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employees and intrusive rules affect service delivery and show how corrupt environments impose costs on citizens. The program is still in its infancy, but it may yet strengthen the capability of the CSC to spot frontline areas that are prone to corruption.

Note that many of the reforms discussed above, which require long-term nurturing, are just beginning—it takes time for new efforts to take hold—or are overshadowed by serious stresses and imbalances, which include bureaucratic standoff (such as the Department of Justice reversing Department of Finance cases against tax evaders), weak agency response (to abuse of executive power in appointing non-career eligibles), and compromises in the reform effort itself (such as legislative concessions on the anti-money laundering law). This explains largely why the Philippines has a “low” ranking in Figure 19.1. In all, the downside risks of unsustained effort outweigh the upside gains. The country’s low score across the years, rather than its position at this time, indicates the direction it is taking, suggesting the enormous effort that needs to be made to lift the country to a higher ethical status.

19.5Creating Virtuous Circles in Public Ethics and Accountability

Being a soft state, the Philippines has few effective resources to do battle. Hence, it makes sense to concentrate resources on strategies that would provide the impetus for changes along a broad front. Capitalizing on a few but high-impact initiatives can be critical when resources are limited.

The entrenched nature of corruption requires breakthroughs, but they have to be cost-effective to give the campaign more dividends. The lock opener is not a singular capacity to pursue reforms all at once. Some institutional reforms that are already underway add up to maintaining constructive conditions in the war against malfeasance: pay decompression in the Philippine civil service, stricter enforcement of the new procurement law, wider coordination among the judicial and quasi-judicial bodies (notably, the Philippine high courts, the Department of Justice, and the Office of the Solicitor-General), and furthering established partnerships with civil society (such as Bantay Lansangan, which is a joint government-NGO partnership monitoring corruption in infrastructure projects).

A key participatory strategy (e.g., civil society observers in the budgeting and bidding processes of government agencies) needs to be continued. Introducing greater transparency into political financing is an old battleground that can benefit from new initiatives, such as launching a coordinated drive for new legislation on campaign finance. Deeper decentralization through putting more teeth into the Local Government Code holds the key to preventing undue concentration of economic and political power in the central government, with all the rent-seeking practices that it implies. Because transparency depends crucially on freedom of press so that right and wrongdoings on the part of the government can be publicized, a freedom of information law ought to be enacted by Congress.

It may be helpful to lift the level of compliance by encouraging agencies to meet intermediate, rather than absolute, standards (Dee, 2006). An ethical bar that is raised too high is politically a non-starter. In this regard, it is more important to generate transitional mechanisms that can point the way toward higher reform. For instance, think-tanks like the Development Academy of the Philippines have developed and adapted middle-level anti-corruption tools like the report card surveys, corruption vulnerability assessment, integrity development review, and citizen’s charters—all powerful impetus for developing performance benchmarks, and providing a breeding ground of change from a control-oriented framework to one of quality service delivery and accountability.

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Better risk analysis of anti-corruption programs may yield superior outcomes. It may not make much sense to target sure winners, they would have succeeded anyway (e.g., COA did not need additional resources when it successfully implemented NGAS). On the other hand, it is a waste of resources to target “lemons” and “flavor of the month” projects as these are merely transient activities. Moral recovery programs (such as those being conducted in government offices) have very low impact in a society where corruption is endemic. They easily wear off unless they are part of a wider strategy to build social capital. What makes economic sense is to target projects with high social returns (such as enacting a new Philippine campaign finance law or amending the Local Government Code for deeper devolution). But projects should not be carried out simply on the basis of a pure cost/benefit analysis, which, as Rose-Ackerman (2004) indicates, is agnostic about who obtains the benefit and looks only at net total gains (a good example is the current sin tax law, which nets the government substantial revenue, but benefits a cigarette monopoly).

In the long run, dealing with the agency problem is clearly not enough. It is only the tip of the iceberg. Over the long haul, the need is to shift the battleground from “small wars” (principalagent problem like the Lateral Attrition Law, picking of “low-hanging fruits” like PASADA) to a “grand war” (state capture like the sin tax law). The existence of state capture requires rethinking the traditional advice of controlling corruption as if it were solely a problem within the bureaucracy (Kaufmann, 2003). There is a need to focus on the links between elective public officials and private sector through campaign fi nance (the successful prosecution of ex-President Joseph Estrada involved illegal campaign donations); links between appointive public officials and the private sector through regulation, policies, contracts, etc. (the recent World Bank debarment of seven fi rms and one individual for engaging in collusive practices involving Department of Public Works and Highways officials under a major bank-fi nanced roads project in the Philippines (World Bank, 2009)). Paradoxically, even limited reforms also set the stage for state capture (take for example the initial anti-money laundering law that set a very high threshold of PhP2 million for bank transactions involving illegally obtained money), thus enabling narrow interests to shape policies to their liking, in the end undermining public trust and weakening the impetus for further reform. The key, too, is to avoid strategic behavior (for instance, Department of Justice adverse rulings on RATE, if they are no longer exceptions to the rule, serve as “guarantees” that encourage moral hazard).

Corruption is endogenous since the regime itself is predatory to state capture (Charap and Harm, 2000). That implies the urgent need to put constraints on the state’s instruments of discretion on franchising, licensing, and policy making. Under the Philippine constitution, the chief executive has enormous leeway over big-ticket contracting. A good starting point is to devolve this power of discretion and ensure that big-ticket items are out of the reach of the few big players who hold concentrated authority. The key still is to decentralize power to independent regulatory agencies that can mediate different interests, as well as to ensure the presence of multiple veto points (independent courts such as the Sandigan Bayan, constitutional entities such as the Office of the Ombudsman, and other non-elected bodies that can “check” the acts of power wielders) that can prevent collusive arrangements (De Dios and Esfahani, 2001).

A serious anti-corruption campaign cannot be commanded from the outside, but needs committed leadership from within, correctly from the topmost levels of the state. While pressure for reform can come from below—indeed, this can effectively supply a broad social consensus—any effective program must be supported from the top. Yet any strategy that relies only on high-level leadership will be vulnerable to the many uncertainties of the political process. Marshalling credible commitment should cover key state institutions and organizations within civil society. A “convergence” of strong players would make for a breakthrough performance against corruption—the

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CSC attempting to reduce the politicization of the career bureaucracy, the Supreme Court putting restraint on executive power, NGOs acting as watchdogs against abuse of power. A broad-based leadership makes the difference in devising means for sustaining ends.

While valuable windows of opportunity may arise on specific occasions, it is necessary to manage expectations and emphasize the long-term character of reform (it is impossible to completely wipe out corruption), while still taking swift, decisive actions (such as putting the big time corruptors in jail). The Philippine government must assign budget resources as well as capable managers to execute a targeted and programmatic anti-corruption campaign. Filipino civil society organizations can only give so much of their own. Business associations like the powerful Makati Business Club and influential NGOs like the Transparency and Accountability Network can help identify priorities and can monitor results, but they cannot deploy the political will and resources of the state that are eventually needed to create transparent and accountable institutions. Taken together, the building blocks of effective anti-corruption policies appear overwhelming, as they entail significant changes in the nexus of relationships within government and among government, the private sector and civil society, and in the current policy practices of government. The challenge ahead is awesome and the task will not be easy.

19.6 Conclusion

Corruption in the Philippines is a failure of public ethics. To isolate the underlying factors influencing the “right” behavior in the Philippine public service, an ethical infrastructure must be put in place. Its touchstones—control, guidance, and management—can keep back undesirable acts and provide the correct incentives for professional performance. Control mechanisms include laws that break up the alignment of predatory forces in order to minimize state capture, executive measures that optimize deterrence, and initiatives that close regulatory gaps. With guidance, values and standards come to mind, expressed in integrity development reviews, credible commitment from public administrators and political leaders, constraints on abuse of power, and steps that encourage public vigilance and the growth of civil society watchdogs. Management elements are found in the organizational and administrative apparatus—rewards and incentives, and productivity and efficiency aspects.

Taken together, these building blocks entail significant changes in the nexus of relationships within government and among government, the private sector and civil society, and in the current policy practices of government. If they are in harmony with both the limits and possibilities of vulnerable governance in the Philippines, they are likely to draw the government, the private sector, and civil society into new acts and new types of engagement, thus generating a virtuous circle of reforms.

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