‘What are we in power for?’

The country’s corruption ranking continues to be the biggest concern against the passage of the proposed Maharlika Wealth Fund (MWF), which members of the Lower House related to and allied with the President are trying to pass before the end of the week.

In the Global Risk Profile report released last month, the Philippines slipped further by three ranks to end in 105th among 196 countries and territories in the Global Corruption Index 2022.

While the report cites that the Philippines’ overall risk score as slightly better at 47.95 than the previous year’s 46.96, a bribery risk score prepared by US-based business association TRACE saw the overall score rise to 54 from 52, with the latest score indicating a higher risk of bribery.

Corruption and bribery in Philippine governance are systemic ills reflected in a political system dependent on a patronage mentality. In our country, it’s important to know who’s who to get things moving and done. More concerning, though, is the practice of under-the-table deal making, without fear of being caught and held accountable.

Political scandals, such as the Priority Development Assistance Fund (PDAF)  deal that happened over a decade until 2013 could easily go unpunished, with an estimated P10 billion of government money pocketed by members of Congress.

Misuse of people’s money, the earliest recorded being the Surplus War Property scandal in 1946 when $90 billion worth of funds raised from the sale of property used in World War II was reportedly mishandled, is so prevalent that over time, Filipinos have become more and more “forgiving.”

Entitlement

The infamous statement “What are we in power for?” that became popular through media in 1950 still reverberates to this day, reflecting politicians’ belief of entitlement when in government.

Getting into government is more commonly believed now as a way to enrich one’s self or to entrench and expand power and wealth, and to protect what has been accumulated. The perpetuity of political dynasties has been well documented, where selected family members are encouraged to go after high government positions.

Thus, a growing number of people in government — even those in career positions of lower civil service ranks — display that aura of entitlement often devoid of a sense of public duty and responsibility if not any remorse when accepting bribes or dipping their hands in public funds.

This warped sense of entitlement is the biggest danger in the creation of the MWF that will draw on monies that will come from any state institution, whether this be the Bangko Sentral ng Pilipinas, the Land Bank of the Philippines or the Development Bank of the Philippines.

Credibility problem

In various papers on sovereign wealth funds, the biggest risks come from corruption. Malaysia, for example, is a glaring example of politicians abusing their power and treating government funds for their own personal use.

As a country whose rank in the corruption index is much improved than the Philippines’, Malaysia’s then prime minister Najib Razak was able to systematically siphon over $4.5 billion from the sovereign wealth fund to 1Malaysia Development Berhad (1MDB) to his own personal accounts.

While Razak is now serving a prison term, the process of recovering the stolen money is far from over, and the accumulated debts that 1MDB had incurred, and eventually stolen by Razak, include 30-year bonds that will be due in 2039.

The plunder of 1MDB was attributed to weak internal governance, poor internal controls within the banks involved, and the failure of watchdog and enforcement agencies to take the necessary action because of politics and the overall lack of political will.

These lapses could very well be possible in the Philippines despite all the assurances of our legislators that proper measures will be incorporated in the proposed law to ensure that the money that goes into the MWF will be protected from any kind of corrupt acts.

For sure, the credibility problem exists when the proposed law is sponsored by three family members of the President, those supporting the bill’s passage are all beholden to the President, and both Houses of Congress are controlled jointly by the political parties of the President and the Vice President.

At this time, too, opposition in the legislature is at its weakest, reflecting huge challenges for checks and balances.

Add to this the pressures on media to look the other way when there are political scandals lest they be ostracized and prevented from being allowed access to interviews and government documents. Over the last years, the quality of local investigative reporting has deteriorated as publishers recognize the need to survive backlash by those wielding political power.

Need we say more?

A reader’s view

One of our readers sent a short e-mail expressing his view on the proposed MWF. This was received before proponents of the bill conceded that funds from two pension funds, the Social Security System (SSS) and the Government Service Insurance System (GSIS) would no longer be tapped.

Our reader, Jorge Buenaventura, brings up a good point though. He wrote: “I agree. The SSS and GSIS have not exactly been in the pink of financial health for many years now. How can we now expect the financial managers to drive a much bigger fund in the MWF?

“Surely, it’s not an issue of scale. Can we at least ask the proponents to give more concrete examples or simulations on where such investment should be made in the prevailing global economic climate?”

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Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.