Cleansing the Augean stables

(Concluded from Monday)

In Greek mythology, the hero Hercules, in a fit of madness, slew his own six sons. So he could atone for his actions, the Oracle of Delphi advised him to serve King Eurystheus for 12 years, performing whatever work the king commanded him to do. Eurystheus ordered Hercules to perform 10 labors, the fifth of which was to clean the stables of King Augeas, who owned more cattle than anyone else in Greece.

But the task was both humiliating and impossible, because the livestock were truly healthy and therefore produced an enormous quantity of dung. The stables, which housed over 1,000 cattle, had not been cleaned for over 30 years. But no matter how onerous the task, Hercules promised Eurystheus he would clean the stables in a single day.

Hercules, according to one tale, tore a big opening in the wall of the cattle-yard where the stables were, then made another opening in the wall on the opposite side of the yard. Next, he dug wide trenches to two rivers nearby. He turned the course of the rivers into the yard. The rivers rushed through the stables, flushing them out, and all the mess flowed out through the hole in the wall—in a single day.

In modern society, the task of cleaning up deep-seated and rampant corruption in public bureaucracies—such as the Bureau of Customs and the Bureau of Internal Revenue—has come to be described by the metaphor “cleansing the Augean stables.”

In a desperate effort to clean up the graft-ridden BOC, Commissioner Rufino Biazon has proposed a top-to-bottom purge of customs personnel in order to stamp out corruption “once and for all.”  Unfortunately, Biazon is not a superhuman hero, as Hercules was, and has demonstrated during his watch in the past two years a penchant for blaming others for his bureau’s shoddy performance in producing revenue.

The BOC posted a P7.83-billion shortfall in targeted revenue collections in the first three months of 2013.  It had aimed for a P76.3-billion collection during the period, but netted only P68.5 billion. Biazon offered a host of flimsy reasons for the shortfall, one of which was that it came in a “traditionally lean season”—a period that “comes immediately after the high-demand Christmas season and the slowdown during the Chinese New Year.”

Biazon has put forward a Herculean scheme of cleansing the bureau’s stables by abolishing the BOC. He drew inspiration from the so-called “Peru model.” In a recent paper, Charles Draper, a  senior economist in the World Bank,  observed that in 1991, customs in Peru could be identified as follows: a poorly equipped and trained staff comprised of only 2 percent; high and complex tariffs; outdated customs regulations; clearance times for customs processing that ranged from 15 to 30 days; antiquated customs procedures, minimal documentation, extensive individual officer discretion, and lack of transparency;  manual paperwork-intensive systems and an inspection rate between 70 and 100 percent; and unlimited discretion of officers working in the 29 ports, resulting in lack of uniformity. In addition to these, the poorly trained and underpaid staff was corrupt and the systems operated on bribery.

In sharp contrast to the 1991 situation, reforms on the issues named above in a five-year transformation resulted in these: The value of imports into Peru increased from $4 billion to $7.5 billion; the tariff was simplified and duty rates were lowered from 39 levels between 10 and 84 percent to two levels at 15 and 25 percent; collections increased from $626 million to $2,723 million despite reduced staffing and inspections and lower duty rates.

The reforms transformed Peruvian customs into a world-class organization in a relatively short time of six years. Today, Peru is a much more desirable environment for business and investments.

In a working paper on customs corruption published by Transparency International in December 1998, Michael H. Lane outlined a program of reforms. Lane said that customs does not exist in a vacuum, and that successful reform requires the political will and long-term commitment of top-level government officials.

Assuming that support and framework are provided from the top, the following actions can establish the   foundation for a customs system characterized by integrity and confidence:

“Pay a salary that is consistent with a position of honor and trust, that will attract high quality personnel; establish high standards for recruits; simplify the tariff controls and audit systems to prevent breaches of integrity and trails to identify and uncover violations; publish standards for cargo clearance and all customs services and provide appeals for customs decisions; automate customs processes, building in controls, and utilize systems for direct deposit of customs duties and fees to financial institutions; develop a code of conduct, core values and a table of discipline that addresses integrity at all levels of the organization; and establish controls to oversee and protect the integrity of the organization.”

The transformation of corruption-riddled Peruvian customs resulted from political will and persistence in concrete and methodical approaches, and not from wishful thinking or incantations of good government from a lazy political leadership.