Aquino’s drive vs corruption

By Samuel V. SeƱoren

Posted on November 30, 2011

How the Philippines’ national budget of P1.816 trillion (US$41 billion) for FY 2012 is disbursed will make or break President Aquino’s anti-corruption drive which is the centerpiece of a governance program during his term.

In seeking prompt congressional approval, Mr. Aquino had assured legislators that management of the budget will follow a well-defined path on governance that “thrives in Daylight.” He is expected to sign it into law before the Christmas holidays.

But government spending next year -- the highest on record -- may be too tempting to resist for the cabal of grafters and financial predators who prey upon the national budget as a key source of a huge off-the-books income every year.

At a 30% overprice or underdelivery (depending on where one is looking from) on infrastructure projects alone and other capital expenditures, close to P100 billion can be easily skimmed from the budget’s capital outlay of P329 billion next year.

By rule of thumb, 30% has been the SOP (standard operating procedure or practice) that contractors and suppliers usually rebate to corrupt officials and project proponents. Even the cost of corruption seems to have gone up with inflation since the SOP used to be only 10% of project cost at the start of the Marcos regime more than four decades ago.

The pervasive thievery over the years is primary responsible for the extremely poor quality of government-funded projects, mostly infrastructures -- substandard roads , bridges and even buildings.

But those days , Mr Aquino vows, are now over.

Surely, bureaucrats, contractors and other parties doing business with the government who defy the daylight policy will be sent to prison. And clearly, that is the message that Mr. Aquino wanted to convey to the bureaucracy when his administration went after former President Arroyo and her husband.

Mrs. Arroyo, who may spend life in prison for vote rigging in 2007, is facing various counts of corruption charges. Her husband, Mr. Miguel Arroyo, has also been charged separately for allegedly selling grossly overpriced aircraft to the national police.

While the charge against Mrs. Arroyo is for election fraud, her court trial is expected to lead to a trail of corruption that may show how or where the money used to commit the felony came from.

Last month, Mr. Aquino’s public works department made an example of a company which won a contract from the Arroyo government to repair a 500-meter road overpass near the Makati financial district.

The road job was declared inferior by public works quality inspectors . Rather than face prosecution and a possible prison term, the owners of the company agreed to settle and redo the project at a big loss. It has been blacklisted by the government.

In another unprecedented move, Mr. Aquino also stripped senior government officials of the power to juggle funds in their respective agencies. The practice of juggling and realigning funds which had been going on for many years effectively overrode loose budgetary controls such that the money eventually ended up in the pockets of corrupt officials.

That is how hundreds of millions of pesos in undisbursed funds leaked from the coffers of military and police agencies. Because the funds were deliberately left unspent, corrupt military and police officials classified them as “savings” and then diverted elsewhere.

A congressional investigation initiated by Mr. Aquino’s allies discovered much later that the “savings” were actually salaries earmarked for soldiers and policemen who were never hired. By the end of 2011, more than 5,000 jobs for policemen and about 4,000 more for soldiers were available, but these were never filled up.

Under the 2012 budget, Mr. Aquino has made sure that next year, more than 80,000 jobs available in the national government which are fully funded, will all be filled up.

Increased government hiring and prompt spending early in the first quarter of 2012 are signals that foreign and local businessmen had been waiting for. They are expected to stimulate the economy early on. Finally, Mr. Aquino is perceived to be sending the right signals on time.

The reaction from the business sector has been swift and reassuring. Starting late November, manufacturers resumed orders for importation of critical raw materials for arrival in January when business normally slows down just after the holiday season.

It also validates the optimism expressed by the business sector in a recent survey conducted by the Central Bank that the Aquino government could steer the Philippine economy toward a dramatic turnaround next year amidst an outlook of gloom and doom in the US and European markets.