Biazon faces ‘revolt of corrupt’ in customs

(First of two parts)

Under fire for failure to curb corruption in the Bureau of Customs, Commissioner Rozzano Rufino Biazon proposed to President Aquino the abolition of the bureau for a top-down purge that would end smuggling and rid the agency of corruption “once and for all.”

Facing mounting demands for his resignation, Biazon defiantly dug in. In a recent interview with Inquirer editors and reporters, he said it was up to President Aquino to decide whether to keep or fire him. He did not say, however, whether he was included in his proposal to abolish the customs bureau.

Biazon’s proposal came amid reports of rampant smuggling of oil and agricultural products through special economic zones, costing the government billions of pesos in lost revenues every year. According to Petron Corp. chair and chief executive officer Ramon Ang, 1 in every 3 liters of fuel sold in the country is illegally brought in, resulting in a revenue loss of P30 billion to P40 billion yearly.

Another industry official, Shell country manager Edgar Chua, has said the volume and value of oil products illegally entering the country can be understated, resulting in smaller tax payments. One way of doing it, Chua said, is having a tanker out at sea fill smaller vessels, which then deliver the smuggled fuel directly to small storage facilities.

Such operations are within sight from the Bureau of Customs building at the South Harbor. How the operations have remained unnoticed by customs authorities stands as the worst case of astigmatism or color blindness afflicting the agency’s personnel.

Despite protests from oil industry executives, the administration remains unmoved and shows no sign it will sack Biazon. Instead of voluntarily going, he has produced from his pocket a proposal that no previous customs administration had the gumption to put forward—the abolition of the bureau as the “final solution” to curb corruption in the agency.

Startling suggestion

Biazon’s solution is a startling idea. The Bureau of Customs, one of the two foremost centers of revenue collection in the country (the other is the Bureau of Internal Revenue), was one of the first insular institutions established by the American colonial government following their occupation of the islands in the first decade of the 1900s. The revenue institutions were established alongside the public schools system.

But if Biazon would have his way, the Bureau of Customs would be the first to go to pave the way for the so-called modernization of the Aduana, to make it run in line with the good government and moralistic preaching of the Aquino administration.

Biazon faces the colossal task of abolishing the customs bureau and replacing it with a new revenue institution. But the replacement will not be part of the state bureaucracy. It will stand outside it as an anomalous sore thumb, staffed by a new batch of personnel untainted by corruption and pristinely innocent. The new institution will be a private sector enterprise.

Peru model

In justifying his innovation, Biazon cited Peru’s customs reforms as his model. He claims that Peru, a Third World country like the Philippines, defeated  corruption and smuggling by abolishing its “customs department,” replaced it with a new institution outside the regular state bureaucracy, hired new officers and employees, adopted stringent qualifications, paid the new staff higher salaries exempted from the salary standardization norms governing the civil service.

Biazon is misrepresenting the so-called Peru model. My research found that Peru did not totally abolish its customs department but only rid it of “corrupt personnel.” It was not a total sweep.

Biazon said corruption was “deeply entrenched in the customs bureau’s culture and system, so firing a few people or catching some smugglers will not solve the problem.”

He said that under his proposal being considered by the administration, the bureau’s replacement will not be dependent on the national government for its budget. Instead, it will retain 3 percent of its tax and duty collections to finance its own operations, assuming its hypothesis is confirmed by results (which is still up in the air).

That way, he said, the new institution will not have to go to Congress every year to ask for approval of its budget, thus “insulating it from politics.”

Biazon assumed that a financially independent institution with highly paid personnel would shield customs operations from corruption.

Civil service law

But he did not say how the new recruits would be exempted from the Salary Standardization Law. He conveniently ignored the issue that the civil service law protecting the tenure of civil servants forbids their removal without reasonable cause.

His proposed reform involves wholesale dismissal without due process. Current employees are at once branded as “corrupt” and stigmatized for life by one stroke of the pen approving the abolition of the customs bureau. It’s hard to imagine how the customs employees could take a mass purge lying down.

Biazon faces a revolt of the rank and file in the customs bureau and a costly dislocation in operation and collection during the transition from the dismantled bureau to its private replacement.

What about the Bureau of Internal Revenue (BIR)? Like the customs bureau, the BIR is a reputed hotbed of corruption. Is the abolition and privatization of the customs bureau a warning of the fate that awaits the BIR, part of a privatization mania that started with the Mindanao hydroelectric power plants—the main cause of the power shortages on that island?

Is Biazon the agent of this ideological shift in the economic policies of the Aquino administration involving the role of the state in relation to private enterprise in economic development?

(Next: What’s the Peru customs abolition experiment?)