No level playing field

Sorry to burst your bubble but not even a presidential declaration can “level the playing field” for business in the Philippines. At least not unless President Benigno Aquino takes time out to really study what creates the inequality or undue advantage in doing business in the country.

For the longest time the accepted notion is that there is no level playing field because of institutionalized corruption and political patronage. To a certain extent, it is true that corruption at the local and national level is so bad that any newcomer into Philippine business would immediately be at a disadvantage.

However there is something that no one seems to be talking about. It is a dirty little secret that people in business have covered up because it is the 50 percent reason why business in the Philippines will never be fair.

Lets label it the unhampered, unrestricted ability of local businessmen and corporations to conduct corrupt practices without fear of legal or criminal liability at every corner. We always talk about graft and corruption in relation to government officials and institutions. But how often has media or law enforcers ever talked about graft and corruption in relation to business practices of private corporations and individuals?

Several years ago, I entered the world of professional corporate consultants and I immediately saw the big difference in the terms of engagement of local corporations, versus international or multinational corporations.

When hiring consultants most local companies are generally informal and the decision to hire is often based on the subjective choice of a CEO or company owner. The documentation tends to be equally relaxed and often done simply for accounting procedures.

On the other hand, I have gone through the stringent process of how consultants are screened by both American and European corporations. They both require documentation and contracts as well as a thorough reading and compliance with “The Book”.

By this I refer to what is called the FCPA or “Foreign Corrupt Practices Act”.

The FCPA for both US and European corporations lays down guidelines and regulations that all western corporations and their affiliates must adhere to or abide by when doing business anywhere in the world.

The FCPA spells out how to conduct business, the transparency of business relations, the conduct and process of transactions and even goes into details of representations, expenses, promotional activities, sponsorships and events.

Being a former foodie, I was surprised that the “book” even spells out how much a western corporation is allowed to spend per plate – per person when entertaining or dining a government official or member of media.

So “The Book” effectively prevents foreign corporations from entertaining at “Le Cirque” or girlee bars like “Air force One” or premium golf courses like “Tagaytay Highlands”.

The book clearly disapproves sponsorships or involvement in sporting or social events that has no direct relation to a business and may be seen as an attempt to indirectly corrupt, influence or gain undue advantage over other corporations.

But unlike the Philippines, the FCPA is taken seriously and no less than the US Department of Justice takes the lead in going after any corporation accused or suspected of violating the Foreign corrupt practices act because it’s bad for business, endangers other corporations and their nationals who could be targeted by local authorities and complicates international relations.

So when you combine Philippine laws that regulate the business activities of foreign corporations with the FCPA which is seriously observed and enforced, it is easy to appreciate why foreign investors are not too excited about a drop in the bucket economy such as the Philippines.

Unfortunately, we cannot say the same for most Philippine corporations. While they have successfully misled Filipinos that multi-national companies are the big bad wolf, the truth of the matter is that many Philippine corporations have actively engaged in corrupt practices.

Time and again, I have heard of local corporations entertaining tax officials at golf courses. Doctors have admitted to me how many times they were sent by local drug companies to non-scientific destinations, officials being provided with service vehicles, free hotel stays at five star resorts. All these on top of regular business meetings at exclusive and expensive fine dining outlets as well as bars, nightclubs and brothels.

If this is not enough, how do you compete when local laws do not really prevent local companies from using sponsorships in sporting events, media events or political projects as a means to bribe or buy favor from powerful figures?

Even offices of the Philippine government have participated in what qualifies as corrupt practices in the FCPA. When certain offices grant funding, advertising, or support to events, projects or programs that are clearly not related to such offices you can be sure that a corrupt act has just been committed.

Imagine what would happen if we had a Philippine Corporate Corrupt Practices Act in place? Business competitors would be on the look out, industries and associations will be under pressure to really police their ranks, and by spelling out the rules, no one gets to hide behind ambiguity.

The best feature of such a law is it would also protect the decent, law abiding businessmen and corporations who can now point to the PCCPA as their reason not to feed the corrupt cannibals demanding for Wagyu and GROs.

Best of all, President “Noy” can lay claim that his administration and allies in Congress helped create a level playing field by taking away the “home court advantage” called domestic corruption.