Anti-Corruption Efforts in the Philippines: An Emerging

Model for the Pacific Rim

By Keith T. Darcy Background From 1966 to 1986, Ferdinand Marcos wrecked an emerging and vibrant Philippine economy through massive and systematic corruption. The lone, bold leader opposed to Marcos, Benigno Aquino, was assassinated in 1983. Two years later, Benigno’s wife, Corazon, ran for president against Marcos. Despite clear and obvious voting fraud, Marcos was declared the winner. Aquino immediately led a massive rally of civil disobedience that led to Marcos’ ouster. She was declared president two weeks later. Today In June 2010, Benigno Aquino III was elected president on an anti-corruption platform. Since then, former President Arroyo, who took office during the impeachment trial for corruption of her predecessor, President Estrada, is under investigation for massive fraud and corruption during her administration. At this time, a former senator also is under investigation; he recently resigned for voting fraud. Earlier this year, Honorable Heidi Mendoza, who courageously blew the whistle on corruption in the Philippine armed forces, was appointed as a commissioner on the Commission on Audit, an independent constitutional body serving as a government watchdog. Justice Conchite Carpio-Morales, formerly of the Philippine Supreme Court, has been appointed as the government “ombudsman.” In late 2009, I met with a small group of Philippine business executives in Manila to discuss the possibility of forming an organization to share best practices to address issues of fraud, corruption, and malfeasance in their home country. Since then, these leaders pressed ahead and created the Good Governance Advocates and Practitioners of the Philippines (GGAPP), an organization that today has over-50 members from the largest companies in the country. ECOA members from PLDT (Philippines Long Distance Telephone) have played a critical leadership role herein. Also in 2009, the Philippine Securities and Exchange Commission (SEC) issued Circular Memorandum No. 6 (of The Revised Code of Corporate Governance), which requires public corporations and certain others to establish and implement rules, systems, and processes that govern the performance of the board of directors and management of their respective duties and responsibilities spelled out in the Manual on Corporate Governance (MCG). MCG will require, among other things: --Training on good governance practices of officers and directors of covered

organizations, --the appointment by the board of directors of a compliance officer reporting directly to the board chair who will monitor compliance with MCG, --violations of MCG will be reported to the board of directors along with recommended action, and --the compliance officer must have the rank of at-least vice president. As a monitoring tool, the SEC requires submission of a “Corporate Governance Scorecard,” which will be independently checked and validated by: --Institute of Corporate Directors --Philippine Stock Exchange --Institute of Internal Auditors of the Philippines --Ateneo de Manila University School of Law Early next year, the Philippine Stock Exchange, in cooperation with the International Finance Corporation, is creating a new board trading exchange called “Maharlika Board.” Herein shares of highly governance-compliant companies will be traded (the exchange is fashioned after “Novo Mercado” in Brazil). Also this year, President Aquino created a five-member, cabinet-level “Governance Commission for Government-Owned and Operated Corporations” (GOCC). GOCC will: --Formulate, implement, and coordinate policies to ensure that governance of GOCC’s is transparent, responsible, and accountable; and --in addition, formulate a code of ethics for officers and directors of GOCC’s, which will include governance standards and performance evaluation systems. On September 15, 2011, the first Integrity Summit for corporations was held in the Philippines. The keynote speaker was President Benigno Aquino III. Over 700 companies signed an integrity pledge to develop and enforce a code of ethics as well as institute an effective system of internal controls. Immediately thereafter, President Aquino flew to Washington, D.C., to meet with U.S. officials regarding other anti-corruption measures his country should consider. Clearly, events from the “Arab Spring” and the “Indian Summer” (e.g., Anna Hazare) to the remarkable events in the Philippines are a statement that corruption in an increasingly transparent world will not be tolerated. Congratulations to Team PLDT and the entire membership of GGAPP on a great start to its journey. Similarly, nineteen years ago, a small group of executives gathered in Waltham, Massachusetts, to discuss the possibility of forming an organization to share best practices to address issues of fraud, corruption, and malfeasance. I can’t help but

wonder whether those 19 original ECOA members in 1992 could have imagined what might emerge two decades later from their efforts. Source: http://www.theecoa.org/iMIS15/ECOAPublic/NEWS/ECOAPublic/NewsContent/Articles/Anti-Corruption_Efforts_in_the_Philippines.aspx