Millennium Challenge Corporation - Policy Improvement Process

This Policy Improvement Process draws from the Medium Term Philippine Development Plan (MTDP) the selection criteria of ongoing high-impact government anti-corruption projects to showcase to MCC. Specifically, the MTDP provides the overall policy framework on the fight against corruption in specifying the following areas of reform:

1. Punitive measures that include effective enforcement
2. Preventive measures focused on strengthening anti-corruption laws, improving integrity systems, and conducting integrity development review
3. Promotion of zero-tolerance for corruption, which involves heavy advocacy to inform all anti-corruption actors of the ills of corruption and how each individual can give his or her own share to help curb this problem

For the purpose of this PIP however, current initiatives on punitive measures involving the investigation and prosecution of corrupt practices are excluded as the judiciary and the Office of the Ombudsman are not under the purview of the Executive Branch of government being a co-equal branch and a constitutionally independent body respectively.

For preventive measures, the PIP POC chose the specific project area of budgetary reform to highlight the significant inroads of government in raising budget transparency. But to go beyond the traditional measure of corruption prevention, a new project utilizing the Balanced Scorecard approach on dealing with corruption and promoting good governance was launched this July 2009. The primary objective of this Performance Governance System (PGS) is to provide the process infrastructure for six national-level government agencies to undertake organizational reform using the Balanced Scorecard system which has proven to be successful for both private corporations and public offices worldwide. The entire process is subject to a formal accreditation program that is recognized worldwide as the gold standard of strategic performance. This is part of the building block of the government to include more agencies in the organization reform program. The third PIP project consists of mobilizing selected Local Government Units (LGUs) noted for their dynamic local chief executives in the creation and implementation of localized strategy plans as a bottom up approach to supplement the top-down approach of the national government to promote good governance and cascade anti-corruption efforts down to the local level. The aims of this project is to enhance / strengthen interaction with national government agencies, including the legislature, on national laws and regulations that impact on the development of LGU policies and procedures to combat corruption and ultimately encourage local firm productivity and competitiveness.
(Additional detail on the underlying rationale behind the selection of PIP projects is in the notebox below.)

All three projects are geared to significantly address the first five broad cluster-groups around the Control of Corruption indicator cited in part II: (1) Reforming the procurement process; (2) Reducing Red Tape; (3) Ensuring a Performing Bureaucracy; (4) Controlling Corruption in Revenue-Collecting Agencies; and (5) Improving Systems to Control Corruption.

The last two clusters on (6) Enforcing Anti-Graft Policies: Efforts of Anti-graft Bodies and (7) Enhancing Judicial Capability being punitive measures were excluded for reasons cited above. The COC factor on police and enforcement is however included as the national police are under the authority of the Executive Branch of government.

This pioneering strategy is private-sector led under the auspices of the National Competitiveness Council which has member-representatives from the local business chambers as the Public-Private Task Force on Philippine Competitiveness by virtue of Presidential Executive Order No. 571, to address the improvement of the country’s competitiveness.

Rationale for PIP Project Selection: Corruption, Integrity and Good Governance

The objectives of government are vital to the understanding of the diverse negative effects of corruption on public service, business competitiveness and sustained economic development. Corruption renders governments unable or unwilling to maximize the welfare of the public. It distorts agents’ decisions and limits the contractual space available to agents and the government. A corrupt principal creates allocation inefficiencies and cripples the government’s credible commitment to effective policies, and opens the door to opportunism for personal gain at the expense of the poor as the critical beneficiaries of public service. Corruption suffocates development, reduces aid effectiveness and undermines the conditions for sustainable progress through private enterprise activities. It hurts the collective electorate especially the poor through lower growth, regressive taxes, reduced and lower quality services, higher investment risks, and lack of protection of legal and civil rights.

The anti-thesis of corruption is integrity and not prevention, detection and deterrence. The latter measures which can be successful in reducing the opportunity, raising the risks and altering the behavior associated with corruption only attack the symptoms and not the disease. Addressing the manifestations of the corruption disease does not solve the problem. Merely catching the crooked public official or even the payer is a stop gap measure at best. No matter how many crooks are caught, the corruption will not stop because the culture that spawns it persists. If there is the unscrupulous businessman or dishonest taxpayer or erring driver who is ever ready to offer a bribe, the culture of corruption will produce the bureaucrat or traffic enforcer who will accept the bribe, render the illegal service or look away. Government institutions may create opportunities for corruption, but individuals are the perpetrators as well as the performance monitors, investigators, prosecutors and external observers.

Thus, the long-term remedy and only effective solution for corruption in the Philippines is the eradication of the culture of corruption starting with individual character development and the institutional strengthening of integrity systems to nurture good governance practices within government.

Integrity, according to famous pastor Richard Dortch “involves everything about the wholeness of our inner person, our heart, mind and will. Integrity simply means singleness: Singleness of our purpose, singleness of our will, singleness of our hearts. There is no dividing of the truth that splits the wholeness of what we are about”. This originally philosophical concept when applied to the organizational setting denotes the perceived consistency of actions, values, methods, measures, principles, expectations and outcomes in relation to pre-defined goals, inherent limitations and acquired competencies. Conversely, corruption is a sign of eroding integrity within the institution and its members whose illegal actions indicate the prevailing duplicity in their professional and private life.

Developing integrity within individuals and institutions entails the formation of a working environment conducive to promoting good governance. Governance according to UNESCAP involves both the process of decision-making and the process by which decisions are implemented (or not implemented). In the organizational setting, good governance implies a high level of operational effectiveness in relation to policy-formulation and the policies actually pursued, especially in the conduct of economic policy and its contribution to growth, stability and popular welfare. In contrast to corruption, good governance connotes accountability, transparency, participation, openness and the rule of law. So doing it helps business and the poor by facilitating markets and economic growth, by promoting participation and empowerment, by ensuring that lawful taxes are paid so that public services are adequately funded, and by enabling delivery of high-quality services. It ensures that political, social and economic priorities are based on broad consensus in society and that the voices of the poorest and the most vulnerable are heard in decision-making over the allocation of development resources. This conceptual view of good governance in relation to corruption is consistent with the World Bank in Governance: The World Banks’ Experience report which stated that:

"Good governance is epitomized by predictable, open and enlightened policy-making, a bureaucracy imbued with a professional ethos acting in furtherance of the public good, the rule of law, transparent processes, and a strong civil society participating in public affairs. Poor governance (on the other hand) is characterized by arbitrary policy making, unaccountable bureaucracies, unenforced or unjust legal systems, the abuse of executive power, a civil society unengaged in public life, and widespread corruption."