The Crime had Victims

There is not enough money in the national treasury to properly fund critical social programs. Programs which, if funded, actually save a few people from death. Not theoretical death...actual "no more breathing", "buried in the cold hard ground" death. And those programs save a lot more people from suffering in general. The convicted former president stole some of the money from that already inadequate supply. The fact that he was convicted means that you no longer have to say "alleged" when talking about the crimes. He really did steal public funds.

If you dug deep enough, how many people would you find that actually died, or at least experienced greater suffering, as a result of the theft? And how many of those same people, or their survivors, still see Estrada as their hero, totally unaware of how his theft caused their suffering?

There are many "victimless" crimes in the world. This was not one of them.

Corruption: The Roots Go Deep

You know, the newspaper is one of the best places to look if one really wants to understand just how deep this country's problems really go. And I don't mean the lead stories on the front page. I mean the little single-column articles about petty crimes and minor issues. This is where we can see all the flaws in the system, which unfortunately, don't seem to attract much attention. It's also where we see just how willing everyone seems to be to simply accept corruption as "just the way it is".

In the 30 May 05 edition of the Philippine Star there was an article entitled "Manila cops cry foul over illegal salary deductions". According to the story, the Comptroller for a Police District in Metro Manila routinely withholds a small amount (P30-40) from each paycheck or other monetary benefit received by each policeman. The reporter goes on to say that the deputy chief of the Comptroller Section admitted that "the deductions were meant as grease money to City Hall personnel to expedite the release of their monetary benefits". The deputy chief added that "it would take time before the police benefits are released from the City Hall unless the personnel there are treated to some perks".

I'm not trying to single out this particular person, but those statements show just how deeply entangled corruption is in Philippine society. And just how willing we are to accept it as normal. First of all, there is absolutely no form of legitimate administrative delay that can be overcome by paying "grease money". The only two possible ways that money can expedite an administrative process is (1) to skip a required step, or (2) if the process is being intentionally delayed for the purpose of encouraging payment. In both cases, a violation is being committed, if not an outright crime. And for the Philippine National Police, of all agencies, to accept this without question, really shows how far we have to go.

Things will never change in this country until people start taking responsibility. Crimes must be reported, even if you think nothing will happen. In this case, the unreasonable delays should be reported to higher levels in the PNP chain of command, and then across to the city government. It may sound naiive, but it has to start somewhere. Corruption is destroying this country, and the greatest threat comes from the thousands of relatively minor acts like this one, occurring every day in offices all over the country.

Corruption: Taking Responsibility

Corporate Responsibility

In its World Development Report 2005, the World Bank reported that more than half the companies in the Philippines had to bribe regulators just to get things done. In this context, "getting things done" refers to routine administrative processes like getting utilities connected, passing inspections, or securing permits from local government offices.

In survey after survey, both local and foreign companies continue to describe corruption as a serious roadblock to doing business in the Philippines. They also report that bribes consume a significant percentage of their total sales. Everyone seems happy to respond to these surveys, apparently thinking that if we talk about it enough maybe something will change. But what do the individual companies actually do about the the problem?

While most companies reject corruption in principle, very few have posted regulations that specifically prohibit corrupt acts. Many publish mission statements or company policies which address the issue, but these are rarely anything more than broad statements of philosophy. While demands for large under-the-table payoffs probably always get attention from senior executives, I doubt whether most CEO's are aware of the myriad of smaller demands that are handled routinely by their staff. Sometimes this is because they don't see, and sometimes because they don't want to see.

In day-to-day operations, company clerks and accountants routinely pay "fees", "consideration", and "for the boys" money to various local government offices or officials, to facilitate company needs. These payments are almost never demanded, but they are always expected, and junior company clerks often find themselves caught in the middle. A government official implies that a "fee" is required, and the employee knows that management needs the service in question. The employee knows the fee is not official, but also knows that the company tolerates the practice as a necessary evil. In most cases, the employee doesn't even feel the need to ask for guidance. It's just SOP.

This system has evolved into something way beyond extortion. Threats are almost never issued, or even implied. In fact, the whole process is more or less automatic. A new employee, unaware of the need for payment, may even be reminded by his co-workers, lest he forget to appease the official and risk some unspoken retribution against the company. A new accountant may ask "how much?", but never "why?" It's just SOP.

Without internal guidelines specifically prohibiting these acts, the employees that actually make a company run will continue to support corrupt behavior, even when it contradicts the company's declared anti-corruption "philosophy". Companies serious about resisting corruption must make their policy crystal-clear to employees, by issuing a regulation strictly prohibiting these payments. Employees need this clarity to give them the confidence to resist the overtures of corrupt city officials, and there should be no mixed signals from the top. By "mixed signals" I mean the company must not continue to unofficially tolerate the practice while posting a regulation that prohibits it. In that case, the safest thing for the employee to do is to quietly keep playing the game. All we've accomplished then is a little more paperwork.

The wording of an anti-corruption regulation is really pretty simple, and should not be hard for any law-abiding company to adopt:

· "It is prohibited for any company employee to make any payment to any government official or office, except published fees as prescribed by law."

· "It is prohibited to make any payment to any government official or office in cash."

· "All checks issued to any government office must be made payable to the institution that provided service. No check for such services may be issued in the name of any individual."

· "No payment may be made to any government office unless an official receipt is issued."

Any company can implement this regulation, which is really just a reinforcement of its commitment to obey the law. Obviously though, a single company making a lone stand may find itself on the losing end against corrupt government officials. Services may be refused or delayed, inspections may be failed, or permits denied. Corrupt officials hold considerable power.

But there is also strength in numbers, and a unified front can succeed where a lone resister could not. Business associations such as the Makati Business Club and the various Chambers of Commerce are perfect vehicles for coordinating simultaneous implementation among their members. The boycott aspect is a "make or break" element, and if enough companies suddenly start refusing to go along with the demand for under-the-table payments, the system will be forced to change.

As an odd kind of example, consider what has happened with airline hijackings since 9/11. After the heroic passenger uprising aboard Flight 93, and a few other celebrated incidents, we seem to have discovered that, if passengers simply refuse to cooperate, hijackers lose their power to take control. In the 3 years since that tragedy, I don't believe there has been a major hijacking anywhere in the world. The power of group resistance.

Finally, at the same time as these companies jointly implement the anti-corruption regulation, it would be helpful to hear a clear and public statement of support from local mayors and city councils. In many cases, bribes and extortion are wrapped within seemingly harmless acts of appreciation, tips, and gift-giving, and are often seen by all concerned as "just the way we do things". A public statement from a government official, worded as clearly as the regulation I just described, will carry weight even if it comes from a corrupt bureaucrat who has no wish to see the current system change.

Corporate policies and public statements are certainly not the cure-all for the kind of corruption described by the World Bank report, but they will definitely be a huge step in the right direction. Any problem must be defined before it can be attacked, and then the act must be specifically prohibited before it can be realistically defeated.

Reporting Corruption

As I said at the beginning, everybody seems delighted to answer surveys about corruption, and to complain about how much it hurts business, but there is a question I haven't yet seen on any survey: How many of the companies who complained of extortion in a survey actually reported the experience to the authorities?

Over the years, I have talked with many local and foreign businessmen in the Philippines, and almost every one has related some experience with under-the-table payoffs. Most were low-level payments to facilitate permits and the like, and a few talked about extortion at much higher levels, but for all the coffee-shop complaining, I have yet to meet anyone who has filed a report or an official complaint about extortion. In fairness, I do occasionally see newspaper reports of these complaints, but they represent a drop in the bucket compared to the "half the companies in the Philippines" mentioned in the surveys. Yes it's true that government doesn't do a very good job of telling people where or how to report corruption, and it's certainly true that exposing a demand for extortion may jeopardize the project, but it's also true that each of these companies have a legal responsibility to report criminal acts. The situation is infinitely more complicated than that, but it is important to understand that blind surveys do not trigger investigations or lead to arrests. Government must make a greater effort to educate individuals and businesses about their options for reporting corruption, and must instill confidence by demonstrating that complaints will be acted upon quickly. But the environment will not change unless official complaints are filed with the authorities.

In my view, this is the real meaning of "Corporate Responsibility".

Petty Cash Funds: Discretion Run Wild

Government petty cash funds are a perfect example of uncontrolled discretion. Not in the fact that they exist, but in they way they are managed. By definition, "petty cash" is a small amount of money intended for minor, unexpected expenses. The office printer suddenly runs out of ink, and there is no more in the supply cabinet. Sometimes these things happen, no matter how carefully a budget is planned. So the office manager issues a few hundred pesos from petty cash, properly logged of course, and someone runs to the store. After making the purchase he turns in the receipt, and that money is now accounted for. This is how petty cash works in most private businesses, and even in many governments. And no matter how big the company, the amount of money in any petty cash fund would never be more than a few thousand pesos at one time. There should not be many unexpected expenses, and those that do arise should be small. More expensive needs, even for emergencies, must still go through the formal purchase request process. The idea is that managers should plan for their needs with a carefully thought out budget.

In the Philippines however, many government offices maintain very large petty cash accounts, sometimes on the scale of several hundred thousand pesos. Expenditures from the fund are often documented by a certification signed by the official, rather than with receipts. There is no proof, other than the official's word, as to how the money was spent. Once again we see the "shield of honor" being invoked to ward off any accusations of corruption. But while we really do wish we could accept the word of those "honorable" officials, let's not forget the 1/5 of the national budget that "evaporates" every year. Misuse of petty cash funds is one of the cracks through which that money disappears.

This situation is simply not acceptable. To say that an office needs to keep 200,000 pesos available for emergency purchases is nothing but an excuse for poor fiscal planning. And not requiring a receipt for every expenditure is an almost overwhelming invitation for corruption. I suspect that millions of pesos, at the very least, are lost and stolen every year through the combined petty cash funds of the Philippine Government, high and low. This is one of the incredibly simple steps that government can take to immediately gain control over its money. Again, strictly regulating the size and use of petty cash funds, and requiring official receipts for every purchase, should not be seen as a sign of mistrust. Every private company does it. It's just good accounting.

Discretion: An Invitation To Corruption

One of the main causes of corruption is the excessive degree of discretion afforded to government officials, coupled with a nearly non-existent level of true accountability. In simple terms, "discretion" means having the authority to decide how money is spent. Some countries limit discretion by implementing very detailed budgets, and extremely clear regulations on how funds may be used. The more regulatory control a government exercises over its funds, the less corruption it experiences. "Accountability" is synonymous with "responsibility". It simply means that a government official who has control over a certain fund is responsible for either properly spending that money or returning it to the National Treasury. The word "accountability" also carries an implied consequence for failure. If a government official fails to properly control money for which he is accountable, there must be a consequence. Corruption-watchers use an embarrassingly simple equation to describe this concept:

DISCRETION - ACCOUNTABILITY = CORRUPTION

The beauty of this formula lies in the fact that it not only describes the problem, but also gives the solution:

LESS DISCRETION + MORE ACCOUNTABILITY = LESS CORRUPTION

The answer to the problem of corruption, in the Philippines or any other country, is simply a matter of reducing the discretion that government officials have to spend money, assess fees, and award contracts, and increasing accountability by holding those officials responsible for every peso under their control. There are basic procedures, used by governments and private businesses around the world, that force people to account for the money they control. Simple things, like requiring a receipt for every purchase, or tightly controlling cash advances. Countries that practice this sort of fiscal accountability do not experience the level of corruption seen in the Philippines. But enforcing these procedures requires challenging the assertion that government officials are inherently honest and that their word is the only verification necessary. This philosophy has been the shield behind which many dishonorable people have taken refuge over the years.

Because it is such a powerful force in daily interactions, and because it often overrides written procedure, the "shield of honor" serves to effectively cancel out any effort to enforce accountability. This is part of the self-sustaining nature of corruption in the Philippines. Any leader who tries to challenge the shield of honor is said to be lacking in delicadeza, and thus is considered arrogant and dishonorable himself.

This brings us back to something I said previously -- the phrase "political will", that is tossed around so often as both an excuse and an accusation, really means nothing more than "just do it". Any government official who says "I can't control corruption in my department" is actually saying "I'm not willing to do what is necessary to control it". No one has to wait for a new law to be passed before they can start fighting corruption in their own area of responsibility. Any government official, at any level, can implement a local policy requiring his people to submit receipts. This is what I mean by "just do it." And while we are on the subject of "willing", it must be clearly understood that it is absolutely not possible for a government official to spend money illegally or to award a contract in violation of government guidelines unless someone at a higher level allows it, either by specific action or by intentional inaction. That decision-making power, free from oversight from above, or in collusion with those above, is the discretion I am referring to.

When we talk about discretion we're not only describing one person's ability to make decisions without supervisory approval or oversight. We're also talking about decision-making groups that create the illusion of a working checks and balances system. Such a group might include only two or three people, such as a taxpayer, tax-collector, and the auditor who checks the work, or it might include an entire city council. It's even possible that a decision-making group might include the entire chain of a national government department, as well as the auditors from a completely separate agency. All it really takes is an agreement to work together in committing a corrupt act.

Whenever government officials are accused of corruption, they often respond by saying that they could not possibly have done anything illegal since their actions were approved at various levels, and that checks and balances within the system would have detected any irregularities. Government itself frequently makes this same assertion, in an effort to deflect arguments that it is not effective in controlling corruption. In reality, if all members of a decision-making group are in collusion, corruption is not only easy, it is also nearly risk-free. And in an environment where corruption brings very little risk and very high reward, coupled with a general belief that there is really nothing wrong with it, it becomes very easy to co-opt the entire group. This is a direct result of the informal way that government operates, as I described before. One of the reasons that procedures and regulations exist is to prevent just this kind of problem.

Of course, some discretion will always be necessary, to allow government to respond to situational changes, but for now that flexibility is far less important than the need to control corruption. All government processes can be charted to determine where discretion is necessary, and where it should be prohibited. This should not be seen as an indication of mistrust. It is simple accountability. Anyone entrusted with the responsibility of handling someone else's money should be able to accept this, whether he is a clerk or a congressman.

Cashless Operations: Part II

In a previous article I discussed the idea of requiring all government transactions to be conducted by check or bank deposit, as a "corruption-proofing" measure. Well, I have a little more to say on the subject.

Government is currently involved in an all out drive to raise new revenue through new taxes. At first glance that doesn't seem like a bad idea. But additional revenue simply won't make any difference in solving this country's problems, and I'll tell you why. The National Treasury "bucket" is full of holes. But these are no ordinary holes. The amount of money that leaks out through these holes, meaning the amount stolen through graft and corruption, is not a fixed number like other expenses. The amount stolen is actually always a percentage of whatever is available. This means that no matter how much more we collect, more will be stolen. And the leakage is not small. The Philippine Center for Investigative Journalism is reporting today that up to 70% of local health funds are stolen by corrupt government officials. Not 5% or even 20% like the Mafia might take, but 70%! It's a wonder there is any money left after everyone gets their cut.

This tells us that there is very little, if any, control over the handling of government money. Sure, we have a whole book full of rules and regulations, but they are simply not enforced. The Finance secretary just reported that government will be filing new cases against corrupt BIR and Customs officials each week. But filing cases depends on catching those people. We'll certainly catch some, and it's important to prosecute them quickly, but those will really only be a drop in the bucket. The system is just too well entrenched, and too many people are involved, to be stopped by a few arrests. What we really have to do is gain physical control over the money itself. We may not be able to force people to be honest, but it is possible to make it very hard for them to hide the money they steal.

The way to do that, as I said before, is simply to STOP USING CASH! One of the suppliers of medicines to a local government, quoted in the PCIJ report, said it very clearly. "Mayors prefer cash, since checks leave a trail." Well, there you go! The bad guys avoid checks like a thief avoids the light. So why don't we shine a little light on the money trail and see where it leads?

Prohibiting the use of cash is one of the easiest moves government can make, and the very minor administrative costs would immediately be offset by the incredible gains in financial control. I suspect that the Department of Finance can probably implement such a policy without need for any new laws. Just advise all government units, at all levels, that from now on, funds will only be disbursed through bank transfers to each unit's official bank account. And then advise each of those units that the only way funds may be disbursed is by check. In fact, any government unit or office can already implement such a procedure within its own jurisdiction. The Armed Forces could do it, a city government could do it...we don't have to wait to be told.

This procedure certainly won't stop corruption, but it will definitely make it harder to get away with it. As a matter of fact, if we actually enforce it, we might even be able to reverse the numbers on corruption pretty quickly. How about 30% stolen and 70% actually used to buy medicines and health care? Not the end of the fight, but a definite improvement. And I believe it's very, very possible.

New Emporers In The Same Old Clothes?

Since I started writing this blog (only recently, I admit) I've tried hard to avoid making purely negative comments without offering at least some small suggestion for improvement. But today I saw a line in the newspaper, for which I can offer no advice. Just a sad observation. The paper was the Philippine Daily Inquirer, and the article was entitled "Filipino ballet star returns home to culture shock". The article itself is not important. The line that got my attention though, says:

"Marcos, whose regime was marked by massive corruption, was deposed in 1986 following a popular revolt. But successive presidents have failed to solve the country's problems of huge poverty and a gaping rich-poor chasm."

You know, I'm just a poor foreigner who may not really understand the country as well as some, but I have to ask why we continue to use the corruption label to distinguish any one administration from another. Marcos was still president when I first arrived in this country, and the truth is, I don't see any difference today at all. Sure, the thefts may be a little more sophisticated nowadays, but I don't think they are any less common.

And by the way, it's also not accurate to separate the issue of corruption from the issues of poverty and the "rich-poor chasm". The country actually has plenty of money. Poverty and the Grand Canyon which divides the rich and the poor are the direct result of massive corruption. Money, which should be used for building roads and schools and social programs for the whole country, is instead used to buy mansions and cars and vacations abroad for a select few.

Maybe we should find a new label to describe that sad chapter of Philippine history. Maybe we should call it the "stayed in power for 20 years without benefit of an election" regime. But it certainly doesn't make sense to single that administration out as the only "corruption regime".

Cashless Operations: An Anti-Corruption Strategy

Government collects money for a variety of purposes, including tax and customs payments, fees for services, and fines and penalties for various violations. In reality though, a very large part of that money never makes it to the National Treasury. Sometimes the amount received is intentionally misdeclared, while in other cases money collected by a government official is not reported at all. In addition, money that is not part of the official payment is often given to expedite the service, bypass red tape, or to reduce the total amount owed. This "under the table" payment, of course, goes straight into the collector's pocket.

Many of these payments to government are made in cash. But despite official receipts and documentation, only two people really know how much was actually collected -- the citizen who made the payment and the government employee who received it. Even with an audit, it is difficult to verify that the amount declared on the receipt is the amount which actually changed hands. If a citizen pays the tax-collector a 30,000 peso bribe to reduce his overall income tax by 70,000, it will most likely not be discovered. If a traffic violator pays 200 pesos to a policeman to avoid a 2,000 peso fine, it will definitely not be discovered. This situation exists because payments are made in cash, and because that cash is given directly to individual government employees.

Government also makes many payments in cash, often in very large amounts. Supplies are purchased, bills are paid, and disbursements are made with cash in envelopes, bags, and briefcases. There is simply no way to track that cash as it moves from one person to another, and in some cases it may not be possible to verify that it was even spent at all. The further down we go on the government ladder, the more common this becomes. The widespread use of cash for government transactions openly invites corruption, and effectively defeats any accountability measures that government could impose. It is therefore critical that we take government offices out of the business of handling cash. The best way to do that is simply to prohibit the use of cash for any government transaction, paid or received.

As an example, take a look at the visa offices at some foreign embassies in Manila. Before their appointment, visa applicants are advised to visit any local bank and pay a fixed amount to a specified account. The bank doesn't need any special forms or equipment to do this. It just takes a straight forward deposit. The applicant then brings the deposit slip to the Embassy and presents it as proof that payment was made. There is no question about how much was paid, and it is not possible for anyone at the embassy to divert the funds. It is still possible for bribery or extortion to occur, but it is now much easier to detect and control. Most payments to government could easily be handled the same way.

Along with direct bank deposits, checks are another form of cashless transaction that can prevent corruption, if they are properly controlled. Checks have a built-in tracking system that can almost guarantee accountability. Every check must be made payable to an official government office, at the highest level possible. For example, a check to pay for a fire safety seminar should be written to the Bureau of Fire Protection rather than to the local Fire Marshal. Payment for a building permit should be made out to the "City of..." rather than to the City Engineer. Documentation prepared by the office that performed the service will record the fact that the fee was paid for a service it provided. Funds can then flow back down from the Treasury, if necessary, to the responsible office. The idea is to send each payment straight to the National Treasury before anyone has a chance to divert it. Absolutely no checks paid to government may be made out in the name or title of an individual. All checks issued to government must be "For Deposit Only" even if they are not marked as such. Encashing a check written to any government office must become a criminal offense, for which both the check-holder and the bank can be held liable. Banks can easily enforce these procedures.

Even the more complicated fees, which require computation and adjustment, can be calculated by the appropriate office and then paid at the bank or by check (again made out to the government rather than to an individual). The important thing is to separate the one who computes the fee from the one who collects it.

Paying taxes by bank deposit or by check is already an option in the Philippines, so let's just take it one step further and make it mandatory. Just compute the tax owed, the same way you do now, and then march off to any local bank to make the deposit. Then attach a copy of the deposit slip to your Income Tax Return. The only people inconvenienced will be the cheaters. And every citizen can be guaranteed that not one peso of his payment will ever find its way into a tax collector's pocket.

This will not prevent connivance between the tax collector and the taxpayer to reduce the amount owed, but it will guarantee that all official payments are deposited entirely into the Treasury. Other measures, which I will discuss later, will address the connivance issue.

Now let's look at payments made by government offices. Except for small petty-cash purchases, every one of those payments must also be issued in the form of a check. Government checks must always be made payable to a person or company by name, never "Pay to Cash". Payment to a company must always be endorsed to the name of the company, never to an individual. All government-issued checks must also be "For Deposit Only". This adds one more check-and-balance layer to the process, making it possible to trace the disbursement of government funds all the way into a registered bank account. The No Cash rule must be required all the way down to the Barangay level. And it must apply in all parts of the country. Every Barangay can open an official checking account. The banks will be more than happy to assist.

The Armed Forces must also implement the No Cash policy across the board, with the possible exception of units in the field. In this case, "in the field" means in areas where no banking facilities exist, and there are actually very few of those areas in the country. Every military post has access to a bank through which it can conduct its financial business. And except in the remote jungle, everyone that the military does business with can deposit a government check with very little difficulty. For salary payments, mandatory direct-deposit payroll accounts must be set up when a soldier enlists, eliminating the need for risky payroll shipments. Soldiers can get their money easily through any Automated Teller Machine in the country. There is no justifiable reason why the AFP cannot conduct almost all of its business by check and bank deposit.

Adopting these measures will not only slash corruption and theft, they will also greatly improve the public's confidence in government, and soon after, the confidence of foreign investors. That value alone will make it worth the effort.

Imposing the No Cash rule on government operations is a simple thing. Much more complicated, but just as necessary, will be to encourage the private sector to adopt the same policy. Compliance would have to be voluntary, but it should not be difficult to convince private companies once they have seen the benefits as demonstrated by government's example.

Corruption-proofing

Prohibiting the use of cash, and requiring all government transactions to be made by bank deposit or check will guarantee a dramatic reduction in the theft of government money almost overnight. Corruption will certainly still exist, but it will be much, much harder to get away with it, because it will be much harder for corrupt officials to physically get their hands on the money.

With cashless operations, there is simply no opportunity for money to be diverted. At the very least, there will be a traceable record of every check and every bank deposit. Transactions that are documented in bank records are transactions that can be taxed.

In addition to the direct benefits, cashless transactions will keep more hard currency in the banks, strengthening the nations banking system. It is a win-win situation. This is a perfect example of the way that a solution to one problem can contribute to the solution to another.

The Insurgency: A Realistic Strategy

The communist insurgency in the Philippines is one of the longest-running rebellions in the world, and volumes have been written to document it's thirty-five year existence. The rebellion took root in the desperation of an impoverished people, fueled by a government that failed and, more often, abused those people. The dictatorship that was newly emerging when the insurgency began is gone, but the corruption and mistreatment of the people by their own government continues. Make no mistake, government is an active contributor to the conditions that feed this rebellion. People live in poverty in many countries, including the United States, and still don't take up arms against their government. The outstanding difference, and the one that I believe leads to insurrection, is the fact that those other countries have working governments that make an honest effort to respond to the needs of their people, and do not try to take advantage of them at every opportunity.

The Philippine Government itself is not abusive, but more than a few individuals within government misuse their positions at the expense of the people. Government officials, especially in the outlying areas, operate as if they were feudal lords, controlling their lands with the power of life and death, taxes and fees, and unchecked authority. Renewing a license requires bribe money. Getting a permit to start a business or put up a building requires kickbacks to a host of open hands. Lodging a complaint about such things with the local police requires "filing fees" and "consideration" for the investigators. In some cases, the police themselves provide the muscle to back up corrupt officials. How does one survive in an environment like that? Who does one turn to, when the very government which is supposed to protect you is the one squeezing the life out of you? When the mechanisms that are supposed to prevent such abuses are themselves corrupted?

Rightly or wrongly, a segment of the population has chosen to take up arms against its own government in an effort to force change. That segment does not represent the majority, but it does voice the sentiments of a large part of the population. Traditionally, insurgencies arise because some citizens feel that their government is not responsive to the needs of the people. Typically born in the universities, violence appears as the next logical step, after dialogue and protest fail to trigger change. Students, passionate about their country and frustrated by their failure to bring about change through the participatory methods they have been taught, take to the countryside to force change through violence.

Insurgency is not a war fought over land or territory, or even political systems, but over needs. Needs for things like justice, human rights, and a man's ability to feed his family. In the Philippines, poverty and despair continue to feed the beast, driving new fighters to join the rebels every day. Some are no more than children, victims of inadequate education and the certain belief that life will never improve for them. They often join for the same reasons that city kids join gangs. The group offers a sense of strength, protection, and livelihood and asks only loyalty in return, at least in the beginning. And for the same reason that a poor mother can sometimes give her beloved child up for adoption, some parents would rather see their sons and daughters fighting with a group that will guarantee their welfare than to see them repeat the cycle of hopelessness they face in their own lives.

Even minor abuses, suffered repeatedly, are enough to convince many people that they must take their welfare into their own hands. Almost like a religion, the insurgency offers a solution. We are your army, they say. We are here to protect you and to improve your lives. Join us, support us, fight with us, and life will be better. For the desperately hopeless, it is an opiate that is very hard to resist. And almost by design, the government, through its failings and its abuses, drives people right into the welcoming arms of the insurgents. Most government social programs are so choked with bureaucracy, inadequate funding, and endless requirements as to be of only limited usefulness to the needy Filipino. The cost of government services is often greater than the value of the help they provide, and abuses by authorities cause irrepairable damage.

The poor don't particularly want a communist government. Nor do they want a shadow army roaming the countryside, forcibly collecting "revolutionary taxes" and dishing out justice with executions, bombings, and bus-burnings. What they do want is a government that responds to their needs. In India, an insurgency has been ongoing for many years. In a BBC News story some time ago, villagers were asked why they support the rebels, called Naxalites, rather than the government. The response from many people was simply "we see the Naxalites, we don't see the government". Similarly in the Philippines, the insurgents are often more reliable than the government, at least according to the popular view. I seldom hear people threatening to report a particular injustice to the police. Many people believe there is simply no use in doing that. And even if they did, they would likely have to pay for the service. But on several occasions I have heard people threaten to report a corrupt policeman or government official to the NPA. In one sentence, the fact that people feel a greater sense of support from the Communist New People's Army than from their own government is the very answer to the problem itself.

The Military Solution

While there is certainly a military aspect to the insurgency, the solution is most definitely not combat. If this was just a fight between two opposing armies, the outcome would have been decided long ago. But this war grew out of intolerable conditions created and then perpetuated by the government itself, through both its failings and the intentional abuses of its officials. Those conditions are the stated reason the insurgents are fighting in the first place, and they are undeniably the reason new recruits continue to enlist in the rebel army. Until the conditions change, the fighting will continue.

There is only one solution to a 35 year old war that is supported by citizens who feel that their own government is the enemy. And that solution is not to meet force with force. Insurgents in the Philippines often claim to control certain areas, but they are never talking about geographic territory. They are talking about hearts and minds. And the truth is, the government is doing most of the PR work for the rebels. Even the most uneducated farmer is smart enough to know that a mayor's job is not to enrich himself and his friends at the farmer's expense. People must see hope and opportunity. They must believe that if someone does wrong to them, they can find legitimate redress through their government, even if the violator is an official of that government. The people do not believe that now, and they do not have hope. This is why the fighting continues. Once these conditions are corrected, there will simply be no more support for rebellion. Once the people start to believe, and to actually see, that their government is there to support them, the insurgency will have lost its mass base, and it will simply wither away. The few factions or groups that continue armed activity after that will have lost their idealogical foundation and can be considered to be nothing more than criminals. Without the people's support to hide, feed, and fund them, they can be rounded up relatively quickly, assuming that law enforcement elements are up to the task.

Obviously, resources are limited and government cannot yet afford to provide every service to every citizen. That is not what the people are asking for. The people of this country simply want honest, fair treatment within the limits of the government's ability. And the people are not stupid. They can plainly see that a promise made or a law passed in Manila, that is blatantly ignored by a corrupt local government, is not working in their interest. The insurgency gains strength every time a local policeman demands a bribe, or a local official awards a contract to a company he himself secretly owns. Every time the military arrests a "sympathizer" from within the local population, it drives another wedge between the people and the government. Many more people than you would believe are "sympathetic". Not to the methods of the insurgents, but certainly to their ideals. Again, this is not a political war, despite the politics of those at the top. For Juan Dela Cruz, this is a fight for survival.

No, the answer to the insurgency is not military. The military has to be involved, because violence is involved. Laws must be enforced, and order must be maintained, and in many parts of the country the Armed Forces is the only entity up to the task, at least for now. It is critical though that all law enforcement functions be transferred to civilian authorities as quickly as possible, even in remote areas. The military is, and must remain, the fighting component but that must be the limit of their role in this war. Except during actual combat, all arrests must be made by civilian law enforcement authorities, supported by properly issued warrants. And even those captured in combat must be transferred to civilian control in a reasonably short time. The military will no doubt protest loudly, arguing that this will hinder their ability to conduct effective operations. But it is necessary to insert a layer of checks and balances to improve the military's image as protector of the people, and to prevent abuses, real or perceived. Keep in mind, these are not foreign prisoners of war. They are Filipino citizens who have broken the law. Military interrogators should continue to enjoy the same level of access to these prisoners as before, but the fact that they are under civilian control will greatly reinforce the public perception that they are being treated fairly, and in accordance with the law. In the big picture, the value of this measure will far outweigh any loss of operational effectiveness.

In a conflict of this nature, military action alone can never succeed in doing anything more than holding the line. Currently, the military situation between government and rebel forces is holding in a sort of tit-for-tat status. Rebel units initiate some sort of military action and government forces pursue, confident that they are protecting the people against unlawful violence. Government forces capture or kill insurgents, and the rebels retaliate, equally confident that they are protecting the people against an oppressive and abusive regime. Rebel numbers have dropped from their all-time high of more than 23,000 in the early 1980's, but they have also risen occasionally, in cycles that seem to correspond to the public's expectations and subsequent frustrations with government. This has been the status quo for years, and it only serves to reiterate the futility of a purely military response. If every last member of the New People's Army were wiped out today, the root causes of the insurgency would still exist, and a new rebel force would eventually arise. Read that sentence again, because it is at the heart of the matter:

If every last member of the New People's Army were wiped out today, the root causes of the insurgency would still exist, and a new rebel force would eventually arise.

Three and a half decades should certainly be long enough for anyone to see that meeting force with force is not the solution to this problem.

Negotiations

Despite government convictions to the contrary, negotiations with the insurgent leadership is also not the answer, although dialogue is certainly necessary. Think about this. The New People's Army has been fighting for 35 years, against five different administrations, and has seen very little improvement, if any, in the conditions that drove them to war in the first place. It is not logical to believe that they would simply give up the fight, on the basis of government promises to change. There is great value though, for the rebels, in long-term negotiations. Negotiations lend legitimacy to the insurgent leadership, at least in the eyes of the Filipino people. As long as government treats them as respected equals by meeting over the conference table, the leadership will continue to be seen as romantic and heroic figures to a great many Filipinos. In addition, as long as the two sides are talking, government forces will be restrained. Meanwhile, the people's dissatisfaction with government continues to fester. Time is the insurgent's ally, an idea expressed by their own strategy of "protracted war".

For those in the most senior positions, there is also the very real truth that they have nothing to gain, and everything to lose, by reaching a negotiated settlement. Jose Maria Sison is a powerful man, living a fine life on the donations of benefactors and the financial collections of the organization under him. If he were to negotiate and reach a settlement with the government, he would become at best an "also-ran", someone who "used to be somebody". At worst, he would spend years in prison as the sacrificial lamb so often demanded in situations like this. In truth, once government has won back the confidence and support of the public, and the insurgency has withered away, people like Sison will simply become irrelevant.

The NPA is not an army that is being dragged to war by its leaders. Nor can its actions necessarily be stopped by its leaders. We know this to be true by the various factions that have broken away over the years. This army is self-motivated, with individual fighters being driven by anger, frustration and desperation, along with a heavy dose of simple criminal greed. The leadership and the ideology give the movement structure and direction, but they do not drive the individual rebel soldier. Government's unresponsiveness and abuse provide that fuel quite nicely. Any settlement reached between the government and the insurgent leadership will certainly benefit the leaders, but will not resolve the underlying issues that drive a farmer's son to join the movement.

The only dialogue necessary, at least in the beginning, should be a constant public awareness campaign to convince the individual rebel soldiers, and of lesser importance, the leadership, that government is actually addressing the problems of the people. Those efforts, of course, will be wasted without widespread visible improvement throughout the country. All the other problems of this country, from poor leadership to corruption to poverty, are the fuel that feeds the movement. Once work begins in earnest to correct those problems, the insurgency will not need to be solved. It will just evaporate, having served its purpose. This should be the only subject of discussion with the rebels. And communication should be directed at the fighters themselves much more than with their leaders. A note of caution here -- Asking the rebel soldiers to "come down from the hills and then we will start fixing things" is simply the wrong message. The work must start first, with visible results, and then you can say "look what we have done so far. Come down and we will finish it together". This stategy will not only bring the fighters down from the hills, it will also win over the hearts and minds of the Filipino people, and dry up their support for the insurgency.

To succeed in this new approach, it is important to carefully rethink current strategy. Around the world, the standard tack in a counter-insurgency campaign is direct military confrontation. Now I am not a pacifist by any means. I am honorably retired after 20 years of service with the US Air Force, and I know that there are times when war is the only option. But I can plainly see, as can anyone who looks carefully, that all the money spent on ammunition, and all the lives lost, and all the property destroyed, has brought this country no closer to peace than when the rebellion began 35 years ago. Every bullet bought has cost a life, with very little ground gained.

This insurgency is nothing more than a symptom of much deeper problems. The solution therefore, is simple, and cost effective -- Treat the problem. The massive sum of money that government has poured into the military effort, and the total amount of "revolutionary taxes" collected by the insurgents over the last 35 years, could have easily paved all the farm-to-market roads in the country. It could have built schools, bought books, and provided health care for millions of citizens.

With that in mind, I suggest a simple but radical change in strategy. Over the years, many people have pointed out the need to focus attention on the nation's ills as the way to defeat the insurgency. Efforts have been made in that direction, but the money has never been there. It's being eaten up by a combat effort that the government incorrectly believes is the first step to solving the problem. The government's strategy of "clear, hold, consolidate, and develop" follows the traditional philosophy of first defeating the insurgency militarily, and then attacking the root causes. And by "development" I get the feeling that we are talking more about physical infrastructure than about cleaning up corrupt local governments. This is not a simple matter of paving roads and building schools. Money is only one piece of the solution. The insurgency will collapse only when honest effort is made, and real improvement is seen, in eliminating the fundamental problems of this country. That sounds like an impossibly tall order, but it really boils down to "providing honest government services through honest government officials". Part of the funding for this massive effort, especially for the physical development side, can be taken from a military "peace dividend". If the military were to shift to a purely defensive posture, and reduce its expenditures accordingly, a massive amount of money would become available for use in a full-force assault on the corruption and services problems. Such an attack will weaken the insurgency a thousand times more than any military campaign. Under the current strategy, both the expense and the effort are wasted in fighting rebel soldiers, who are actually only a symptom of the real problem.

This is not the macho solution, and it certainly requires more than a little pride to be swallowed, especially by the military. But it is the right solution for the problem, and it is the solution that will work. Changing strategy certainly does not mean that the military has failed. It only means that the problem was never a military problem to begin with. Recognizing this and moving ahead will be a great achievement, and should be seen as a source of pride for the nation. Other countries, faced with similar problems, will certainly see it that way once we have shown that it can be done.

This is not just an essay on the shortcomings of the Philippine Government. It is a plan, with each step clearly spelled out. Government must take a hard line with its own officials to force change, but it is absolutely do-able and very, very easy. This is a war that will never end by treaty or concession. It is a war that will begin to end on the day the people start to believe that their own government is there to protect them and to serve their needs.

Corruption: The Depth of the Problem

Corruption exists in every country of the world. In some places it is a minor nuisance that can barely be measured. In others, corruption is deeply rooted in every aspect of daily life. Sadly, the Philippines falls squarely into the second category. Business organizations and international surveys routinely rank the Philippines among the world's most corrupt countries. In fact, surveys such as Transparency International's "Corruption Perception Index" seem to show that the Philippines is getting steadily worse. Government's response to these reports typically starts with a declaration that they are "unfair" and that "we are doing our best". In practical terms though, statements like these and others like "we have the will" and "we are committed" are meaningless. The technical procedures for preventing corruption are simple and straight-forward, but they require stepping on high-placed toes, because many of those high-placed toes are involved, directly or indirectly, in corrupt activities. Despite arguments to the contrary, the inability of the government to control corruption is not a result of "we can't catch them". It's a result of "we're not really going after them".

The biggest challenge in any anti-corruption campaign in the Philippines is the system itself. Networks of business, social, and family relationships discourage even the authorities from making accusations against anyone with just a little power. A telephone call to a friend can stop an investigation against you or someone you know. Sometimes even that phone call isn't necessary, since the authorities may be hesitant to go after a person known to have connections. I'm not talking about "the authorities" as an institution. I'm talking about the individual people in government who actually make things work. There is a big difference between the two.

In fairness to the Philippine Government, there does seem to be a new attitude taking hold, driven by a flood of international reports and surveys which paint a very gloomy future for the country. The senior leadership, at least, seems to understand that the situation cannot continue as it is. A pretty intensive campaign against corruption is ongoing, and it seems to be reaching all the way to the lower levels, where the problem is most entrenched. The question is, will this just be another brushfire effort, which burns hot but burns out fast, or will we actually see some permanent change? Only time will tell.

A quick glance at the Philippines reveals a structure very similar to other governments around the world, with laws, regulations and safeguards enough to make the system run properly. But, on a day-to-day basis, the people who actually implement those procedures operate much more informally. This is exactly where government breaks down and a purely network-based organization takes over. This shadow structure defines both the implementation and the enforcement of Philippine Government processes, from the municipal to the national level. Regardless of the level, the reason this informal system thrives is simple. I've said it before: we routinely do not follow (or enforce!) laws, rules, regulations, or procedures. This situation is not unique to the Philippines, and in fact, many of the things I will describe here are characteristic of governments and government officials around the world. The differences between corruption in one country and corruption in another are differences of degree rather than design.

In addition, there is a common feeling among many government officials, a view which seems to be shared by many civilians as well, that profiting from corruption is not really wrong, and is in fact an entitlement of public office. A survey last year by the Asian Institute of Management reported that "...some executives already regard behavior or actions commonly perceived as wrong as 'wrong only sometimes.' Moreover, eight out of 100 executives believed it was not always wrong to do something that was inherently wrong, as long as it was for friendship, position, or seniority." [Business World, 6 July 04] Personally, I suspect that many of those who responded to the surveys were not completely truthful in their answers. I think the numbers are really much higher.

If this really is the general attitude, then it is unlikely that citizens, either in or out of government, will ever really join the fight against corruption until they believe that it is in their interest to do so. To change that mindset, it is necessary to personalize the effects of corruption, rather than simply trying to preach "This is right and this is wrong". Everyone agrees that corruption in general is a bad thing, but the specific practices that make up corruption are not always seen in such a bad light. It may be more effective to emphasize the harmful impact of those individual acts, by constantly exposing people to the ways that corruption affects them personally. The idea is to eventually make such behavior distasteful, and to then bring social pressure to bear on corrupt officials at all levels. Changing the way people view corruption must be the goal of a very long-term, but very necessary, public education campaign.

The statistics of corruption are reported all too often, but they bear repeating. According to the Manila-based group Procurement Watch, 1/5 of the national budget and 15% of the cost of all government contracts is lost to corruption every year. 1/5 of the national budget! Put another way, that means we lose an entire year's budget every 5 years. Granted, those figures are only estimates, and it's probably not possible to determine the actual amounts with any certainty, but whatever the numbers, the bottom line is this: Filipinos are stealing the food right out of the mouths of Filipinos. And let's make something absolutely clear, right from the beginning. These surveys and reports always use phrases like "lost to corruption" and "unaccounted for" as if money had just evaporated because someone forgot to put the lid on the bottle. The reality is, corruption is theft, plain and simple. When a citizen is asked to pay an additional "fee" to expedite his request for a government service, that money goes straight into the pocket of the clerk on the other side of the window. It's not a "service fee", no matter what he says. That government employee is a thief, and he has just stolen money from the citizen.

Corruption is not just an aspect of Philippine culture; it is entangled in the very fabric of daily life. The average Filipino, rich or poor, considers under-the-table payments to be a fact of life. The poor pay because they have no choice, constantly borrowing money to get through the red tape of life. The middle class and the wealthy also pay, because it's a convenient way to bypass bureaucracy and because it is the only way to compete with everyone else who pays. When dealing with Government, the customer finds obstacles and delays at every turn, leading him to look for an easier way through the process. Juan Dela Cruz (John Q. Public, for the American reader), faced with these seemingly unending bureaucratic roadblocks, will eventually start to think "there must be a way to cut through all this red tape!" And as soon as he asks that question, the clerk behind the counter offers the answer. In fact, much of the procedure and delay involved in obtaining any government service seems almost intentionally designed to encourage the customer to ask that very question. “Designed” may be the wrong word, but procedures have certainly been allowed to evolve in that direction.

These payments are not a rare occurrence. It is my opinion, based on countless conversations with Filipinos and foreigners alike, that the many surveys and statistics which describe the extent of corruption in the Philippines don't even scratch the surface of the problem. Not even the honest corruption-fighters want to admit just how deep it really goes.

Corruption exists at every level of society, in both the government and private sectors, at the national level and at the Barangay. In the world of government contracting, for example, the popular term is "SOP". Traditionally, that abbreviation stands for "Standard Operating Procedure", a term that describes something so commonly done that you don't even have to talk about it. In the Philippines, SOP means the kickback that a government official automatically requires before any contracted project under his jurisdiction can begin. The amount of this payment is typically 15 - 20% of the budget for the entire project, although it is sometimes much higher. SOP usually has to be paid up front and, depending on the size and scope of the project, the blessing of several officials may be needed. In cases like that, the 20% kickback is not always shared among the wolves. Rather, the winning company often has to pay each official separately, sometimes jacking up the total cost of the project by 60% or more. Those with government contracting experience already know the SOP of particular officials, so the subject never even has to be discussed. Hence the term "Standard Operating Procedure". We'll come back to this a bit later, but for now it's important to recognize the fact that corrupt activity is usually known to everyone, and protected with a wink and a nod.

The fact that most people don’t see anything wrong with corruption means that new laws or harsher penalties will not have a significant impact on the problem. The real answer lies in “corruption-proofing” the system, by implementing procedures that make it physically impossible to complete a corrupt act.

Conventional wisdom says that government must prosecute a few "big fish" if it wants to prove it is serious about fighting corruption. This is certainly true, from the all-important public relations angle. But it is also true that this is the one act government finds very difficult to do, for a variety of reasons. While I am not advocating letting the "big fish" get away, I do not believe they are at the heart of the problem. Corruption is tolerated at the top, and there is no doubt that those at the top benefit most, but the self-sustaining nature of the problem comes from the fact that it permeates all operations at the lower-levels. A permanent cure will only come when we clean up the system at the bottom. In fact, we do that by enforcing procedures, and by prosecuting violators of those procedures. Untouchable corrupt senior officials will find it much more difficult to steal government money if the junior employees below them are afraid to break the rules.

While there are certainly some officials who steal millions of pesos through corruption, the real problem is more like shoplifting in a local convenience store. On its own, each theft may be only a pack of candy or a bottle of perfume, and we may even feel sympathy for the "poor" rogue. But over a year, and across the entire chain of stores, those seemingly harmless thefts can add up to millions. That's why, in many countries, every shoplifter is prosecuted, even if they only took a pack of gum. This is exactly what is going on in the Philippines, and this is exactly how we have to solve the problem.

Corruption: Definitions

Corruption. noun. 1. impairment of integrity, virtue, or moral principle; depravity. 2. decay; decomposition. 3. inducement to wrong by improper or unlawful means (as bribery). 4. a departure from the original or from what is pure or correct.

Merriam-Webster

English Dictionary

Corruption: The misuse of entrusted power for private benefit.

Transparency International