A Dramatic Year for Anti-Corruption in the Philippines

The Philippines have long been plagued by endemic corruption, including graft, bribery, and extortion.  A lacking and complex regulatory system and low institutional oversight to enforce existing regulations contribute to an environment of widespread corruption.  Insufficient campaign finance laws and lobbying regulations, bureaucratic loopholes, and a judiciary perceived as inefficient and incompetent combine to give the Philippines a reputation as a hot spot for political corruption.

It is into this environment that President Benigno Aquino III was inaugurated as the Philippines’ 15th President on June 30, 2010.  Aquino vowed to crack down on all types of corruption, with a campaign slogan of “If there’s no corruption, there’s no poverty.”   To this end, Aquino has already passed a new law protecting whistleblowers and plans to increase transparency and accountability through the Cabinet Cluster on Good Governance and Anti-Corruption and a new e-governance initiative.  In response to this progress, Moody’s has upgraded the Philippines’ credit-rating outlook to “positive,” bringing it closer to an investment-grade ranking.

This past year in particular has been a dramatic one in the fight against corruption.  The first notable event was the arrest of Former President Gloria Macapagal-Arroyo.  Arroyo, President Aquino’s predecessor, was widely seen as a symbol of political corruption in the Philippines. In February 2011, the Commission on Elections indicted her for rigging an election for a candidate back in 2007. The next month, she was charged along with her husband with making a corrupt contract with a Chinese telecommunications company.  Arroyo plead not guilty to both.  But when she attempted to leave the country for medical treatment last November, she was promptly arrested and detained at the hospital.  Though she still faces life imprisonment if convicted, on July 25th she was released on bailafter the courts found the evidence to keep her detained insufficient. This is seen as a setback for President Aquino, who made bringing her to justice a national priority upon taking office.

But the drama didn’t end there.  Less than a month after Arroyo’s arrest, Chief Justice of the Supreme Court Renato C. Corona was impeached and put on trial for allegedly violating the Constitution (by not disclosing all of his financial assets) and for a “betrayal of public trust.” Corona was appointed by President Arroyo and was seen as a major figure in her corrupt regime.  In fact, her arrest was in direct violation of Justice Corona’s decision to let her leave the country.  President Aquino branded Corona as “[embodying] what ails the judiciary.” Corona, for his part, has claimed his trial is political revenge for an earlier ruling requiring a sugar plantation owned by the Aquino family to be redistributed to local farmers.  He has also spoken out against Arroyo’s arrest as unconstitutional and politically motivated.  When testifying, Corona agreed to release his financial information, revealing millions of dollars worth of previously undisclosed money.  In a Senate vote he was convicted 20 to 3. His conviction is seen as a major victory for the Aquino administration and has prompted many other politicians to disclose their assets voluntarily.

The third anti-corruption drama of the year was the threat issued by the Financial Action Task Force of the OECD to downgrade the Philippines to its “blacklist” if proper financial reforms were not implemented by June 21st. Now under pressure from both President Aquino and the FATF, the legislature drafted and passed two laws, which were signed by the President on June 18th, three days before the deadline.

The bills were called the Act to Further Strengthen Money Laundering Laws and the Terrorism Financing Prevention and Suppression Act.  The first law expands the ability of the Bureau of Internal Revenue and the Anti-Money Laundering Council to investigate financial records without prior consent, the second focuses more on freezing the assets of suspected terrorists.  These laws hope to put an end to the Philippines’ reputation as a safe haven for financing illicit activities, especially terrorism.  Terrorism in the Philippines is a major challenge, with multiple insurgencies operating in its territory (one of which is funded by jihadists in the Middle East). Although the third reform, which would have expanded the number of non-bank entities subject to inspection, was not passed, the FATF was satisfied and upgraded them to the “grey list.”  The FATF was established in 1989 by the G7 as a special commission with the task of combating international financial crime.

Two years into President Aquino’s term, it appears that progress is being made, though much remains yet to be done.  Whether or not the legal battles with Arroyo and Corona are politically motivated, punishing a few high profile corrupt politicians will do little to solve the problem of endemic corruption in the country. The Partnership for Transparency Fund has given grants to several Filipino civil society organizations (CSOs) to help them increase local transparency and accountability.  Some examples of funded projects include an effort to get young people involved in anti-corruption through monitoring the money allocated for the Youth Council, an organization bringing transparency-focused CSOs into procurement projects, and a watchdog group monitoring corruption in the health and education sectors. These local projects aim to tackle the problem at the grassroots level, where much of the corruption is out of reach of the central government.  Though combating corruption in the Philippines is a daunting task indeed, when citizens resolve to mobilize for greater transparency, they give those participating in it nowhere to hide.