Honeyman: Smuggling

Sunday, September 4, 2011

PNOY has amazingly poor people skills. That is the only clear message obtained from the probable departure of Bureau of Customs (BOC) Secretary Alvarez. One of the worst things a boss can do is to tell the world that one of his immediate subordinates is going to be fired…but when?

The National Federation of Sugar Planters (NFSP) which successfully intercepted smuggled sugar last year, made constructive suggestions as to how BOC could reduce smuggling. Apparently Alvarez did not implement these suggestions.

Have something to report? Tell us in text, photos or videos.

In future, we need more cooperation between NFSP and BOC to prevent planters’ livelihoods from being threatened.

In a past life, Alvarez was an auditor for SGV. What is an auditor? An auditor is someone who finds accountancy too exciting! Seriously, we need to define our terms. An auditor is an inspector. He is not someone who can wave his magic wand and, hey presto, smuggling is eradicated.

What happened when Alvarez was appointed BOC Sec? He encountered a Bureau staffed by well-entrenched, career civil servants. Did they all work co-operatively and cohesively with the incoming boss? Or did they resist his instructions with objections, obfuscations, deceptions and dumb insolence?

We assume that Alvarez’ initial marching orders included an instruction to eradicate smuggling.

What authority does Alvarez have? Can he easily fire permanent civil servants in BOC whom he believes are not up to the job? Can he hire external people to troubleshoot a chronically dysfunctional government entity?

This begs the question: Who is the ideal candidate for the position of BOC Sec? Is it an ex-SGV auditor like Alvarez? I don’t think so. Many years ago, 1997 in fact, Victoria Milling Company was having financial problems. It turned out that the accounts, as audited by SGV, did not accurately reflect VMC’s financial condition. The reaction of SGV at the time was ‘Don’t blame us if we were given the wrong information.’

In short, auditors tend to be passive, reactive people. Heidi Mendoza is a National Treasure because she interpreted her audit role as requiring pro-activity. When she encountered obstructions, which AFP supplied aplenty, she was persistent and tenacious. We do not see this in the average civil servant.

So who is the ideal BOC Sec? We expect him to actively investigate and deter smuggling. We expect him to be able to work well with his peers in SRA, PDEA, NBI, PNP and others in order to produce a multi-jurisdictional attack on smuggling. [In this regard, SRA’s Gina Martin has mentioned Alvarez as approachable, as indeed he should be].

Smuggling always involves fraud. Last week’s filing of plunder charges against Mike Arroyo, ex PNP Chief Jesus Verzosa and a cast of thousands for allegedly buying second- hand helicopters and pretending them to be new, has to be underpinned by much detailed investigative work. We salute Senior Superintendent Edgar Danao, PNP’s antifraud division chief for what must have been much painstaking work including the investigation of senior police officers. BOC needs the same kind of investigative efforts.

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Last Thursday saw the beginning of the crop year 2011-2012. This year, we would like to see SRA issue accurate data relating to sugar production. This will entail SRA monitoring closely what is going on in the mills.

Last year’s data, from February 2011 onwards, defied belief. Specifically, the data appeared to include the sum of our own sugar production and smuggled sugar.

We do not accept that the Philippines has suddenly become a substantial net exporter of sugar with, in addition, a recent overhang of 800,000 tonnes.

In August 2010, there was a sugar shortage and the government decided to import 100,000 tonnes.

Events over the past few months indicate a large influx of smuggled sugar which has insinuated itself into our orthodox distribution channels. How? Although we are aware that smuggling is not formally within SRA’s mandate, we are entitled to expect SRA to issue accurate data on sugar production. In this way, SRA can achieve its mandate which is to ensure fair play at all stages from planting to end-user purchase. The sudden drop in millgate prices from February onwards hurt many planters. We give SRA a failing grade for 2010-11 and hope to see its fair play mandate for 2011-2012 to be successfully implemented. Millgate prices are likely to be soft so long as there is such a large overhang.

But we must stop being in denial about smuggling.

There is glib talk about a return to the 1990s when we claimed to be a net exporter of sugar. But we should also recognize that our population is 60% higher than it was twenty years ago. Our domestic consumption has risen correspondingly.

Let us not fool ourselves.