MCC: No grant assistance forthcoming until Arroyo gov’t shows it can curb corruption

WHENEVER it is confronted with the latest survey findings about the worsening levels of corruption in the country, the Arroyo government would typically dismiss the results as based on “mere perception.”

Gloria Macapagal-Arroyo and her retinue of spokespersons, particularly in the last couple of years, would instead offer the public what it considers a more “accurate” measure of the extent of the problem than what the likes of Transparency International or the Hong Kong-based Political and Economic Risk Consultancy (PERC) annually churn out — the government’s inclusion in the Millennium Challenge Corporation‘s grants program, the Millennium Challenge Account, of the U.S. government.

The MCA provides funding grants to some of the poorest countries of the world based on independent indicators that measure good governance, the countries’ investments in their people, and policies that encourage economic freedom.

So that when MCC announced in March 2008 that the Philippines was eligible to receive grant money amounting to hundreds of millions of dollars as part of its Compact Country Program, Arroyo regarded it as a “remarkable validation of the efforts of our government and nation to invest in our people, fight corruption and encourage economic freedom.” These after all, she hastened to add, are the “hallmarks” of her administration.

But a good nine months after Arroyo’s happy announcement of the country’s eligibility for an MCC compact that would have allowed it the opportunity to propose for funding for a five-year anti-poverty and anti-corruption program, no such assistance is forthcoming, leaving Arroyo with little to crow about.

In its December 11 meeting, the MCC Board of Directors decided that, while the Philippines remains eligible for developing a compact proposal, it will not be signing one until it passes the indicator criteria on corruption.

A month ago, MCC released the country scorecards for the fiscal year 2009, with the Philippines among countries floundering in its control of corruption, one of five indicators under the “Ruling Justly” category. From a percentile ranking of 57 percent last year, the country has plummeted below the median for the first time since 2006 at 47 percent. (Click here to view the country’s complete scorecard.)

The Control of Corruption indicator measures the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as “capture” of the state by elites and private interests.

The 2009 scores in Control of Corruption, as well as in the other indicators (Government Effectiveness, Rule of Law, Voice and Accountability, and Regulatory Quality) were sourced from the World Bank Institute’s Governance Matters VII dataset. The data reflect the performance of the candidate countries in calendar year 2007.

Under the indicator, countries are evaluated based on 26 factors, some of which could have carried considerable weight in the case of the Philippines in light of the string of corruption scandals that continue to hound the Arroyo government. Among these factors are:

• the extent to which senior government officials are immune from prosecution under the law for malfeasance;

• the extent to which the government ensures transparency, open-bidding, and effective competition in the awarding of government contracts;

• the extent to which whistleblowers, anti-corruption activists, and investigators have a legal environment that protects them;

• the extent to which allegations of corruption at the national and local level are thoroughly investigated and prosecuted without prejudice.

Compact eligibility

Eligibility for an MCC Compact is reserved for countries that score above the median on 17 independently measured indices in three broad policy categories: Ruling Justly, Investing in People, and Encouraging Economic Freedom. (For a guide to the indicators, click here.)

In considering countries for MCA grant assistance, the MCC Board of Directors looks at their performance in their income peer group (Low Income and Lower Middle Income) as one of the key criteria. This means that countries should be above the median on at least half of the indicators in each of the three policy categories and above the median on the Control of Corruption indicator. A country that performs substantially below average on any indicator (i.e. the bottom 25th percentile) and has not taken appropriate measures to address the shortcoming may be determined ineligible.

To be sure, the country’s low performance on the corruption index indicates persistent problems with public corruption that have nagged the Arroyo government, and which the MCC already pointed out in 2006 as largely attributable to high levels of corruption in tax and customs administration, conflicts of interest in the public sector and weak enforcement of existing anti-corruption laws.

Yet despite being ineligible for a broader MCC Compact assistance then, MCC bestowed on the Philippines a “threshold country” status under its grant program, for which it received $21 million (or P1.1 billion) for a two-year anti-corruption program in 2006.

MCC funding, which ran until late November this year, went to the government’s programs strengthening the work of the Office of the Ombudsman in prosecuting corrupt government officials, and intensifying the enforcement of anti-graft programs of the Department of Finance (DoF): the Revenue Integrity Protection Service (RIPS), Run After Tax Evaders (RATE) of the Bureau of Internal Revenue (BIR), and the Run After The Smugglers (RATS) of the Bureau of Customs (BoC).

Out of the $21-million assistance, the Ombudsman received $6.5M, which was reportedly spent on trainings, acquiring surveillance equipment, information management, disseminating the Graft and Corruption Prevention Education Teaching Exemplars (in line with its mainstream anti-corruption education program), and institutionalizing mediation for non-graft cases from 2006-2008.

Ombudsman’s measures of ‘success’

The Ombudsman, in its 2007 annual report, pointed to successes in its performance targets for the year based on three indicators: cumulative conviction rate (from 30 percent to 35 percent), the number of officials charged by the DoF’s RIPS and suspended by the Ombudsman (from six to 25), and the number of cases successfully mediated (from zero to 267).

It also reported a 55-percent conviction rate — up from 40 percent in 2006, but far from the 500-percent rate increase Arroyo trumpeted during her state of the nation address last July — before the Sandiganbayan, with 94 of 171 cases decided by the anti-graft court resulting in convictions, including guilty pleas. (The conviction rate, according to an abs-cbnnews.com report today, has gone down to 18.3 percent from January to October 2008.)

Foremost of those convictions was the plunder case of former President Joseph Estrada, in the process also recovering more than P569 million of his unexplained wealth and another P25 million recovered from co-accused Charlie ‘Atong’ Ang.

Similarly secured last year were the convictions of former Parañaque City Mayor Joey Marquez for the purchase of overpriced 142, 612 pieces of “walis tingting” and Director Trinidad T. Sibug of the Bureau of Tribal Relations of External Affairs, Office of Southern Cultural Communities (OSCC) for failure to account her cash advances and falsification of public documents in relation to the disbursement of funds for a fictitious training.

“Floundering’ on high-profile corruption cases

Such achievements, however, pale in relation to what anti-corruption advocates and the public alike regard as the apparent “inaction or downright mishandling of high-profile cases involving large-scale corruption that have been brought before (the Office of the Ombudsman).”

The Coalition Against Corruption (CAC), for one, notes how cases, interestingly involving allies of the administration, have either “floundered or have been dropped due to technicalities,” recalling the recent dismissal of the cases against former justice secretary Hernando ‘Nani’ Perez in the IMPSA payola scam and Cebu local government officials in the overpriced lampposts scam; and the acquittal of Commission on Elections officials led by former chair Benjamin Abalos Sr. in the bungled poll computerization deal with Mega-Pacific.

Then, there is also the long overdue filing of a plunder case against former agriculture undersecretary Jocelyn ‘Joc-Joc’ Bolante, the alleged mastermind of the fertilizer funds scam, even as no one has been held accountable for the cheating allegations in the 2004 presidential elections, the distribution of “cash gifts” in Malacañang to thwart another impeachment complaint against Arroyo, the bribery scandal involving the botched $329-million national broadband network project with ZTE Corporation, and the recent fiasco over the Philippine National Police’s “Euro Generals.”

Failing also in health and education

Still, it’s not only in curbing corruption that the Arroyo government has been actually found wanting. Its MCC scorecard also shows failing marks under the “Investing in People” category, performing poorly in two of five indicators — Health Expenditures (19 percent) and Primary Education Expenditures (32 percent).

Both indicators measure public expenditure — on health and education — as a percentage of gross domestic product (GDP), the first, sourced by MCC from the World Health Organization (WHO) and the second, from the United Nations Educational, Scientific and Cultural Organization (UNESCO) as primary source, and self-reported data from national governments as secondary source.

The country’s scorecard on health and education spending is however only reflective of the priorities of the Arroyo government. Last year, for instance, education only received more than a fourth of what was allocated for debt service. Health expenditures, on the other hand, got a paltry three percent of what went to payments for the country’s debt. (see also Misplaced Government Spending Worsens Woes)

With such level of spending, the country is also not on track in meeting its Millennium Development Goals (MDGs) targets to achieve universal primary education, reduce maternal mortality and increase access to reproductive health by 2015. Last year, halfway to the deadline, elementary participation, at 84.4 percent, declined from the 2000 level of 96.8 percent. Cohort survival only slightly increased at 69.9 percent from the 2000 level of 68.4 percent.

The 2015 target of 52 deaths in the maternal mortality ratio (MMR) is unlikely to be met with the decline in number of maternal deaths per 100,000 live births slowing down — from 209 deaths in 1993 to 162 deaths in 2006.

While access to reproductive health care improved at a modest rate of 50.6 percent in 2006 (for currently married women aged 15-44) from 49 percent in 2001, this will not be enough to achieve 100 percent access by 2015.