Ending corruption

The President declared to the people: “Corruption must stop!” The declaration reverberated in the public consciousness and unleashed hope for change. No other Philippine leader, whether in the recent or long-gone past, has ever made such an emphatic directive to the public sector. And this one walks his talk; he fires people he once trusted on a mere “whiff” of corruption. Some were rightly or wrongly booted out of the service, but they do serve at the appointing authority’s pleasure so there is no reason to rant.

The biggest challenge to the President is cleaning up the bidding process in the implementation of public infrastructure projects, from flood control to undersea infrastructure to road improvements, and a lot more.  The web of corruption is spun not in the implementation stage of the project but as early as the nascent stage of project conceptualization and budgeting.

An enterprising public works contractor who has “connect” with project planners and designers can corner big-ticket projects. The payoff ranges from 3 percent to 5 percent of the total project cost depending on the project’s nature. Flood control or undersea projects are pricier because the margin is greater and the bloated costs easier to conceal.  More often than not, such projects are a welcome sight for the people, if not outright out of their sight.

Once the project is identified and the payola or commitment fees are front-loaded, the project goes into the agency’s budget proposal for inclusion in the National Expenditure Program, which goes into the general appropriations bill that later becomes the General Appropriations Act, which funds the project.

The public works contractor has to have good “connect” at the budget department to ensure the inclusion of the choice project in the General Allotment Release Order or Special Allotment Release Order and the Notice of Cash Allocation. The release of the Garo or Saro and NCA triggers the project’s implementation. The expeditious release of funds is another layer for payola at the rate of 2.5 percent of the project cost.

Based on cost, the project is downloaded to the regional or district office for implementation. The institutional payoff rate is 7 percent plus 1 percent for the audit watchdog. The bidding process is usually rigged or complementary; it is directed by the public works contractor who arranged and funded the project’s conceptualization and inclusion in the budget proposal, and the expeditious release of funds.  The public works contractor, in turn, is under the baton of a political overlord whose payola ranges from 20 percent to 30 percent. Some local government units that host projects get a courtesy fee of 1 percent to 2.5 percent.

Public works contractors are cartelized based on geographic location and political affinity.  The cartel funds the campaign kitty of political overlords come election time. The profit margin of a public works contractor is 12-15 percent, minus the “revolutionary tax” if the project is situated in a rebel-controlled area.

But all is not lost. The government can curb corruption through the Antitrust Law or the Philippine Competition Act. The Philippine Competition Commission (PCC) can focus its attention on public bidding. But it will be ineffective if it is unable to tap the conversations of collusive actors and grant immunity to bean-spillers.

Honest-to-goodness competitive public bidding in the implementation of public infrastructure projects will be a monumental legacy of the administration in the pursuit of its vaunted anticorruption campaign.  The President may certify as urgent to Congress a bill to amend the Antitrust Law by empowering the PCC with the authority to conduct wiretapping operations and grant immunity to whistle-blowers. The enhancement of the PCC’s powers will substantially end corruption.

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Frank E. Lobrigo practiced law for 20 years. He is a law lecturer and JSD student at San Beda College Graduate School of Law in Manila.