Unraveling the mess-A A +A
An Independent View
Monday, September 30, 2013
JANET Napoles’ allegedly dubious financial transactions involving her numerous bank accounts have attracted the attentions of us all.
Accompanying our usual fatalism about the existence of widespread corruption throughout government is anger that the amounts of money are so large. Also, channeling funds through bogus NGOs reveals a level of hypocrisy which we did not believe was possible. Naively, I thought NGOs were operated by the rich but honest to help the lowly and downtrodden.
Now it seems that the bogus NGOs are conduits to facilitate the illicit transfer of public money into private hands. How depressing.
PNoy was elected partly on the basis that he would reduce corruption. In 2010 I wrote that his presidency could be deemed adequate if Philippines improved its Transparency International league table position from a then lowly 134th to 100th or better, By December 2012 our position had improved to 105th. The December 2013 results are awaited with interest but anecdotal evidence suggests some slippage.
Throughout PNoy’s presidency he has enjoyed very high ratings. Neither Pulse Asia nor SWS have issued ratings since the alleged anomalies involving the priority development assistance fund were revealed. A significant drop in his popularity would show just how important corruption eradication is in the mindset of the populace. 2016 presidential candidates should take note.
There are a substantial number of government instrumentalities that have some responsibility for addressing what is commonly known as the pork barrel mess. It is not surprising, therefore, that contention can arise. Perhaps the most public example is the denial of the request of Sen. Teofisto Guingona III to subpoena Janet Lim Napoles to appear before the Senate Blue Ribbon committee (chaired by Guingona). Senate President Frank Drilon has the authority to issue the subpoena, but before doing so, he consulted the Ombudsman, Conchita Carpio Morales. She advised against, “at this time,” citing Rules of Procedure that among other things prevent people from exposure to ridicule or public censure.
Guingona disagrees. But if Napoles’ evidence is an important “aid to legislation,” would it not be possible for the Blue Ribbon committee to hear what she has to say in Executive Session – that is, in private?
Exposing witnesses to ridicule is something for Senate to avoid. I recall years ago when Senator Richard Gordon subjected Sandra Cam to a totally unnecessary public humiliation at a Senate hearing. Cam’s legal adviser, recently deceased Frank Chavez was also subjected to Senatorial self-importance when he tried to defend his client.
Bangko Sentral ng Pilipinas (BSP) also has a huge workload in trying to establish whether banks holding Napoles’ accounts fulfilled their responsibilities under the Anti Money Laundering Act (RA 9160). BSP officials are given authority under RA 7653 – the New Central Bank Act which was passed in 1993.After twenty years, this Act is due for revision. One proposal is that BSP should have a P150 billion capital infusion. [RA 7653 mandates only P 50 billion which, in any case, has not yet been fully remitted by the government]. The reason for the proposed additional capital is that in 2012, BSP recorded a loss of P95.38 billion as it purchased dollars to dampen down a sharp appreciation of the peso. The Philippines is vulnerable to exchange rate fluctuations, particularly when we consider that overseas remittances, predominantly in US dollars, are equivalent to approximately 10% of the nation’s GDP. So when the dollar buys relatively few pesos, the adverse impact on the economy is serious.
Another proposed revision of RA 7653 is better protection for BSP officials and staff in the performance of their duties. This is disturbing. Does this mean that these officials have been receiving real or imagined threats of legal action by officers and staff of banks currently under investigation as a result of the Napoles’ family accounts?
It is in the public interest to know how banks are co-operating with BSP in terms of any possible breaches of the Anti Money Laundering Act (Amla) [RA 9160]. “The Bankers Association of the Philippines (BAP) has been working vigorously with its members to ensure full compliance with Amla laws and regulations,” says BAP president Lorenzo Tan also president of Rizal Commercial Banking Corp. (RCBC). We are glad to hear this.
Mel Racela, deputy director of BSP’s anti-money laundering specialist group, says: “It’s too early to say if they (the banks) have failed in their know-your-customer (KYC) policy.” This is a difficult area. There is customer information that is required under Amla for those, like Janet Napoles, who are dealing with large amounts, but there is also much KYC information that banks have which is not covered by the New Central Bank Act or the Amla Act. We need to remember that the banking industry in its present form is underpinned by the 1955 Bank Secrecy Act (RA 1405). This means that banks are, in general, not allowed to disclose depositor information.
Consequently, there is a balancing act between investigation and disclosure. But banks should not use the Bank Secrecy Act to protect the guilty and this is what the more recent Acts are designed to prevent.
‘Justice is truth in action’
-Benjamin Disraeli (1804-1881)
Speech in the House of Commons
11 February 1851
Published in the Sun.Star Bacolod newspaper on September 30, 2013.