SALN - a corruption buster

The SALN issue has been an eye-opener to everyone. It has given us an awareness on how government personnel can show transparency. The only hitch is when the official uses a dummy and puts all his assets under the name of that person then stashes it far, far away from this country.

I must admit I had to read more about SALN in order to get a better understanding of it. It is quite complicated especially since it deals with numbers. But for mathematicians, I’m sure they can easily see through the numbers and the possible hocus pocus behind them.

SALN is the acronym of Statement of Assets, Liabilities and Networth. It is the balance sheet used by financial practitioners to analyze the government employees’ increase and decrease of their assets and liabilities. SALNs are prepared every year by imposing the financial impact of all the filer’s current annual activities and transactions on the immediately preceding SALN. Therefore, the absolute differences between any two SALNs should reveal all the activities and transactions with financial impact between the two dates. This has been the accepted method for reconstructing missing information in financial audits and investigations.

In filing a SALN, the filer is saying that this is what he owns, this is what he owes and finally that this is what he is financially worth after paying off all his debts and all the final taxes on all his sources of income.

Amounts higher in the more current year show growth while amounts lower in the more current year show decline. Increases in assets come from acquisitions, donations, inheritances and windfall events like winnings for example. Decreases in assets come from disposition (sale of assets or payment of expenses), donations and loses (theft, arson or destruction through natural calamities).

Increases in liabilities come from the creation of borrowings as loans, purchases on installments and delays in the payment of expenses such as rentals, 13th month pays or interest on outstanding obligations. Decreases in liabilities come from the net payment of borrowings for example, more loans paid than made for the same period.

Changes in networth can only legally come from tax evidenced filings (TETs) such as those related to ITRs, CARs, deeds of donations, tax exemption certificates etc.

According to Mr. Benny Gonzales, A.K.A. Mr. Energy, “The current brouhaha over Article II of the CJ’s impeachment trial is a classic occasion which not only brings the SALN prominently into the public consciousness but likewise can either deliver it a mortal blow or show it as the people’s new champion. Its fate will depend on whether the SALN can be made to indubitably convict or exonerate the accused.”

He further said, “I am neither for one or the other. My interest is in finding out how efficaciously the SALN Law can be implemented for the good of our country. I believe that this can only be done if the lawyers on both sides of the argument are taught how to use it properly. This task begins by interpreting and understanding the accounting entries behind its contents. I am afraid that based on the progress thus made, the SALN issue will soon be abandoned as it has gotten us nowhere. This kind of failure in the face of the huge amount of publicity which the SALN currently enjoys will leave it in disuse in the future. If this happens, the Filipinos would have lost another effective tool for evicting scalawags from the government service.”

But, why do you think the SALN Law has rarely been used to convict those who have illegally enriched themselves in spite of the blatant display of unexplainable lifestyles rampant from government officials in the Philippines? Mr. Energy gives us three basic reasons: It involves Math and these are really not the favorite subjects of lawyers while in school nor in practice now; even the handful of exceptional CPA lawyers have shunned away from this specialization because of the mistaken notion that it, like slander, would be very difficult to prove; and it remains unclear in accounting and mathematical terms how the SALNs themselves can and should be used to assure a conviction or absolve the accused.

He shows us how easy it would be to allow the SALNs to speak for itself. He said that the prosecution should simply focus on the justification in the submitted changes in Networth from a year to year basis. From a legal standpoint, it can be said that the only increases or decreases in this account must come from Tax Evidenced Transactions (TETs). As a matter of fact, every entry on this account and even the beginning balance must be established on the basis of TETs.

With the Chief Justice’s SALNs already submitted and offered as evidence in court, the burden of proof is on him to show that all these changes resulted from TETs. But, according to Mr. Energy, “If this is not enough to convict, a second line of questioning is to ask the defendant to justify increases in assets without corresponding increases in liabilities and/or decreases in liabilities without corresponding decreases in assets. Should the combined impact of the first and second offensives still be found insufficient for an incontrovertible conviction, the third offensive is to ask the defendant to justify the beginning balance in the very first SALN which he filed. Even this amount must be legally based on TETs, otherwise everyone can potentially set it up in anticipation of substituting illegally acquired wealth to be made possible upon his assumption into an office of trust and power.”

“The supremacy of this method of prosecution is that the SALN as sworn documents speak for themselves and the best evidence of what the filer has already attested to wittingly or unwittingly. That being the case, all the prosecution has to do is to present increases in Networth and ask that they be supported by TETs. Should any remain unsupported, the burden of proving that all these unsupported amounts were legally acquired is immediately on the defendant.”

It will be to the advantage of the people if the government wins this highly publicized case. The conviction will bring about fear to commit corruption in both high and low places in the bureaucracy.

I fully agree with what Star columnist, Boo Chanco wrote in his column, Demand and Supply written last February 20. He said, “P-Noy should issue an Executive Order requiring all officials appointed by the President to sign a waiver to the secrecy provision of our banking laws. An appointment, even an ad interim one, should become effective only after this waiver is signed. Eventually, a law can be passed that would cover everyone who gets a salary from the government.”

This SALN issue must not stop with the impeachment trial. P-Noy should take advantage of it by using it to strengthen our government’s plight to fight corruption. If he truly means what he says, he should lead all his men to act consciously toward his “daang matuwid” lest they continue to be crucified for being so irresponsible for their actions.