The charge against GMA et al. Deputy Ombudsman Cyril Ramos said the Philippines ranked the 6th most corrupt among Asia Pacific countries. His Herdis Management and Investment Corporation (Herdis), which was established in 1969 with a bank loan of only US$3,500, was ranked 15th amongst the country's top 1,000 corporations in 1976, with consolidated assets amounting to US$140 million (Manapat, 1991, p. 316). It is the cause of many problems between the government and the public. 1362 (D.N.J. Presidential Commission on Good Government (PCGG) vs. Desierto, Ananiano, Herminio T. Disini, Paciencia Escolin-Disini, Angel E. Disini, Liliana L. Disini, and Lea Disini (2003), “Supreme Court G.R. Westinghouse out-manoevered GE by employing Herminio Disini as its special sales representative. The scandals that affect many Philippine presidential administrations reflect this inability of both state and society to curb opportunities for grand corruption. Public Administration and Policy: An Asia-Pacific Journal. With the exception of the conviction of President Estrada for plunder (though later pardoned by Arroyo), no other high-ranking official above the position of provincial governor has ever been convicted of corruption (Bolongaita, 2010). Former Isabela mayor convicted of graft over P2.5-M project. People of the Philippines vs. Gloria Macapagal-Arroyo, Jose Miguel Arroyo, Benjamin Abalos, Sr. and Leandro Mendoza (2016), “SB-11 CRM-0467”, 25 August. He also directed the government takeover of three Disini firms, in which the government had substantial financial exposure. It has many different shapes as well as many various effects, both on the economy and the society at large. endIndex: Metro Manila (CNN Philippines, January 23) — Corruption worsened in the Philippine government in 2019 as it ranked 113th of 180 countries studied on … Nevertheless, he showed his hand at influencing government by inviting the DOTC Secretary Mendoza for breakfast at his home. The court found no convincing proof of Marcos' ownership of the Herdis companies or his financial gain from the Westinghouse deal. MANILA, Oct 27 (dpa): Philippine President Rodrigo Duterte on Tuesday directed the justice department to conduct a sweeping investigation into corruption in all government agencies. Corruption is a word that Filipinos do not want to hear. It is not clear how much commissions Disini and by extension, Marcos received from Westinghouse. Despite the contract's cancellation, the SBRC decided to continue its investigation. Consequently, the U.S. Nuclear Regulatory Commission (USNRC) issued guidelines for the upgrading of plant design and equipment requirements as well as other disaster preventive measures (USNRC, 2018, pp. Initially refusing to disclose information for proprietary reasons, Westinghouse eventually revealed that Disini received commissions of at least US$18 million for the period 1976–1982 (Beaver, 1994; PCGG vs Desierto et al., 2003). Described as a national agency suffering from ’systemic corruption’, an in-depth qualitative case study analysis of one of its programmes is imperative. In February 1976, close to two years after the approval of the Westinghouse proposal, the two parties formally signed the final contract. To be sure, authoritarian rule prevented the discovery of other incriminating evidence on the legal improprieties of the BNPP contract. ... through mediation or if the transgression carries fines above PHP 5,000 or more than one year in prison will the case be referred to the Philippine … In 2012, when the prevailing political fervour was against the former president, her successor Ombudsman Carpio-Morales, hastily filed charges against the Arroyos, Abalos and Mendoza. People who pay 300 pesos to have the written part of their driver's licenses filled up for them are corrupt. In October 2007, amidst the Senate inquiry, Abalos resigned from his post as the Comelec chair. Marcos and his wife were subsequently indicted by the U.S. government on racketeering charges, but in 1990 (after Marcos’s death) Imelda was acquitted of all charges by a federal court. Finally, after the initial media exposés, the Marcos and Arroyo governments failed to effectively contain the scandals from further prolongation or escalation. © 2015 Nine Media Corp. CNN name, logo and all associated elements ™ and © 2015 Cable News Network. For its part, in August 1980, the Philippine Atomic Energy Commission (PAEC), the country's nuclear regulatory body, submitted its own re-evaluation study, which recommended the lifting of the construction suspension order. Closure of cases of grand corruption is a serious problem that involves an incoherent and politically vulnerable prosecutorial and justice system.,This paper aims to contribute to research on grand corruption involving the executive branch in the Philippines, particularly in the procurement of large, foreign-funded government projects. The cases against Imelda Marcos et al., for example, have been pending since 1986 when the Marcos dictatorship was toppled by angry citizens. 141-155. 50,000.00 to Php. The purpose of this article is to analyse the weaknesses of governance institutions in constraining grand corruption arising from the government procurement of large foreign-funded infrastructure projects in the Philippines. The SBRC report also found it improper for the president to be playing golf and having lunch at ZTE's Shenzhen headquarters in November 2006 since the company was lobbying for a contract. Disini's profit from the BNPP project was not limited to commissions. Based on the recommendations of the Puno Commission and PAEC, Marcos directed the NPC to resume construction of the BNPP. Constantly, been the dominant issue of the country. In late 2011, GMA and Abalos were charged and jailed for electoral fraud. Second, that executive agreements could be made without competitive public bidding encouraged the formation of corrupt rent-seeking relationships at the top levels of government. Cecil Morella, Agence France-Presse. 1362 (D.N.J. Some senators including Juan Ponce Enrile, Ramon Revilla Jr. and Jose Ejercito Jr. were jailed in connection with the Napoles pork barrel scam but have been either released on bail or acquitted of plunder charges. 300,000.00. Further, in reaction to the U.S. media pressure, Marcos immediately ordered the investigation of the Westinghouse deal and the government takeover of Disini companies, which were symbolic gestures to affirm his integrity. ZTE's NBN deal with the government was negotiated within the framework of the Philippine–China Economic Partnership, which was established in June 2006 as a result of China's diplomatic offensive in Southeast Asia. 1989). At the time of its divestment in 1981, the Herdis group included more than 30 companies under its umbrella. By early 1986, the total project cost had risen to US$2.1 billion, or a billion dollars more than the original contract price in 1976. The constancy of grand corruption scandals in the Philippines suggests deeper problems in politics and society. The petition was filed in July 2012 by Carpio-Morales. Top-level executive agreements that do not require competitive public bidding provide an opportunity for grand corruption. Citizens of the Philippines, since the point of time, got used to corruption. ... And that is one reason that crime and corruption are thriving in the Philippines in spite of scores of charges filed against the malefactors. U.S. District Court for the District of New Jersey, 714 F. Supp. Recovery of the Disini commissions has been made even more uncertain after his death in 2014. That’s two-and-a-half decades ago. Posted at Jan 18 2017 10:39 PM. 3019 (1960), “Anti-graft and corrupt practices act”, Official Gazette, available at: (accessed 4 September 2019). 13 (Republic of the Philippines vs. Disini et al., 2012; PCGG vs Desierto et al., 2003). Both men were freed after posting bail on the day of their arrest. “Governments must urgently address the corrupting role of big money in political party financing and the undue influence it exerts on our political systems,” said Transparency International chair Delia Ferreira Rubio. 130-143. CNN and the CNN logo are registered marks of Cable News Network, Inc., displayed with permission. 3, pp. Beaver, W. (1994), “Nuclear nightmares in the Philippines”, Journal of Business Ethics, Vol. In May 1993, the federal court jury in New Jersey also reached a verdict exonerating the two American companies. Bribery of public officials is penalized under Articles 210 to 212 of the Revised Penal Code.There are other laws that penalize corrupt acts/practices and prohibit the giving of gifts to public officers under certain circumstances.Republic Act No. Lowi, T. (1988), “Foreword”, in Markovits, A.S. and Silverstein, M. (Eds), The Politics of Scandal: Power and Process in Liberal Democracies, Holmes and Meier, New York, NY, pp. The weaknesses of Philippine governance institutions to curb grand corruption in government procurement projects during the past half-century could be gathered from a comparison of the two scandals. Immediately following Marcos's approval, Melchor signed a letter of commitment giving approval for Westinghouse and NPC to firm up the project contract. 155 No. On 25 August 2016, the Sandiganbayan issued its resolution exonerating the Arroyo spouses, Abalos and Mendoza for lack of evidence to establish allegations of overpricing, the existence of a conspiracy and the disadvantages of the ZTE–NBN contract (Macapagal-Arroyo vs. People of the Philippines and Sandiganbayan, 2016). The BNPP and NBN–ZTE scandals illustrate cases of corrupt relationships formed at the highest levels of government in contracting large infrastructure projects in the Philippines. In 1982, Disini fled to Austria, a country without an extradition treaty with the Philippines. Initially, it was understood that Westinghouse would only provide design engineering and project construction management services. The TMI accident caused a partial nuclear meltdown, therefore raising alarm worldwide about the safety of nuclear energy. Second, strong incentives to commit graft persist. However, political considerations led Marcos to postpone operations until after the 1986 snap elections. Butterfield, F. (1988), “Westinghouse, Jersey firm sued by the Philippines”, New York Times, 2 December, available at: (accessed 3 September 2019). (2015), “Treading the straight and righteous path: curbing corruption in the Philippines”, Asian Education and Development Studies, Vol. Corruption Rank in Philippines averaged 93.96 from 1995 until 2019, reaching an all time high of 141 in 2008 and a record low of 36 in 1995. The Sandiganbayan's ruling on the ZTE case, issued in the early days of the Duterte presidency, favoured the Arroyos and other co-accused. Her remark was suggestive of the political malleability of the courts. The Sandiganbayan and the Supreme Court decided on the Disini case during President Benigno Aquino's term. Despite negative views across the region about the entrenchment of corruption in government, Bangladesh, the Philippines, Malaysia and Indonesia scored highly – 86 percent, 82 percent, 74 percent and 67 percent – when respondents were asked whether their countries’ anti-corruption agencies were doing a good job. Php. Corruption in the Philippines is the norm, not the exception. The Arroyo government's damage control included the cancellation of the NBN–ZTE contract as well as the suppression of key witnesses (e.g. P19.34 Trillion Lost Within 52 Years Starting 1960; A report by Global Financial Integrity entails that the country lost $410.5 billion or 19.34 trillion in Philippine currency.. htm,,,, -corruption-still-a-way-of-life.html,,,,,, sandiganbayan-orders-marcos-crony-to-return-50-m-loot-in-nuclear-plant-deal#ixzz5uMzLke00,!.pdf, how_can_we_stop_it,,,, Government Response Our government enacted approaches to combat this corruption, which are divided into three, namely: 91 No. Corruption at this level usually involves large sums of financial and state resources. Corruption In The Philippines. Furthermore, an inefficient prosecutorial and judicial system, often subservient to political power, encourages corruption by failing to punish crimes of powerful individuals and firms. 23 No. According to the 2017 UNU-Wider report (2013 data), tax evasion costs Philippines almost $7.4 billion annually, or 2.7% of its GDP. United Nations Office on Drugs and Crime (UNODC) (2019), “Corruption and democracy”, Anti-Corruption Module 3: Corruption and Comparative Politics, December, available at: (accessed 7 January 2020). December 02, 2016 BY: Vince F. Nonato. Finally, there is the perceived failure of closure to past scandals by the justice system, as there continues to be a “low risk” of punishment (Quah, 2013, p. 129). As sums were paid to him, no bribery of top-level Philippine government officials (including Marcos) was proven, which might have otherwise made Westinghouse legally liable under the U.S. Foreign Corrupt Practices Act of 1977. While the Philippines also got a score of 34 in 2017, it only ranked 111th out of 180 countries. Corruption is a pervasive and longstanding problem in the Philippines. htm (accessed19 August 2019). Of the revised total project cost, Westinghouse would share US$677.1 million (or 61% of total cost) and NPC US$432.3 million. Thanks are also due to Emil Bolongaita and Cleo Calimbahin for their useful comments and suggestions. District Court for the District of New Jersey, 714 F. Supp. The ZTE project cancellation was the product of the system of checks and balances in post-Marcos democracy, with pressure exerted by the mass media, Congress, the courts and public opinion. However, this system of checks and balances has not guaranteed the absence of grand corruption in the country. Consequently, the new Ombudsman at the time of the Supreme Court decision filed graft charges against the Marcos crony. No. Before the SBRC hearings ended in August 2009, the OMB released the results of its own investigation. It examines allegations of improprieties in government project contracting and the politics of resolving corruption scandals through the justice system. AHI's BOT scheme meant that the private company would run the enterprise until its agreed date of transfer to the government. It is a complicated case arising from the quarrel for profit and commissions between two competing groups with powerful political sponsors. Hence, the unpacking of a corruption scandal could be guided by an examination of its substantive and procedural stages. Legal tactics and jurisdictional conflict among the PCGG and Office of the Ombudsman (OMB) delayed settlement by the Sandiganbayan, the country's anti-graft court. The U.S. government, through its Export–Import Bank, provided project financing with a US$272.2 million loan and a guarantee of an additional US$367.2 million for NPC bonds. So let’s hope that it will be enacted as a law soonest. After Benigno Aquino III assumed the presidency in 2010, the winds of Philippine politics shifted. Sandiganbayan orders Marcos crony to return $50-M loot in nuclear plant deal, Reasons of state: Citicorp report ignored by Philippine government, What is grand corruption and how can we stop it, United Nations Office on Drugs and Crime (UNODC), Anti-Corruption Module 3: Corruption and Comparative Politics, United States Nuclear Regulatory Commission (USNRC), Trailblazing: The Quest for Energy Self-Reliance, Treading the straight and righteous path: curbing corruption in the Philippines, Filipinos say Marcos was given millions for '76 nuclear contract,,,, -blamed-for-economic-crisis/d99e8760-087d-4d25-ad66-3d324150dc4d/,,,, grandmother-of-all-scams-3/, These included former Herdis president Rodolfo Jacob, former Asia Industries president Jesus Vergara, former vice president Angelo Manahan and former legal vice president and cousin, Jesus Disini. His friend and technical adviser, Rodolfo Lozada, was sent to Hong Kong to avoid testifying before the Senate. Ombudsman Merceditas Gutierrez was Mike Arroyo's schoolmate in one of the country's prestigious universities. Their comparison enhances the understanding of grand corruption in government-initiated projects involving foreign government and corporate entities. Mathews, J. and Wideman, B. Means of corruption include graft, bribery, embezzlement, backdoor deals, nepotism, and patronage. Corruption is a constant in the society and occurs in all civilizations; however, it has only been in the past 20 years that this phenomenon has begun being seriously explored. Insufficient evidence to graft charges led to the Sandiganbayan's exoneration of the accused in August 2016. In the NBN project, direct Chinese government participation came through the ZTE, a state-controlled firm, and the China Export–Import Bank for loan financing. Consequently, by 1984, the revised BNPP project cost estimate reached US$1.95 billion (Velasco, 2006, p. 111). She also cleared GMA's husband. Up to this point, the hearings have collected information that could help the … Republic of the Philippines vs. Westinghouse Electric (1989), “U.S. 2-3). More than a year after the contract signing, a series of reports from the Washington Post followed by the New York Times, criticized Disini's Marcos connection as well as his involvement in the BNPP. Philippines scored 34 points out of 100 on the 2019 Corruption Perceptions Index reported by Transparency International. This thinking is flawed. Twelve congressmen are on the list of government officials and employees implicated in massive corruption in the Department of Public Works and Highways (DPWH), Presidential Anti-Corruption Commission (PACC) Commissioner Greco Belgica said. 132120”, 10 February. However, contract negotiations dragged on for more than a year. Senate Blue Ribbon Committee (SBRC) (2009), “NBN-ZTE, committee report no. This point raised contrasting legal opinions yet to be resolved (Suplico vs NEDA, 2008). As such, the ZTE was the only proposal left for consideration in the NBN project. A politically subservient or accommodating judiciary might be argued to be the fifth element in the legal settlement of both corruption scandals. Speaker JDV tried to distance his involvement from the project by telling the SBRC that his presence in Shenzhen was due to the invitation of the president (SBRC Report, 2009, p. 76). On 24 June 2016, the Sandiganbayan granted the request and as provided by the rules of criminal procedure, gave Arroyo et al. graft and corruption cases in the Philippines Regions. The failure of closure of past scandals encourages corrupt practices by top officials, who regard government as a lucrative source of private wealth and power. The Philippines’ score indicates that it “continue[s] to struggle to tackle corruption,” along with other countries in the Asia Pacific region, the report read. Such agreements encourage the formation of corrupt rent-seeking relationships involving the selling firm, brokers, politicians and top-level government executives. The design and cost of the original ZTE proposal submitted to the CICT was not clearly established during the Senate investigation or during the Sandiganbayan trial. First, the total project cost reached US$1.1 billion for one reactor compared to the original estimate of US$500 million for two reactors. Velasco, G. (2006), Trailblazing: The Quest for Energy Self-Reliance, Anvil, Manila. (1978), “Marcos orders seizure of wealthy friends' companies”, Washington Post, 18 January, available at: (accessed 21 August 2019). While plant construction was undergoing in March 1979, a nuclear disaster struck in the United States at Three Mile Island (TMI). The PCGG was able to gather voluminous evidence against the Marcoses and their cronies. A month later, a company delegation went to the Philippines to brief the president on the proposal to supply two 620-MW pressured water reactors for a reported cost of US$500 million. Corruption is a significant obstacle to good governance in the Philippines. Through his close presidential connection, Disini was able to build a vast business empire in a short span of time after the imposition of martial rule. In 1991, the Swiss arbitration panel cleared Westinghouse of bribery charges (United Press International, 1991). In November 1975, the final negotiated contract was transmitted to Solicitor General Estelito Mendoza for review. Later, Joey De Venecia led in exposing anomalies in the deal. Soon after the announcement, the National Power Corporation (NPC), as the main implementing agency, began the work of undertaking the necessary technical studies as well as negotiate with vendor and financing institutions. In response, Marcos ordered the Ministry of Energy and Ministry of Justice to investigate Disini's involvement in the award to Westinghouse (Butterfield, 1978). Thus, in 2004, then Ombudsman Simeon Marcelo filed two criminal cases against Disini, one for bribery and the other for violation of Section 4(a) of the Anti-Graft and Corrupt Practices Act, which prohibits a private individual from exploiting close personal ties with a public official in order to gain some pecuniary or material advantage. 220598”, 19 July. David-Barrett, E. and Fazekas, M. (2019), “Grand corruption and government change: an analysis of partisan favouritism in public procurement”, European Journal of Criminal Policy and Research, 16 June, doi: 10.1007/s10610-019-09416-4 (accessed 6 January 2020). Soon after, the accused asked the court to allow them to file a demurrer to evidence. The media is literally sinking in reporting scandals to try and ensure closure Corruption in the Philippines … 19 No. Such incentives are not only exclusive to politicians, political appointees and professional bureaucrats but also to foreign governments, private firms and individual brokers. In 1997, Ombudsman Desierto dropped the graft charges against Disini for lack of prima facie evidence, despite the PCGG evidence. The CPI scores countries and territories by their perceived levels of public sector corruption using a scale of zero to 100, with zero as “highly corrupt” and 100 as “very clean.”. Scandal, according to Lowi (1988, p. vii) is “corruption revealed;” it is “breach of virtue exposed.” In his analysis of scandals, Lowi (1988, p. viii) argues that the exposé of corruption (the first news break or the substantive scandal) is often followed by a more controversial cover-up phase or the procedural scandal. A. On 21 April 2007, the government through the Department of Transportation and Communication (DOTC) headed by Secretary Leandro Mendoza signed a supply contract with ZTE for the NBN project. The former chief police enforcer of Philippine President Rodrigo Duterte's deadly war on drugs will be charged with corruption for allegedly protecting officers linked to the narcotics trade, the justice department said Thursday. On 14 June 1974, GE presented a 200-page prospectus to the NPC and Presidential Executive Secretary Alejandro Melchor, Jr. who also served as the NPC director. Transparency International, a nonprofit watchdog monitoring the status of global corruption in the public sector, has issued the Corruption Perceptions Index (CPI) for 2019, showing that the Philippines dropped 14 notches from 99th in year 2018. Despite this, 86% of Filipinos believe that corruption in government is a … This article is published under the Creative Commons Attribution (CC BY 4.0) license. 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