Corruption in the Philippines; Benigno Aquino pledges to end a crooked disbursement system in the Philippines

Corruption in the Philippines

Scratching pork

Aug 29th 2013, 6:20 by J.McL. | MANILA

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“PEOPLE Power”, which toppled the corrupt regime of Ferdinand Marcos in 1986, was in the minds of protestors massed in Manila’s main park on August 26th. From families and schoolchildren to nuns, the tens of thousands of Filipinos were demanding an end to pork-barrel politics, after a government audit earlier this month revealed that politicians had funnelled over 6 billion pesos ($135m) into 82 dodgy NGOs. Many demonstrating saw themselves as the heirs of ’86.Mr Marcos is long gone, but graft remains the bane of the Philippines. The country still ranks as one of the most corrupt in South-East Asia, despite a boost in the tables last year (from 129th to 105th in Transparency International’s corruption perceptions index). Since taking power in 2010, Benigno Aquino, the Philippines’ president, has led a half-hearted campaign against fraud. His neat election slogan, “If there’s no corruption, there’s no poverty”, won him the presidency, because it suggested a tidy solution to the country’s two biggest problems. But for three years his efforts have consisted of little else than the arrest and prosecution of his predecessor, Gloria Arroyo, on trial for misusing millions in state lottery funds.

So Mr Aquino had an opportunity to advance his campaign when his government’s chief auditor reported this month that a dozen senators and scores of congressmen had directed billions in pork-barrel money into fishy NGOs over three years. The money (given to members of Congress to spend in their constituencies on projects of their own choosing) was disbursed during Mrs Arroyo’s term. But Mr Aquino’s first reaction was to defend the pork-barrel scheme. That is because he is at the apex of the Philippines’ pyramid of political patronage, so has the final say on whether other politicians get their pork. When he was member of Congress, he received pork-barrel funds. In the absence of an effective political party system, the pork-barrel arrangement gives Mr Aquino a degree of influence over Congress.

The Priority Development Assistance Fund (PDAF), a government programme, has institutionalised pork barrel in the Philippines. Each of its 24 senators receives 200m pesos ($4.5m) per year and each of its 300-odd congressmen receives 70m pesos ($1.6m). The scheme has its merits. Roads get paved. Poor students receive scholarships. A washerwoman asked her congressman to pay for an urgent mastectomy (she now votes for him religiously). Politicians are supposed to use the fund to finance their pet projects, but some use it to enrich themselves at public expense. The arrangement shores up a political establishment made of powerful families that monopolise elective positions generation after generation.

It was only once social media began to call for a mass protest (one-million strong, organisers hoped) against pork that Mr Aquino changed his mind. On August 23rd, flanked by the president of the Senate and the speaker of the House of Representatives, he pledged to scrap the PDAF. The public received his bid with a dose of scepticism—and it did not deter the porcine masks and costumes from rallying. Congress must first agree to abandon the scheme. And an alternative set-up for financing local development projects, proposed by Mr Aquino, sounded like pork-barrel politics with a new name.

The protesters (numbering about 65,000) were nowhere near as numerous as their predecessors who ousted Mr Marcos. But their demonstration was the biggest since Mr Aquino took office. His approval rating, at 70%, is among the highest in the Philippines’ history. Demonstrators put the president on notice that they expect not just slogans about corruption, but the demolition of the political edifice that shelters it.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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