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Public Ethics and Corruption in the Philippines 387

erecting barriers to competitors. Likewise, Philippine law allows cross-ownership of power generation and distribution utilities. A power distribution company can enter into supply contracts with its generation subsidiaries, and create hidden profits for the conglomerate (Patalinghug and Llanto, 2005). Generally, as Abad (2005) notes, current industry regulatory measures are vulnerable to rent seeking.

19.2.4 Collateral Measures on Electoral Reform

Theoretically, elections offer a means for the orderly removal of corrupt incumbents from power (Azfar, 2008). Yet an outdated electoral process, which is heavily dependent on manual counting of votes, makes Philippine elections a fertile ground for control and manipulation by vested political interests. In recent years, automation of vote counting has been high on the electoral reform agenda. The Philippine Congress passed an election modernization law in 1997 giving the government enough headstart to automate the 2004 elections. But the proposed cure turned out to be as bad as the illness, as the automation project itself, handled by the Commission on Elections, became embroiled in an overpricing controversy. As a result, the Philippine Supreme Court nullified the project prior to the May 2004 presidential elections. The government’s own candid assessment of the problem pinpointed both the failure to implement the electoral modernization law and the flawed regulatory capabilities of the Commission on Elections as responsible for impeding reform efforts in the electoral process (MTPDP 2004–2010).

Arguably the more important challenge faced by government regulators is in the area of campaign finance. Central to winning elections—given their high costs to candidates—are campaign contributions from wealthy benefactors. Since Philippine political parties are unstable and makeshift coalitions held together only by dyadic patron-client relationships (Romero, 2002), resources are obtained chiefly from corporate or private donations (Gonzalez, 2002). Campaign financiers may come from the ranks of local political clans, businessmen, or tycoons most of whom are often deeply involved in the formulation and implementation of policy and regulations that offer concentrated benefits as part of political paybacks by the winning (and financially supported) candidate. The spending limits imposed by law are unrealistically low; the Commission on Elections often looks the other way when it comes to campaign finance violations. At any rate, ensuring that the campaign kitty is used only for ethical campaigning purposes by the party or the candidate, and is not eventually channeled to policy makers, is a regulator’s nightmare. So far, the Philippine legislature, for obvious reasons, has failed to pass any meaningful campaign finance reform laws.

19.3 Guidance

With guidance, values and standards come to mind, expressed in codes of conduct and credible commitment from public administrators and political leaders. Values and standards have to be understood and communicated. They may likewise be demonstrated through professional socialization programs such as education and training. Guidance highlights leadership, personal responsibility, and living by example. If politicians accused of misconduct can stage-manage investigations in order to shield themselves, and if civil servants are faced with secrecy and apparent cover-ups when they lodge their complaints to public authorities, they will be less than receptive to official exhortations to more ethical conduct (Mills, 1998). Unlike control that zeroes in on problems, guidance focuses on predicaments, which may lend themselves to several solutions (Bertok, 2000).

© 2011 by Taylor and Francis Group, LLC

388 Public Administration in Southeast Asia

Does government’s guidance objective—the promotion of zero tolerance for corruption through leadership, education, value-formation, and advocacy—stand a chance in the face of the state’s behavior as a Stackelberg follower, with its weak ability to credibly commit to a particular policy course (instead, it merely reactively responds to the autonomous actions of private actors such as special interest groups) (Bardhan and Udry, 1999)? Consider the following initiatives.

19.3.1 Leadership that Casts a Wide Net over Corrupt Acts

Murphy, Shleifer, and Vishny (1993) show that a coordination failure may arise when more resources are allocated to rent seeking, that is, when returns to productive activities fall faster than returns to rent seeking. This lowers the opportunity costs of further rent seeking, making it a more sought-after activity. In an effort to prevent coordination breakdown, the heads of the CSC, the Commission on Audit, and the Office of the Ombudsman sealed a compact to combine their anti-corruption efforts. Known as the Solana Covenant, the pact has reinforced the three agencies’ monitoring and enforcement capabilities, and permitted them to conduct joint projects such as lifestyle checks and integrity development reviews. But this is only a beginning and Solana is vulnerable to coordination failure whenever changes in leadership in these institutions occur.

The Philippine judiciary also pro-actively forged anti-corruption alliances. Recognizing that the Philippine judicial system and procedures are susceptible to externalities such as quasi-judicial bodies, law enforcement, investigative and prosecutorial systems of the Department of Justice and the Philippine National Police, the Supreme Court launched the Action Program for Judicial Reform to improve judicial processes, decongest courts, and minimize their vulnerability to corruption.

On the whole, it can be said that joint action is a significant force in maintaining rule of law and in deterring wrongdoing. Coordination programs serve as an ex-ante (preventive) rather than an ex-post (curative) mechanism to curb corruption. There is no direct mode of sanction execution since the focus of the program is network building among civil society groups and other divisions of the government.

19.3.2 Limiting Monopoly and Discretion to Constrain Abuse of Power

A professional civil service and an executive restrained in its exercise of appointing power are preconditions to the establishment of a corruption-free bureaucracy. Compared to their Asian counterparts, Philippine presidents have the greatest depth of political appointments, totaling 11,000 positions, going all the way from cabinet secretaries down to assistant bureau directors. The practice of offering “courtesy resignations” with changes of administration, according to an ADB report, also creates the potential for high turnover of senior officials and opens the door all the more to the possibility of filling those positions with political protégés.

On its assumption to office, the Arroyo administration vowed to respect the career executive service. But its track record shows otherwise, as scores of career civil servants have been placed on floating status, or have been relieved of their posts and replaced by non-eligibles. Most executive departments have excess undersecretary and assistant secretary positions. The Philippine Center for Investigative Journalism reported in 2006 that of the 2583 career executive positions appointed by President Arroyo, 42% were filled by non-eligibles (Chua, 2006).

Guidance, in this case, requires leadership of a different kind—resistance and non-acquiescence. The CSC took steps to put the brakes on the propensity of the executive department to disregard rules on meritocracy, by disallowing career appointments not based on eligibility, prohibiting

© 2011 by Taylor and Francis Group, LLC

Public Ethics and Corruption in the Philippines 389

non-career officials occupying career positions from exercising control or supervision over regular personnel of an agency, and conferring only temporary appointment (not exceeding 1 year) to presidential appointees lacking the appropriate eligibility requirement. That put the CSC on a head-on collision with the Office of the President. It remains to be seen whether this act of political will shown by the CSC can be sustained in the long run.

19.3.3Participatory Appraisal that Increases Agency Resistance against Misconduct

In many government agencies, too few civil servants have the training and enterprise to prevent corruption from taking place. Yet the bureaucracy provides an excellent training ground for civil servants to learn how to shore up safeguards against wrongdoings. One such participatory program that increases the likelihood of avoiding ethically unacceptable situations and complements technical and organizational help is the integrity development review scheme, launched in 2004 by the Philippine government.

Integrity development review entails a systematic diagnosis of an agency’s vulnerability to corruption and the corruption resistance mechanisms in place to forestall wrongdoings. Developed by the Development Academy of the Philippines, this appraisal scheme has been conducted as a training program in as many as 20 government departments to equip employees with tools to plug their agencies’ vulnerabilities. Because its impact is long term, it will take a little while before concrete outcomes are known.

19.3.4Steps that Encourage Public Vigilance and the Growth of Civil Society Watchdogs

Successful anti-corruption programs always counted on broad-based involvement. Even selfinterested politicians, according to Boerner and Hainz (2006), can be compelled to implement anti-corruption policies if there is widespread political support for such measures. Persistent high corruption levels, in fact, suggest the absence of public support.

The Aquino government is credited with encouraging the emergence of civil society activism in the Philippines. Forming watchdog organizations that monitor government actions, publicize transgressions, and press for reforms has become a leitmotiv of anti-corruption discourses. Freedom of expression and association has shored up non-governmental organization (NGO) involvement. The impeachment of President Estrada in 2001, for instance, was triggered by a damning investigative report of the Philippine Center for Investigative Journalism of his lifestyle and undeclared assets. The atmosphere has led to a franker discussion and stronger proposals for reform.

From watchdog work in monitoring specific government activities (procurement, revenue collection, presidential appointments, “big-ticket” contracting, and elections) to fact-finding to draw attention to and deepen understanding of the problem and its debilitating effect on society (SWS surveys, PCIJ investigative reports), civil society involvement in anti-corruption went into high gear when it set up its own anti-corruption organization (the Transparency and Accountability Network) and formed broad coalitions in the implementation of anti-corruption measures.

Civil society organizations, free of the governmental obligation of balancing interests, can cover more grounds in the anti-corruption fight. Acting as both advocates of change and pressure points, they can inform, probe, lobby, protest, and provide technical assistance. Yet, as Azfar (2008) cautions, it would serve NGOs well to keep their activism and service delivery wings apart;

© 2011 by Taylor and Francis Group, LLC

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