Corruption in the Philippines: Reality or perception?

Flunking MCC corruption test imperils $700-M for RP’s poor

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WASHINGTON D.C. – The Philippines’ apparent difficulty to hurdle the Millennium Challenge Corporation’s (MCC) corruption test is putting in peril over $700 million in aid for the country’s poorest families.

Ambassador Willy Gaa said the Philippines passed 14 of the MCC’s 17 yardsticks in a review earlier this month.

The MCC gave the Philippines a failing grade in the area of “control of corruption.” The country failed two other indicators for not spending enough for health and primary education.

“It’s (corruption control) a must-pass indicator,” Gaa said.

The control of corruption is part of the parameters for “ruling justly,” one of three main MCC indicators.

Last January, MCC CEO John Danilovich expressed “serious concerns” with corruption indicators in the Philippines.

“The drop in performance was in fact very dramatic,” Danilovich told reporters at the Foreign Press Center at the time. But in March, the MCC Board gave the green light for the Philippines to move up from Threshold to Compact status.

The Philippines was in Threshold status since July 2006 and received $21 million mainly for anti-corruption projects of the Office of the Ombudsman and improving transparency in the Bureau of Internal Revenue’s collection programs.

Elevation to Compact status made the Philippines eligible to hundreds of millions of dollars in grants and aids. The MCC budget has grown from $650 million when it was established in 2004 to $2 billion in 2007. Ultimately, it aims to make available $3 billion in succeeding years.

“The Board agreed that the Philippines remains eligible for developing a compact proposal,” an MCC statement said, “but the MCC will sign a compact until the country passes the indicator criteria on corruption.”

“I would like to point out that the Philippines failed only .01 percent and in part we can attribute this to the fact that the MCC added two third party sources whose findings were given higher weight,” Gaa averred.

The MCC called on the Arroyo administration to “intensify efforts to fight corruption,” adding that it will be closely watching the country’s performance.

“We should perhaps do better in our efforts to fight corruption… Take it as a challenge,” Gaa told reporters at a Christmas lunch.

Failing on perceptions

The country’s chief envoy couldn’t help complaining that the MCC “changed the rules in midstream”.

He was referring to the two additional third party sources that reportedly gave an unflattering evaluation of corruption in the Philippines.

“Had the sources remained as those of last year’s sources, we could have passed,” Gaa said.

“In the three areas that we failed, we can attribute them to the lag in the reporting of third party sources. Statistics for this year were not reported. Improvements we have made in areas like corruption were not reported on time by the third party sources,” he insisted.

One key third party source for the fighting corruption yardstick is the World Bank Institute. In a matrix, where 100 is the best possible score, the Philippine’s rank feel from 36 in 2005 to 23 in 2006 and 22 in 2007.

The assessment is combined with other third party sources like Transparency International, which produces a Corruption Perception Index (CPI), where the Philippines placed 141 out of 180 countries for this year.

The Philippines fared better in 2007 when it ranked 131 in a field of 179 countries.

Transparency International culls its CPI from a host of other agencies, including the Asian Development Bank, Economic Intelligence Unit, Freedom House, and Political & Economic Risk Consultancy, among others.

Gaa stressed that judging the Philippine’s corruption problem is less than objective.

“I would like to add that we are being judged on perception alone. It’s not an issue of factual findings of corruption, we are being weighed on perception,” he declared.

Projects for the poor on the line

Gaa revealed they have submitted five project proposals to an MCC technical board. A sixth project is “on standby” because the MCC has indicated it is not keen to take it up.

The Kapit-Bisig Laban sa Kahirapan aims to provide seed capital for community projects in municipalities with at least 50 percent poverty incidence.

The Pantawid Pamilyang Pilipino proposes to give cash grants to extremely poor households for education and health in Southern Luzon, Bicol, Western and Central Visayas.

The Sustainable Upland Watershed Management project is intended to preserve mountain water resources and help residents to meet survival challenges while protecting the environment.

The Secondary Road Development project aims to build, repair or expand six priority road networks totaling 309 kilometers that could boost agriculture and hasten delivery of basic services to the remotest areas of Luzon and the Visayas.

The Empowering the Taxpayer program was proposed by the BIR to reinforce tax and customs collection, anti-corruption and computerization activities.

The 7th “standby” project is for coastal fisheries’ protection activities.

The total cost of the six project proposals submitted so far to the MCC runs up in excess of $740 million.

“Up to the signing of the agreement, we have to pass all the key indicators that are provided for in the MCC standards,” Gaa said.

Only 17 countries have won Compact agreements, among them Armenia, Cape Verde, Lesotho, Mongolia, Tanzania and Vanuatu.

“It’s possible we can have a signing next year but again, that will depend on our proposals. The MCC has to agree to our proposals,” he added.

Gaa counts the grant of eligibility for Compact status to the Philippines as one of two highpoints in Philippine-US relations this year; the other being the 96-1 victory of the Filipino veterans equity bill in the US Senate.

Even as the government faces a seemingly Sisyphean struggle to reverse perceptions of Philippine corruption, Gaa said the government can only try harder.

“This is not for the government or anyone else. Our people, especially the poor, need this,” he stressed.

SOURCE: ABS-CBN News Online, flunking-mcc-corruption-test-imperils-700-m-rp%E2%80%99s-poor