TEXT OF PRESENTATION
Auditors and Investigators Working Together to Fight Corruption
The Philippine
Experience
by Director Leonor D. Boado, Esq., CPA
Fraud Audit and Investigation Office
Philippine Commission on Audit
The
Philippines is replete with stringent laws that exact accountability from public officers. Theoretically, that should make
life difficult for the corrupt. For one, our penal law punishes the embezzlement
of funds or property amounting to $4.50 with 6 years imprisonment. The failure
to render accounts for a period of 2 months is punished with 2 years and 4 months in prison.
Qualified theft of public funds amounting to $150 carries a maximum of 20 years imprisonment.
For
another, the Philippine Constitution devotes one whole section (Article XI) to “Accountability of Public Officers.”
It
begins with a noble principle beautifully worded thusly:
“Public office is a public trust.
Public officers and employees must at all times be accountable to the people, serve them with utmost responsibility,
integrity, loyalty, and efficiency, act with patriotism and justice, and lead modest lives.”
The
Constitution likewise created the Office of the Ombudsman and endowed it with enormous powers over any act or omission of
any public official or employee which appears to be illegal, unjust, improper, or inefficient. It strengthened the Commission
on Audit or COA by infusing it with the exclusive authority to determine, prevent and disallow improper use of public funds
and property. It recognized the Sandiganbayan,
the special anti-graft court having jurisdiction over high ranking officials accused of corruption. Sandiganbayan is a
Filipino word meaning one to whom the people repose their trust.
With
the Office of the Ombudsman and the COA at the helm, and the stringent laws on accountability in force, there should be no
reason why corruption should exist.
It
is therefore puzzling why there is the perception reported by Transparency International that the Philippines is among the
most corrupt in Asia and in the rest of the world.
But
perception may or may not be proportionate with reality. So we need a gauge or
standard to determine whether or not the perception approximates the reality. We can offer our poverty level and our citizens’
perception of corruption as standards.
There
is no doubt that a great majority of our people are poor. Studies done by international
agencies on the Philippines’ poverty situation show that of around 90 million people, 20 million are living below $1.25/day
while over 40 on less than $2/day. (That would not even buy a hamburger here.)
Personally,
I do not understand why many of us are so poor.
Let
me inform that Filipinos are very skillful, industrious and creative. Hon. Hillary
Clinton recognized this when she told the President of the Philippines that she has not found a group of people more industrious
than Filipinos. It is not rare to find an individual holding two jobs a day. Or, a student working at night to support his studies as well as the needs of his
family.
May
I inform also that the Philippines is very rich in natural resources. Years ago,
an Arabian visitor said that God did not give us oil but gave us everything. He
was wrong. God also gave us oil as deposits have been discovered in the gorgeously beautiful island of Palawan, one of the
7107 islands of the Philippines.
So,
with very rich natural resources and very industrious and skillful people, why are most Filipinos poor?
A June
30, 2008 article of the Philippine Daily Inquirer explained why. It reported
that “In 1997, the Office of the Ombudsman estimated that the government lost $48 billion
to corruption in the previous 20 years.”
With such huge amount lost, it can only translate to increase in poverty. There
is a direct link between corruption and poverty: the level of poverty is directly proportionate with the level of corruption. To put it succinctly, for every case of corruption, one child will not eat or a father
will sell his kidney or a mother will be buried in a landslide or a sibling will be carried by raging floodwaters.
Concededly, corruption is not the only cause of our poverty but it is the mother of all causes.
Lack of disaster preparedness drives families to poverty because we are hit by typhoon very often. Deforestation thru illicit sale of permit to cut trees increases incidents of flooding
and landslide. Farm-to-market road fund allotted by the government to help farmers bring their produce in the market is diverted
to some pockets that it is now termed “farm-to-pocket” funds. Land ownership by influential few causes many farmers to remain
in land bondage. There are many job vacancies available but graduates are poorly matched
because the standard of education has been eroded by shortage of schools and educators.
Actually,
you have lured many of our good teachers here offering them salaries which our government cannot afford.
A
teacher in the Philippines earns about $350 a month. Her monthly here is her
one year salary back home.
True,
many corrupt officials are charged before the court but because they steal big, they can hire lawyers who skillfully delay
the judicial process. Due process has become an endless process.
And
because of this sad situation, the citizens’ perception is that corruption is real.
In fact, our perception of corruption has become so pervasive that we now have corruptionary
– dictionary of corruption words and phrases. This book was prepared
by volunteer students and researchers from the Center for People Empowerment in Governance (CenPEG). It contains about 400 corruption related terms and jargon and the list is growing.
Examples
of these words are:
Trapo (tra - po) – a combination of the first syllables of the words traditional politician. Trapo is a Filipino word meaning rags or tattered cloth for wiping dirt and therefore
the traditional politician is presumed to be dirty.
Moderate your greed – corruption is addictive
and the greed of the corrupt becomes excessive, thus they are admonished to moderate
their greed.
Tongpats (tong – pats) – reverse spelling of the word patong
(pa – tong), meaning “on top.” It describes the illicit mark-up
on government contracts to cover under-the-table commission or kickback.
Ninoy – nickname
of Benigno Aquino, Jr., father of the Philippine President and husband of former President Cory Aquino. Ninoy’s face can be found on the P500 bill. When a traffic
policeman apprehends a driver for alleged violation of traffic laws and says “Ninoy,” he is demanding a P500 bribe
(about $10).
The
people’s exasperation over corruption catapulted our President to the highest office because of his campaign slogan:
“no corruption, no poverty.”
Corruption
subsists due to lack of systematic, automatic, speedy and unbending enforcement of laws on accountability. In other words, without enforced accountability, corruption flourishes and poverty abounds. Put differently, opportunity plus impunity equals corruption.
This
is not to say that the Government did not try to remedy the situation. Public
records will show that it did, indeed.
The
Philippine Senate and the House of Representatives each has a Committee on Justice, Committee on Good Government, Blue Ribbon
Committee all of which investigate corruption in government. There is also the
Presidential Commission on Good Government to recover ill gotten wealth. We had
the Presidential Anti Graft Commission to investigate Presidential appointees accused of corruption. The defunct Presidential
Anti-Smuggling Group was tasked to go after smugglers and their protectors in government. The Anti-Money Laundering Council
to report and monitor money launderers and the banks that cuddle them; and so many more.
However,
if the personalities involved in the drive against corruption do not inspire belief or are corrupt also, the whole thing becomes
a farce.
So
what do we do? Well, what we do in the Commission is we still try and do our
best. And as we are partnering with the Ombudsman, we hope that we could make
a dent.
For,
I would like to believe that of the anti-corruption agencies we have, the most formidable are the Office of the Ombudsman
and the COA.
The
COA and the Office of the Ombudsman are very much feared institutions because of their enormous oversight powers over public
officials and employees. But they have not been getting their act together. If they did, and should, these two agencies can
be a force to reckon with – a “fear factor,” a deterrent to unscrupulous public officers.
The
need for such concerted act cannot be overemphasized for the result of audit of the COA is forwarded to the Ombudsman for
prosecution of the erring official. The output of our forensic audit is the input
of the Ombudsman’s investigation prosecution.
For
a better understanding, let me discuss very briefly their creation and mandate.
The
Office of the Ombudsman was created by the 1987 Constitution as protector of the people.
It was given enormous power to prosecute erring public officers and employees.
It has an active role in the enforcement of laws against corruption other offenses that may be committed by such officers
and employees.
The powers
of the Ombudsman include investigation of any act or omission alleged to be illegal, improper,
or inefficient.
It can take action against a civil servant and order his removal, suspension, demotion, fine, censure, or prosecution. It can demand the submission of documents relating to contracts or transactions.
On the
other hand, the COA has existed for 112 years since the Spanish colonial rule in the Philippines. It was called the General
Auditing Office and headed by an Auditor General. Later, the Auditor General
was replaced by a collegial leadership of the Chairman and two Commissioners. In
1987, the new Constitution expanded the powers of the COA which include audit of all revenues and
expenditures or uses of public funds and property; the exclusive authority to disallow irregular, illegal, unnecessary, unconscionable,
excessive, or extravagant (IIUUEE) expenditures; and the authority to promulgate accounting and auditing rules and regulations.
The Commission is thus authorized to set up the accounting system of the government; maintain the budgetary accounts;
and report on how the budgeted amounts were disbursed. It can investigate the
commission of fraud in government transactions. Nothing is exempt from our audit for the Constitution in mandatory and prohibitory
language bans the Congress from enacting any law authorizing such exemption.
With such
expansive and extensive oversight authority of the Ombudsman and the COA, corrupt officials’ inclination to
satisfy their greed should be clipped. However, militating against such is the lack theretofore of the minimum coordination
and cooperation between them. In fact, there were frictions at times because
the Ombudsman often directed the COA to conduct audit investigation of complaints it receives.
Naturally, the COA is offended considering that they both have separate mandates and the audit agency has limited personnel
and budget just like all others.
Thus,
meanwhile that they are debating on whether or not the COA should act on the Ombudsman’s directive, time is wasting
away and the case becomes cold. To the great pleasure of the officials accused
of corruption and to the utter dismay of the complainant. Thus the need to thresh
out these differences.
Recently,
the two agencies realized the immediate need for cooperation and coordination to arrest the growing number of corruption cases. So in 2004, the COA and the Ombudsman together with other agencies involved in the
investigation and prosecution of corruption banded together and came up with a joint anti-corruption plan. The members called it the Solana Covenant. It outlined concrete
initiatives to be undertaken by these agencies with a more coordinated approach to fighting corruption.
Somewhere
along the way, the enthusiasm of the members fizzled out and the group hibernated until in 2009. A new collaboration among the Ombudsman, the COA, and the Civil Service Commission was forged bringing into
existence the Constitutional Integrity Group (all three are creatures of the Constitution).
In
2010, the United States Agency for International Development (USAID) through the Management System International and its Integrity
Project (MSI-IPro) entered into the picture and facilitated the closer and sustained cooperation between the Ombudsman and
the COA. The timing could not have been more perfect.
To
respond to the urgent and imperative need to address the respective concerns between the two agencies for a harmonious working
relationship, the following steps were undertaken:
1. The Fraud Audit and
Investigation Office (FAIO) which I head was designated as the focal office for COA. I met several times with my counterpart
in the Ombudsman to map out our coordination efforts.
2. The offices held separately
a series of Focus Group Discussions in March and April of 2010 to identify and propose solution to the issues and concerns
adversely affecting the investigation and prosecution by the Ombudsman of cases arising from audit reports
3. Core personnel of the
two offices met preliminarily to narrow down the issues and concerns and propose possible solutions.
4. The output of that small
group was presented in plenary for finalization.
5. This culminated to a
joint workshop entitled “Strengthening Institutional Commitments between the Commission on Audit and the Office of the
Ombudsman: Towards Winning Corruption Cases.”
In
that workshop, the following targets were achieved:
a. Plan of action based
on the results of the discussions;
b. Memorandum of Understanding
between and by the representatives of the COA and the Ombudsman; and
c. Memorandum of Agreement
to be signed by the Heads of the Ombudsman and the COA.
The
plan of action identified concrete activities, within a timeframe, to solve the identified issues and concerns.
These
activities are as follows:
1. Draw guidelines in conducting joint investigation for high-profile cases;
2. Identify focal units for issues that require coordination between the two agencies, and
to monitor/track cases;
3. Create records unit and establish storage facilities to preserve documents and evidence
4. Set up of a case management system at both offices
5. Conduct cross trainings for capability building for forensic audit, investigation and
prosecution; and
6. Develop joint guidebook on case-building and prosecution; identify the crime and the corresponding
evidence needed.
On
June 15, 2010, the Memorandum of Agreement for close coordination and cooperation between the auditors and investigators in
the fight against corruption was signed by the Chairman of the COA and by the Ombudsman. One month thereafter, to make operational
the Memorandum of Agreement, the two agency heads met again and signed two joint circulars: on the case management system
and on the conduct of the joint investigation.
As
to the capability-building of the auditors and investigators, nationwide trainings were conducted by the COA for the benefit
of Ombudsman investigators and prosecutors to familiarize them on auditing laws, rules and regulations. The prosecutors of the Ombudsman returned the favor and trained COA personnel all over the country on the
rules and procedures on corruption investigation and prosecution, and help them become effective witness in court.
A
side benefit of these exchanges is that the relationship between the forensic auditors and the Ombudsman prosecutors has become
more personal. Now, communication between them is more on real time, so instead of writing to each other which takes about
a month or two to get the results, a telephone call or a personal appearance in the office will do the job in just one or
two days.
On
the joint investigation activity, the agencies agreed on the following criteria for a case to be covered:
1.
Amount involved is at least $1.20 million
2.
Respondents are high ranking officials like mayors, corporate managers, directors, and the like.
An
unwritten criterion to narrow the choice is the greater impact of the case on the public for there are many cases that can
fall within the two criteria. Already, three big ticket cases are lined up for investigation. One of these cases has been
the subject of a series of case conferences last year between the forensic auditors and the prosecutors. The investigation is proceeding satisfactorily and is now in the report writing stage.
The
joint investigation team or JIT is composed of select investigators and forensic auditors. Before the JIT, our fraud audit
report is transmitted to the Ombudsman which will subject it to another fact-finding investigation. If the investigators are
satisfied that the pieces of evidence gathered are sufficient, they will recommend its preliminary investigation in another
department. It thus takes too long to complete the process before the case goes
to the Sandiganbayan. It is not surprising
for a complaint to take two years or more to ripen into a court case and the trial of the case can take even longer.
Precisely,
the FAIO was created to help arrest the growing number of corruption cases. We
receive around 10 complaints a day, so we cannot do much with less than 50 forensic auditors and perennial shortage of investigation
and IT equipment.
The
FAIO is also tasked to cleanse the ranks of auditors. We investigate and file
administrative disciplinary cases against auditors who have neglected or failed to check abuses in their respective agencies.
We must remember that they are the first line of defense against corruption as they are resident auditors. Thus, in a little
over two years, we have investigated and charged 83 auditors for various infractions. And in the same period, we submitted
30 fraud audit reports to the Office of the Ombudsman. These are significant
cases that involve millions of pesos lost to corruption.
Examples
of these cases are as follows:
1. Failure to issue receipts and to
record in the books grants and donations amounting to over $100,000 to a government agency involved in alleviating the plight
of poor people living in urban areas
2. Purchase of rubber boats overpriced by over $100,000
3. Renting service vehicles for $235,000 instead of purchasing
4. Failure of a mayor of a fourth class municipality to liquidate cash advances of
$63,000 since 2004
5. Livestock raisers’ program which failed due to connivance with favored input
suppliers involving more than 10 million dollars.
The
above reports were completed prior to the creation of the JIT and as of today none of these cases has been filed in court.
It
is hoped that with the JIT members working shoulder to shoulder, the period of investigation and filing of cases in court
will be shortened.
As
earlier stated, the JIT is working at present on a big ticket case. The team
has so far uncovered the following findings:
1. Allowances/benefits and bonuses granted were excessive in number and excessive
in amount
2. Future benefits and allowances were paid in advance to trustees by accruing and
paying the amounts before year end and through cash advance. This is double illegality
for not only are they disqualified to receive benefits and allowances, these should not
be paid thru cash advance and should not be accrued
3. Consultants and non-organic personnel who were not entitled were also granted
benefits
4. Compound instead of single accounting entry concealed the irregular transactions
5. The allowances and benefits were doubly claimed from Personal Services account
and from Maintenance and Other Operating Expense account to which class these do not belong
6. These allowances and benefits were also taken from the two kinds of Funds held
by the agency. In other words, the same benefit was taken four times –
from Personal Services, from Maintenance and Other Operating Expense, and from two Funds
7. The total amount of the illegal disbursements is estimated to reach not less than
$2 million
The
immorality of this fraud is mind-boggling and nauseating, to use a very mild term.
It
is my personal wish that with the collaboration between the auditors and the investigators, we will achieve the following:
1. Identify and charge erring public officials
2. Prosecute them successfully
3. Send a message to other public servants that they should serve not rob the government, and
4. Recover the amounts lost.
The
Ombudsman and COA believe that they have created a lethal partnership and expect to reduce opportunities and thus clip the
inclinations of corrupt officials. They should not only moderate their greed but deaden it all together.
With
the legal guidance of the investigators, the case building of our forensic auditors is expected to produce air-tight cases
that will stand the rigors of trials.
To
repeat, corruption subsists due to the lack of systematic, automatic, speedy and unbending enforcement of laws on accountability. Without enforced accountability, corruption flourishes and poverty abounds. Opportunity plus impunity equals corruption.
As
the Holy Book says: Because sentence against a bad work has not been executed speedily,
that is why the heart of the sons of men has become fully set in them to do bad. (Ecclesiastes 3:11)
Through
the successful prosecution of cases jointly investigated, the COA-Ombudsman JIT expects to instigate a ‘fear factor’
that will send this message –
Corruption
is a crime that is not tolerated by the Philippine society and is severely punished under Philippine laws.
So
God help us!
