global anti-graft organization that the Philippines was among the most corrupt countries in the world was puzzling.

    Based on the report, Somalia is the most corrupt with a rating of 9 while New Zealand is the most transparent with a rating of 89. Countries are rated between 0 and 100 with 0 being the most corrupt.

    “I’m wondering why and would like to see why we went down when we were just cited as having the most budget transparency in Asia recently,” Angara said in a text message.

    The senator was referring to the Open Budget Survey (OBS) 2017 wherein the Philippines got an open budget index (OBI) of 67, securing the top spot in Asia for budget transparency.

    The OBS is a biennial survey conducted by the International Budget Partnership (IBP) which assesses budget transparency based on the amount and timeliness of budget information governments make available to the public.

    The 2017 OBI of the Philippines was three points higher than its 2015 score of 64, surpassing Indonesia (64), Jordan (63), Japan (60), and South Korea (60).


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