Oct 182014

Reference ID Created Released Classification Origin
2008-03-12 09:57
2011-08-30 01:44
Embassy Manila


DE RUEHML #0622/01 0720957
O 120957Z MAR 08




E.O. 12958: N/A

REF: STATE 18836

¶1. (U) Per reftel request, this cable includes Post’s input for the
2008 International Anticorruption and Good Governance Act (IAGGA)
Report to Congress, detailing Philippine anticorruption efforts
since 2006 and U.S. Government-funded programs to support these

Philippine Government Efforts to Fight Corruption
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¶2. (U) While corruption remains a central challenge to good
governance in the Philippines, the Philippine government has made
significant efforts to improve transparency and combat corruption at
all levels. Central to the government’s anticorruption efforts is
the Office of the Ombudsman, the independent agency that
investigates and prosecutes corruption cases in the public sector.
Starting from a low six percent conviction rate in 2002, the
Ombudsman succeeded in raising the conviction rate in public
corruption cases to 19 percent in 2006 (35 convictions out of 188
cases) and 55 percent in 2007 (94 convictions out of 171 cases).
The Ombudsman’s prosecution of former president Joseph Estrada for
plunder and the Anti-Graft Court’s unprecedented conviction and
40-year sentence in October 2007 was the most significant of these
cases, highlighting that the Ombudsman’s reach extends to the
highest levels. While Estrada was pardoned, he was required to
forfeit bank accounts and property amassed illegally during his
two-year tenure, as decreed by the Anti-Graft Court.

¶3. (U) Notwithstanding this progress, the efforts of the Ombudsman
and the Anti-Graft Court are hampered by many institutional
challenges. Investigations are hindered by Philippine banking
secrecy laws that limit access to certain crucial financial
information, and by poor protection for would-be whistleblowers.
The high caseload and the general practice in Philippine courts to
try cases on a piecemeal basis combine to make trials at the
Anti-Graft Court last an average of six to seven years from filing
to promulgation of decisions. While delay remains a significant
problem, the Anti-Graft Court has taken steps to address the issue
by improving case management and making several important procedural
changes, most notably the move to continuous trials. The Anti-Graft
Court also established a mediation process to trim its caseload and
successfully mediated 256 cases in 2007.

¶4. (U) The Department of Finance, Bureau of Internal Revenue, and
the Bureau of Customs have also taken significant steps to
strengthen their anticorruption mechanisms. The Revenue Integrity
Protection Service (RIPS) detects, investigates, and prevents
corruption in the revenue generating agencies of government under
the Department of Finance. Its recent successes include the filing
of 27 graft cases in 2006 and 37 in 2007, compared to 18 cases in
¶2005. To date, 25 officials of the Bureau of Internal Revenue or
Bureau of Customs have been suspended by the Ombudsman under the
program. Six Bureau of Customs officials were suspended for alleged
smuggling of 16 luxury vehicles and cases were filed against two
Customs officials for the illegal release of another 14 high-end
luxury vehicles at the Subic Bay Freeport Economic Zone.

¶5. (U) The Run After the Tax Evaders (RATE) Program, created by the
Bureau of Internal Revenue in 2005, pursues tax evaders and those
involved in facilitating tax evasion. According to a National Tax
Research Center study covering the period 2001 to 2005, an average
of P35.74 billion ($893.5 million) in potential revenues was lost
each year because of individual tax evasion. From the time the
program began in 2005, some 87 RATE cases have been filed with the
Philippine Department of Justice. The Program achieved a 19 percent
increase in corporate tax return filers in 2007 and a 5.8 percent
increase in individual taxpayer returns.

¶6. (U) The Run After the Smugglers (RATS) Program, established by
the Bureau of Customs in July 2005 and formally launched in 2006, is
mandated to detect and prosecute smugglers and other customs and
tariff law violators. Thru December 2007, 60 cases have been filed
with the Philippine Department of Justice. Some 11 high-value cases
were filed with the Court of Tax Appeals. To further help prevent
smuggling, the Bureau of Customs also took the initial steps to
shift all operations to “paperless” transactions.

¶7. (U) Other notable accomplishments of the government include the
November 2006 ratification of the UN Convention on Anti-Corruption
and the June 2007 signing of the Anti-Red Tape Act, a law designed
to significantly reduce transaction times for government procedures
and to provide stiffer penalties to those employees who engage in
corrupt practices. In November 2007, President Gloria Macapagal
Arroyo established the Procurement Transparency Board to increase
civil society oversight of government procurement activities.

U.S. Government-Funded Programs

¶8. (U) The Chief of Mission and senior U.S. officials used every
appropriate opportunity, publicly and privately, to highlight the
negative effects of corruption on economic growth and political
stability, while development assistance supported both Philippine
government and civil society partners to develop the policies and
tools necessary for a transparent democratic system. In July 2006,
the Millennium Challenge Corporation through its Millennium
Challenge Account (MCA) Threshold Program provided a $21 million
grant to the Philippine government to strengthen and
institutionalize its anticorruption programs. The Philippines
contributed counterpart funding of P1 billion ($25 million) to the

¶9. (U) Law Enforcement and Legal Systems: In 2006 and 2007, the
U.S. provided training to approximately 2,000 government officials
on anticorruption procedures and mechanisms. U.S. assistance helped
the Anti-Graft Court develop a computerized case management
information system, making it easier to track cases and identify
those that are overdue. U.S. efforts also enabled the Anti-Graft
Court to conduct continuous trials, permitting judges to gauge the
reliability of witnesses and rule effectively. With the prospect of
dilatory tactics eliminated, the accused in almost half of over 50
pilot cases selected for continuous trial opted to enter plea
agreements, effectively concluding their cases. U.S. assistance
helped improve the abilities of staff of the Office of the Ombudsman
to investigate and prosecute corruption cases through training in
substantive law, investigation and prosecution skills, legal writing
and research, and case preparation. The U.S. also supported
assessments of selected government agencies for vulnerability to
corruption and provided direct training and support to improve the
capacities of the Office of the Ombudsman, the Bureau of Internal
Revenue, and the Bureau of Customs. The U.S. also provided
advisory assistance to the Philippine Anti-Money Laundering Council,
which is investigating seven corruption cases involving P1.4 billion
($35 million).

¶10. (U) Transparent Governance: The U.S. provided technical
assistance to improve the efficiency and transparency in government
procedures at both local and national levels, including business
registration and permit issuance, tax collection, and budget and
procurement procedures. U.S. programs continued to strengthen
procedures and internal controls among the revenue-generating
agencies of the Philippine government. The U.S. continued to
support the automation of the personnel and management systems for
the 11,000 employees of the Bureau of Internal Revenue. U.S.
programs helped the Office of the Ombudsman and the Supreme Court to
detect vulnerabilities to corruption; and to design and implement
systems and safeguards to prevent corruption in public sector

¶11. (U) Civil Society: The U.S. also engaged civil society in the
fight against corruption by supporting the Multi-Sectoral
Anti-Corruption Council and various focus groups that act as
watchdogs to prevent corruption in government. The U.S. provided
assistance the Transparency and Accountability Network, a coalition
of 25 civil society organizations concerned with anticorruption and
good governance. The U.S. also funded a broad coalition of civil
society organizations to monitor the formulation and use of the
national budget. With assistance from the U.S., the Office of the
Ombudsman distributed teaching guides on graft and corruption
prevention to all the elementary and secondary teachers in 44,000
public schools nationwide to instill civic awareness, ethics and
integrity among public school students and teachers.




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