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Viewing cable 08MANILA622, PHILIPPINES: 2008 REPORT PURSUANT TO THE INTERNATIONAL

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Reference ID Created Released Classification Origin
08MANILA622 2008-03-12 09:57 2011-08-26 00:00 UNCLASSIFIED Embassy Manila
VZCZCXYZ0000
OO RUEHWEB

DE RUEHML #0622/01 0720957
ZNR UUUUU ZZH
O 120957Z MAR 08
FM AMEMBASSY MANILA
TO SECSTATE WASHDC IMMEDIATE 0097
UNCLAS MANILA 000622 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR INL/C/CP, INL/AAE, EAP/MTS, EAP/RSP 
PASS TO USAID/ANE 
 
E.O. 12958: N/A 
TAGS: PGOV KCOR KCRM EAID RP
SUBJECT: PHILIPPINES: 2008 REPORT PURSUANT TO THE INTERNATIONAL 
ANTICORRUPTION AND GOOD GOVERNANCE ACT 
 
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 
efforts. 
 
Philippine Government Efforts to Fight Corruption 
--------------------------------------------- ---- 
 
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 
project. 
 
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 
agencies. 
 
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. 
 
KENNEY