Minimizing Philippine big corruption deals

Frankly Speaking
By Frank Wenceslao

Ombudsman Conchita Carpio-Morales

BREWING development to address the Philippines’ graft and corruption problem may soon result in minimizing if not eliminating the inclination to earn a quick-buck by rigging large government contracts and get big kickbacks or commissions similar to the P728-million fertilizer fund scam in 2004 for which Jocelyn “Joc-joc” Bolante has been charged of masterminding.

Or the $329-million National Broadband Network (NBN)-ZTE deal brokered by ex-Comelec Chairman Benjamin Abalos after the former First Gentlemen Jose Miguel Arroyo drove away ZTE’s competitors including ex-Speaker Jose de Venecia’s son who claimed to have offered the most advantageous bid, a build-operate-and-transfer (BOT) contract that won’t entail any public expenditures upfront.

To have an idea how the NBN-ZTE deal is so rotten, Abalos allegedly promised then NEDA chief Romulo Neri P200 million by merely approving the contract. That’s after Abalos had confirmed China’s ZTE Corporation’s seriousness to pay an over price of up to 35% of the contract value or approx. $115 million. Abalos allegedly got an advance payment of $1 million for his commission which was enough proof for him the Chinese firm would pay the over price, thus enable Abalos to fulfill his promise to pay hundreds of millions of pesos firstly to Mike Arroyo and the government officials including Neri who had to approve the contract.

Even at that time Ombudsman Merceditas Gutierrez could’ve brought charges against Abalos et al. on the basis of Jun Lozada’s testimony and other evidence of corruption could be found in the NBN-ZTE deal that should’ve included forfeiture to the state of Abalos’ unlawfully acquired properties when he’s the Mandaluyong mayor and Comelec chairman under RA 1379 (forfeiting unlawfully acquired property of a government official or employee) probed through forensic audit of his ITRs and SALNs. This should’ve been the “lever” to open investigation of Abalos’ ill-gotten wealth and use it as evidence for criminal charges of his violating RA 3019 (Anti-Graft and Corrupt Practices Act).

As a nuclear option, Gutierrez should’ve invoked the PHL-USA Mutual Legal Assistance Treaty (MLAT) and other international cooperation agreements against corruption explained below and asked the US Department of Justice’s (USDOJ) help to prosecute Abalos in the US.

It took a retired UP law professor and CA justice and a retired Filipino employee of the US Treasury Dept. financial crimes division, volunteer advisers who wish to remain anonymous of the LA-based Philippine Anticorruption Movement USA, Inc. (Pamusa), among thousands of Filipino lawyers to point out that Philippine law enforcers have been sleeping on the job unaware of the legal resources added to the Philippines justice system since the signing of the said legal assistance treaty in 1994; the UN Convention Against Corruption (UNCAC) that took effect in Nov. 2006 after it’s ratified by the Philippine Senate and became part of the law of the land; and the US National Strategy to Internationalize Efforts Against Kleptocracy promulgated in Aug. 2006 enabling the US to cross national borders in enforcing the UNCAC pursuant to US laws in effect empowering US law enforcers to “target assets misappropriated by current and former senior foreign government or political officials, their close associates and immediate family members, or other politically exposed persons (PEPs)” (US National Strategy, supra), charge the perpetrators in US court and send them to US jail.

Added meanwhile to these legal resources, among others, are the 2008 OECD agreement on the exchange of tax information, say, between the BIR and IRS, which has been reinforced by the G-8 Summit last June in Northern Ireland where the world’s eight (G-8) most powerful nations agreed to clamp down hard on tax avoidance and evasion including countries allowing themselves to be tax and hot money havens; and the 2009 G-20 London Summit ending secrecy of bank accounts that led then British PM Gordon Brown to declare: “The era of bank secrecy is over.”

It’s not an exaggeration that with these legal resources properly implemented President Aquino can close the exit doors of proceeds from the country’s big corruption deals towards safe havens abroad or recover them with worldwide cooperation in the remaining three years of his term. This will be continued by the OMB-PCGG-PAMUSA Cooperative Framework (“coop” for brevity) more so when Ombudsman Carpio-Morales will still be the OMB head for at least three more years after the President left office.

Surely, the Philippines has lost a great opportunity to minimize corruption during President GMA’s administration. She could have ended the nefarious practices of Filipino defense lawyers’ strategy to delay investigation of corruption cases until investigators are bought; evidence is lost due to undetermined cause; the complainant and principal witness loses interest; or a change of administration brought in the justice department has new interests far from addressing and fighting corruption. Arroyo could’ve stopped also the arrogant reply when one suspected of getting involved or engaged in corrupt activities, “Prove it!”

However, the above legal resources have likewise empowered the OMB’s prosecutors to change strategy and prosecutorial discretion. Firstly, gather all the pieces of evidence from the office where respondent allegedly may have committed the crime including for probable BIR tax evasion and the Anti-Money Laundering Council (AMLC) may have traced unusual bank deposits and foreign currency remittances (money-laundering evidence) since it’s almost certain a government official or employee involved in a big corruption deal would’ve evaded paying correct income tax, sent money to the US and acquired properties beyond the realm of statistical probability of his income. Last but not least, all government offices that may have received illegal business proposal from the would-be respondent or his company should pass this information to the OMB for analysis and inclusion.

There’s always the probability an illegal business proposal made to another office is part of the suspect’s modus operandi and could be the missing link to reinforce the totality of evidence the OMB investigator has gathered and lower the boom. Thus, it’s imperative for the BIR, AMLC and other infrastructure development-related agencies to constantly update each other of “Suspicious Activity Reports” (SARs) such as that reported to the US Treasury Dept.’s Financial Crimes Enforcement Network (FinCEN) by all US banks and financial institutions including money changers, casinos, currency dealers, etc. pursuant to the US Bank Secrecy Law, as amended to conform to anti-terrorism regulations.

To implement this new anticorruption strategy and prosecutorial discretion, there should be the abovementioned cooperative framework (“coop” for brevity) for the Presidential Commission on Good Government (PCGG), OMB and Pamusa whereby the PCGG will update its evidence on Marcos’ and cronies’ ill-gotten wealth with their location on which the said legal assistance treaty applies bolstered by the international cooperation agreements against corruption while the OMB will henceforth combine all pieces of evidence of the agencies concerned against a suspect to qualify him at the level actionable by the OMB and be charged of probable violation of the laws that can be thrown at him, e.g. anti-money laundering act that AMLC provided the OMB to pull the rug under ex-CJ Renato Corona’s feet, which is the one evidence for his disgraceful fall.

A totality of evidence should be ready to be the basis of legal action against a respondent and not as happened in the past when a case was prosecuted with piecemeal evidence that led to acquittal. Whether or not respondent has been charged in Philippine court, the evidence can be transferred to the US with Pamusa either retaining a US law office, asset-search firm (detective), etc. to gather its own evidence to add to what came from the Philippines. Hence, this won’t need FBI’s further investigation and lessen its work to “determine whether a federal investigation may be warranted. Instead, with sufficiency of Pamusa’s evidence, “the FBI will refer the matter to a United States Attorney (USDOJ prosecutor) for a final determination regarding legal action.”

This is based on Pamusa’s authority to participate in fighting corruption granted by the USDOJ’s letter of 11/14/07. Justice Secretary de Lima is expected to reinforce this authority by designating Pamusa’s president which happens to be me presently to be her representative to make and receive the requests of the USAG pursuant to the said legal assistance treaty “in connection with the prevention, investigation, and prosecution of criminal offenses, and in proceedings related to criminal matters.” Either party shall render unto the other when requested, as follows: (a) taking testimony or statement of persons; “(b) providing documents, records, and items of evidence; (c) serving documents; (d) locating or identifying persons of items; (e) transferring persons in custody for testimony or other purposes; (f) executing requests for searches and seizures; (g) assisting in proceedings related to forfeiture of assets, restitution, and collection of fines; and (h) any other form of assistance not prohibited by the laws of the Requested State.”

The truth is had GMA accepted Pamusa’s offer to help her clean up graft and corruption the Philippines could have included in asking US government assistance, for instance, of conducting searches and seizures where Bolante hid his share out of the P728-million (approx. $15M) fertilizer scam his wife reportedly carried to the US in 2006, or Abalos’ $1 million advance commission from the NBN-ZTE deal.

In retrospect, it’s foolish of me to offer Pamusa’s services to GMA because knowing how deeply she’s allowed herself, her family members and close associates to be mired in corruption, she must’ve thought she would be the first in Pamusa’s crosshairs. I promised her, though, as quid pro quo for her support we won’t act against anyone she won’t approve of. It’s not too late though to do this as soon as the OMB-PCGG-PAMUSA Cooperative Agreement (coop) takes effect.

Norwalk, CA – 80313