November 23, 2007

To the hilt

No Philippine president has insulted the Filipino people's intelligence more than Gloria Macapagal-Arroyo. No other administration has so mangled and twisted the Constitution to suit its ends and made a travesty of the rule of law while maintaining the trappings of a democratic regime. (Ferdinand Marcos had to declare martial law first, place a gun to the heads of the members of the Constitutional Convention and then proceed to justify his so-called “constitutional dictatorship”.)

You think you've seen the most brazen cases of immoral and illegal conduct in the highest reaches of government with the recent spate of corruption scandals. This latest string of outrages culminated in the multi-million dollar ZTE scam topped by the bribery attempts to squelch criticism and preempt impeachment proceedings.

You think you've heard the worst insults to your intelligence with the barefaced lies and clumsy attempts to put the lid on the stench of corruption and official wrongdoing. Comes now the World Bank suspension of the release of loans for Philippine road projects (USD 33 million, part of USD 232 million loan) due to reports of irregular bidding and excessive pricing.

Mrs. Arroyo’s Budget Sec. Rolando Andaya has the gall to attribute and thereby pass on culpability for the anomalies to WB-imposed procurement procedures! Mr. Andaya argues further that the irregularities could have been avoided if Philippine procurement procedures were used instead.

However, everyone knows that public works is one of the biggest sources of corruption in the Philippines, with a going rate of "forty percent automatic" at the lowest levels and much higher as one goes up the bureaucratic ladder.

One might acknowledge that Mr. Andaya is not being entirely off the mark. The Bank itself cannot be accepted as a paragon of virtue, not exactly your champion of clean governance. The World Bank and its projects are themselves plagued by corruption; estimates range from 5-25 % of the USD 525 billion it has lent out to Third World countries has been lost to corruption since 1946. That means Third World peoples -- including you and I -- have been paying for 26-130 billion US dollars that have enriched unscrupulous bureaucrats, technocrats and contractors.

According to US Senator Dick Lugar, chairman of the US Senate foreign relations committee, “Even if corruption is at the low end of estimates, millions of people living in poverty may have lost opportunities to improving their health, education and economic opportunities…So, not only are the impoverished cheated out of development benefits, they are left to repay the resulting debts to the Bank.”

According to the Government Accountability Project (GAP), “Management can no longer point the finger at borrowing countries with lax protections as the source of the devastating cost of corruption. The World Bank itself fosters fraud and abuse within its own organization by silencing many responsible staff members and shielding those who abuse the system.”

GAP ia a 30-year-old nonprofit public interest group in the US that promotes government and corporate accountability by advancing occupational free speech, defending whistleblowers and empowering citizen activists. Its Webpage describes GAP as the leading whistleblower-protection organization in the US.

But this sobering knowledge about the Bank only underscores how intolerable and unacceptable the levels of corruption in the Arroyo government have become. And how smugly blatant, preposterous and ridiculous its excuses. It is worthwhile to make a run down of what Mrs. Arroyo’s subalterns and apologists had to say about the latest black eye on her government.

Public Works Secretary Ebdane said that while “foreign-funded projects are not bound by local laws that mandate bidding to stay within the approved budget for contracts” he later cancelled the bidding of the two large road contracts that the WB suspected to be marred by collusion and excessive pricing in order “to remove the root of the problem.” Is Mr. Ebdane saying that the root of the problem is oversight by the foreign funder?

DBM Secretary Andaya sought to downplay the significance of the suspension by saying that “technically speaking” the Bank had not suspended the loan package because Phase 2 was still being deliberated by the agency’s board and its implementation had yet to begin. “The DBM and WB have agreed to institute safeguards…which in turn will facilitate the resumption of deliberations on NRIMP Phase 2.”

Finance Secretary Teves, on the other hand, confirmed that he was briefed about the inquiry being conducted by the bank’s internal investigation unit, the Department of Institutional Integrity (INT) and that he suggested that the Office of the Ombudsman be involved “because it would be the body that would be construed as fair and clothed with independence…”

Presidential Management Staff Remonde exhibited flagrant buck-passing when he said, “The contracts might have become collateral damage. We were just caught up in the internal row among the World Bank staff…this suspension is a result of the changes in its leadership.”

1. Justice Secretary Gonzales adjudged that the problem lay in that “…we are the most notorious in flagelating ourselves so that the international community makes conclusions based on what we ourselves say to the world about us.” Mr. Gonzales railed against the unfairness of the Bank saying, “We cannot allow ourselves to be the punching bag of any international (agency).” He reminded the public that the Bank had its own share of shenanigans as demonstrated by the resignation of its former President Paul Wolfowitz over the controversial appointment and high salary he had arranged for his girlfriend, a WB employee.

The World Bank suspension of the $232-M loan looks really bad for the Arroyo government so much so that the Malacanang must resort once more to another inept cover-up. Within the logic of an economic policy framework that has made the Philippine economy foreign debt-dependent and foreign investment-driven, this development indeed spells trouble for the Arroyo regime and the system as a whole.

Any ruling regime should quake at being accused -- much more proven -- as one that cannot be trusted to execute foreign-funded projects reasonably “free” of corruption. The fact that the World Bank has taken official notice, enough to investigate and to suspend the loan while the investigation is pending, indicates that the Arroyo administration has taken its corrupt practices to the limits of what is “acceptable” even of corruption-ridden governments like hers.#

*Published in Business World

23-24 November 2007


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