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i3 Project Year 3 Annual Progress Report October 1, 2014 – September 30, 2015 1

INTEGRITY FOR INVESTMENTS INITIATIVE (i3)

PROJECT YEAR 3 ANNUAL PROGRESS REPORT OCTOBER 1, 2014 – SEPTEMBER 30, 2015

October 2015

This publication was produced for review by the United States Agency for International Development. It was prepared by Deloitte Consulting LLP.

INTEGRITY FOR INVESTMENTS INITIATIVE (i3) PROJECT YEAR 3 ANNUAL PROGRESS REPORT OCTOBER 1, 2014 – SEPTEMBER 30, 2015

Program Title: Integrity for Investments Initiative (i3)

Sponsoring Office: USAID/Philippines – Office of Economic Development and Governance (OEDG)

Contract Number: AID-492-C-13-00006

Contractor: Deloitte Consulting LLP

Publication Date: October 2015

Authors: i3 Project Team

DISCLAIMER

This report is made possible by the support of the American People through the United States Agency for International Development (USAID). The contents of this report are the sole responsibility of the Deloitte Consulting LLP and do not necessarily reflect the views of USAID or the United States Government.

i3 Project Year 3 Annual Progress Report October 1, 2014 – September 30, 2015 i

CONTENTS

LIST OF FIGURES AND TABLES ....................................................................................................... i

ACRONYMS ................................................................................................................................ ii

EXECUTIVE SUMMARY .................................................................................................................... 1

INTRODUCTION .............................................................................................................................. 3

PROJECT YEAR 3 ACCOMPLISHMENTS ............................................................................................. 5

Component 1: Anticorruption Enforcement Effectiveness Improved .................................................. 5

Component 2: Opportunities for Public Sector Corruption Reduced ................................................. 15

Component 3: Corporate Governance in Public and Private Sectors Improved ................................ 17

Cross-Cutting: Strategic Communications and Gender ..................................................................... 21

RESULTS BY RESULTS ANALYSIS ..................................................................................................... 25

LIST OF FIGURES AND TABLES

Figure 1: i3 Results Framework .............................................................................................................. 3

Table 1: Summary of Case Build-Up Team Trainings ........................................................................... 7

Table 2: i3 Activities in Support of Ombudsman’s Eight-Point Priority Agenda ................................. 10

Table 3: COA Capability Building Activities with i3 Support ................................................................ 14

Table 4: Summary of Messaging and Communications Planning Workshops .................................... 21

Table 5: Summary of Communications Trainings ................................................................................ 22

Table 6: i3 Performance Indicators ...................................................................................................... 25

i3 Project Year 3 Annual Progress Report October 1, 2014 – September 30, 2015 ii

ACRONYMS ACFE Association of Certified Fraud Examiners ACGS ASEAN Corporate Governance Standards ARTA Anti-Red Tape Act ASEAN Association of Southeast Asian Nations ASOG Ateneo School of Government CCMS Complaint and Case Monitoring System CFE Certified Fraud Examiner COA Commission on Audit CPA Citizen Participatory Audit CSC Civil Service Commission DOF Department of Finance EIPD Enforcement and Investor Protection Department FIO Field Investigation Office FSS Facilitated Study Sessions GAD Gender and Development GAO Government Accountability Office GCG Governance Commission for Government Owned or Controlled Corporations GOCC Government Owned or Controlled Corporation i3 Integrity for Investments Initiative ICMS Integrated Case Management System ICRS Integrated Corporate Reporting System LSC Lifestyle Check MISS Management Information System Service MOLEO Military and Other Law Enforcement Offices OGA Office of the General Accountant OLA Office of Legal Affairs OLAP Ombudsman Legislative Advocacy Project Ombudsman Office of the Ombudsman OSP Office of the Special Prosecutor PACPO Public Assistance and Corruption Prevention Office PAMB Prosecution and Administrative Monitoring Bureau PMC Project Management Committee of OLAP PPA Proactive Policy Analysis PY Project Year RCS Report Card Survey SEC Securities and Exchange Commission SOAR SEC Oversight Assurance Review STB Strategic Training Board UNCAC United Nations Convention against Corruption USAID United States Agency for International Development USG United States Government


EXECUTIVE SUMMARY In Project Year (PY) 3, i3 realized significant accomplishments as a result of its interventions supporting counterparts’ efforts to advance legal and policy reforms, skills building, and systems improvements. This year’s highlights include the following: Facilitated the adoption of landmark legislation and policies – President Benigno Aquino III signed into law Republic Act No. 10660 to strengthen the functional and organizational structure of the Sandiganbayan. i3 provided technical assistance to the Office of the Ombudsman’s (Ombudsman) Legislative Advocacy Project (OLAP) in its efforts to advance legislation to strengthen the agency’s effectiveness in implementing anticorruption programs and prosecute cases at the Sandiganbayan. The enactment of the Sandiganbayan Reform Law, which aims to speed up the process of deciding cases before the anti-graft court and ease its backlog, was the first priority legislative reform package of the Ombudsman. The Ombudsman issued Office Order No. 279 on “Lifestyle Check (LSC) cases undergoing case build-up or fact-finding investigation” that implements and institutionalizes i3’s recommendations for the “Case Build-Up Team Approach”, a recognized international best practice of collaboration between the legal expertise of prosecutors handling criminal cases in court with the investigative expertise of the field investigators responsible for gathering evidence. Adoption of a policy for early collaboration between Ombudsman prosecutors and field investigators aims to improve the quality of cases filed before the Sandiganbayan and help ensure improved success rates. Enhanced officials’ skills in anticorruption work – For PY3, i3 trained 1,112 officials (492 males and 620 females) on areas such as detecting and investigating fraud, good practice case management protocols, good corporate governance code and practice, strategic communications, and gender integration. Among the notable training initiatives this year are two activities with the Commission on Audit (COA) -- Certified Fraud Examiner (CFE) training and accreditation for state auditors and attorneys, and the knowledge sharing and exchange visit with federal and state agencies and other organizations in the Washington, D.C. on performance and forensic auditing. Staff and officials of the Securities and Exchange Commission (SEC) and the Governance Commission for Government Owned or Controlled Corporations (GCG) were trained on risk management and fraud detection. The project provided counterparts with the knowledge and tools to more effectively communicate its efforts to the public and increase visibility of government efforts to combat corruption. i3 also organized training to help partner government agencies in identifying entry points in their respective gender and development (GAD) plans and budgets that may also support i3 activities.


Improved evidence and case management systems in counterpart agencies – With i3 support, COA is now able to digitize and store audit-related documentation. The agency has the ability to preserve the important paper records, allowing easy access of data for audit analysis. From May to September 2015, over 230 thousand pages of audit documents have already been scanned using the Content Central Document Management Software, a document and evidence management system procured by i3 for COA. Apart from more secure evidence storage, data digitization may also eventually facilitate information sharing with other anticorruption agencies.


INTRODUCTION The Integrity for Investments Initiative (i3) contributes to inclusive growth by reducing the costs of corruption to investments and trade, thereby promoting open and fair competition. By focusing on policy improvements, legislative reforms, skills building, and system enhancements, i3 is laying the foundation for strengthening enforcement efforts, reducing opportunities for corruption, and improving corporate governance. i3 is a four-year (with one option year) project implemented since February 2013 by Deloitte Consulting LLP in collaboration with international and local institutions, including: Tetra Tech DPK; Makati Business Club (MBC); Navarro Amper & Co.; CD Asia Technologies, Inc. (CD Asia); Social Weather Stations (SWS); CPRM Consultants, Inc. (CPRM); and the Ateneo School of Government (ASOG). The counterpart agencies from the government sector are: Ombudsman; COA; Department of Finance (DOF); Civil Service Commission (CSC); SEC; and GCG. This PY3 Annual Progress Report covers the period from October 1, 2014 to September 30, 2015 and highlights the activities completed, outcomes realized, and progress of ongoing activities for the three components of the project: 1) anticorruption enforcement; 2) corruption prevention and institutional integrity; and 3) corporate governance. Results Framework i3 is organized into three components for each of the sub-Intermediate Results based on the results framework (Figure 1).

FIGURE 1: i3 RESULTS FRAMEWORK


The project has identified three activity outcomes that contribute to the achievement of the sub-intermediate results: 1. Anticorruption legislation and policies improved – Improvements in anticorruption

legislation and policies will help provide an enabling environment for implementing more effective oversight and enforcement activities.

2. Skills of personnel of anticorruption offices improved – The ability of anticorruption

agencies to detect fraud and conduct performance and forensic audits, investigate and prosecute cases, and monitor errant firms and individuals rests on a competent workforce equipped with the necessary skills to successfully pursue public corruption cases.

3. Internal management systems of anticorruption offices improved – Internal operations in

each agency need to be modernized to support timely and more effective management of their respective workload, such as better evidence management and data sharing systems.


PROJECT YEAR 3 ACCOMPLISHMENTS COMPONENT 1: ANTICORRUPTION ENFORCEMENT EFFECTIVENESS IMPROVED i3 supports the Ombudsman and COA to help improve laws, policies, skills, tools and systems to further increase the effectiveness in detecting and prosecuting corruption. Technical assistance is being provided to strengthen internal operations, particularly in case management, digitized records management, and case monitoring. Assistance is channelled to developing specialized audit, investigation and prosecution skills, and strengthening interagency cooperation. OFFICE OF THE OMBUDSMAN Priority legislative reforms In year 2, i3 assisted the OLAP in its efforts to advocate for five priority legislative reform packages: 1) changes to the Sandiganbayan law; 2) institutional strengthening of the Office of the Ombudsman; 3) asset forfeiture and recovery; 4) investigative and prosecutorial functions of the Ombudsman’s Office; and 5) United Nations Convention Against Corruption (UNCAC) compliance. i3 developed and provided the Ombudsman with a Proactive Policy Analysis (PPA) Tool that uses a visual analysis of the potential impact of the proposed legislation. From October to December 2014, the project organized 12 meetings for the OLAP Project Management Committee (PMC). The meetings provided an opportunity for the OLAP to present their proposed legislation to members of Congress and representatives of civil society organizations. Ombudsman Conchita Carpio Morales highlighted the importance to prioritize consideration of the proposed legislative reform packages at the “2nd State Conference on UNCAC Implementation and Review” on December 2, 2014 with the Philippine President, Senate President, Speaker of the House, Chief Justice of the Supreme Court, Cabinet Secretaries, and other high-level government officials in attendance. i3 also supported the OLAP Assessment and Strategic Planning Workshop on February 5-6, 2015 to formulate a strategic work plan for implementation up to March 2016. An article on the use of the PPA tool was published by Devex online on February 17, 20151 at https://www.devex.com/news/development-done-differently-making-better-decisions-with-proactive-policy-analysis-85501.

“The Proactive Policy Analysis tool has helped the

Office of the Ombudsman, the Philippines’

constitutional anti-corruption agency, present to

Senators and Congressmen in a visually compelling

and persuasive way how support for the anti-

corruption legislative initiatives of the Ombudsman

can generate concrete economic and development

gains for the country, particularly to improve

perceptions of government anti-corruption efforts,

reinforce GDP per capita gains, enhance other

economic indicators, and decrease overall poverty

levels.”

Deputy Ombudsman for Luzon and OLAP PMC Chairperson Gerard Mosquera

https://www.devex.com/news/development-done-differently-making-better-decisions-with-proactive-policy-analysis-85501

https://www.devex.com/news/development-done-differently-making-better-decisions-with-proactive-policy-analysis-85501


On April 16, 2015, the Philippine President signed into law Republic Act No. 20660, “An Act Strengthening Further the Functional and Structural Organization of the Sandiganbayan, Further Amending Presidential Decree No. 1606, As Amended, and Appropriating Funds Therefore”. The law introduces three major amendments: 1) expanding the number of Sandiganbayan divisions from five to seven, thereby increasing the number of justices from 15 to 21, with three justices per division; 2) decreasing the number of justices needed to constitute a quorum for sessions from three to two per division; and 3) transferring to the Regional Trial Courts the exclusive original jurisdiction of cases with allegations of damage to the government or bribery for amounts not exceeding one million pesos. Case Build-Up Team Approach

i3 with support of Tetra Tech DPK provided capacity building activities to institutionalize the case build-up team approach, a recognized international best practice of early collaboration between the legal expertise of prosecutors handling criminal cases in court with the investigative expertise of the field investigators responsible for gathering evidence. Timely collaboration between prosecutors and field investigators in early fact finding stages of case build-up can help ensure the successful prosecution of Ombudsman cases.

Participants to these activities were comprised of deputy ombudsmen, deputy special prosecutors, directors, prosecutors, and investigators from the Office of the Special Prosecutor (OSP), Field Investigation Office (FIO), and the Prosecution and Administrative Monitoring Bureau (PAMB) of the Central Office, and from the sectoral offices of Luzon, Visayas, Mindanao, and the Military and Other Law Enforcement Offices (MOLEO). Training activities in year 3 are summarized in Table 1 . On April 30, 2015, the Ombudsman issued Office Order No. 279, “Lifestyle Check Cases undergoing case build-up or field investigation” to formally institutionalize the case build-up team approach. The Office Order includes a number of protocols recommended by i3 consultant such as the conduct of regular case conferences and streamlined procedures for closing out cases, among others.

i3 has trained a total of 178 Ombudsman officials to improve

their investigative and prosecutorial skills in support of the

“Case Build-Up Team Approach”.


TABLE 1: SUMMARY OF CASE BUILD-UP TEAM TRAININGS

Office Training Module Date No. of Participants

Male Female Total

OSP, FIO, PAMB, Luzon, MOLEO

Systems and Procedures in Lifestyle Check (SPLICE) and Special Prosecutors and Investigators’ Endeavor (SPINE)

October 9-10, 2014

16 15 31 Case Management: Classification, Priorities, and Time Standards

Investigation: Issues, Probable Offense, and Linking Evidence to Elements

Mindanao

A Team Model For Building Successful Public Corruption Cases and Case Build-Up / Trial Teams – Best Practices

October 15, 2014

17 25 42

OSP, FIO, PAMB,

Mindanao [Batch 1]

Effective Use of Tax Returns in Lifestyle Check (LSC) Case Investigations and Prosecutions

February 5-6, 2015

14 13 27

Using Spreadsheets in the Investigation and Prosecution of LSC Cases

Strategies for Assessing Income from Family and Non-Family Businesses and Presentation at Trial

Visayas

A Team Model For Building Successful Public Corruption Cases and Case Build-Up / Trial Teams – Best Practices

February 9-10, 2015

19 32 51

OSP, FIO, Luzon,

Visayas, MOLEO

[Batch 2]

Effective Use of Tax Returns in Lifestyle Check (LSC) Case Investigations and Prosecutions

February 11-12, 2015

15 12 27

Using Spreadsheets in the Investigation and Prosecution of LSC Cases

Strategies for Assessing Income from Family and Non-Family Businesses and Presentation at Trial

Overall Total 81 97 178


Ombudsman case management operations In year 2, i3 completed the data migration of 6,710 criminal cases and 6,654 administrative cases of the Ombudsman’s Central Office into the agency’s data migration system. The work was done by sub-contractor CD Asia Technologies. The activity entailed the consolidation of databases and hyperlinking related documents (e.g. complaints and pleadings belonging to the same case file). An Ombudsman technical working group conducted the verification and validation of digitized case files as a final quality assurance check. Clearance of the Ombudsman committee is necessary before the digitized cases are transferred by the Ombudsman’s Management Information System Service (MISS) into the Ombudsman’s Complaint and Case Monitoring System (CCMS). As of the end of September 2015, a total of 2,684 criminal cases have been transferred to the CCMS out of the 3,315 validated criminal cases that are posted for re-uploading. The target for completion of validation of all Central Office cases in the data migration system and uploading into the CCMS is by March 2016. Enhancing and optimizing the capabilities of the CCMS contributes to efficient processes of screening, classifying, and disposing complaints and cases according to prescribed timeframes with the end view of utilizing the Ombudsman’s limited resources to prioritizing high-impact cases of high-risk government agencies. Evidence management system for the Ombudsman In February 2015, i3 with support of Tetra Tech DPK completed a proposal containing the technical and functional requirements for the development of an evidence management system at the Ombudsman. The benefits of maintaining evidence in digital format for intelligence gathering, investigation, and prosecution of cases are substantial. In addition to improving security and efficiency of evidence exchange, the evidence management system offers a number of other advantages:

Improving collaboration through ease of access to case evidence by the case build-up team investigators and prosecutors;

Providing an application for digital storage and retrieval of evidence for intelligence purposes; and

Preserving original evidence collected in the investigation of high priority cases for use at trial.

On September 11, 2015, i3 held a workshop on the evidence management system with 18 Ombudsman officials (7 males and 11 females) representing the following units: OSP; FIO; MISS; Central Records Division; Preliminary Investigation, Administrative Adjudication, and Monitoring Office; Project Management Bureau; and the sectoral offices of Luzon, Visayas, Mindanao, and MOLEO. Among the recommendations that came of the discussions were:

1. Include the evidence management system in the next Information Technology System Strategic Plan of the Ombudsman’s Office (current plan will expire in 2015);

2. Appoint and convene an evidence management system governance committee composed of system users and management;


3. Determine the cost of maintaining an evidence management system to inform their budgeting cycles after the initial investments of i3;

4. Inquire into the possibility of purchasing an evidence management system that is based on an open-source platform/s in order to mitigate maintenance and upgrade costs;

5. Identify and agree on the set of documents to be scanned and indexed into the evidence management system, wherein the documents under consideration are (a) final action papers i.e. decisions, resolutions, investigation reports, with their annexes; (b) the government’s Statement of Assets, Liabilities, and Net Worth; (c) main pleadings; and (d) documentary evidence; and

6. Participate in the demonstration by vendors to fully appreciate the different functionalities of an evidence management system.

Support for the Ombudsman’s eight-point priority agenda Throughout PY3, i3 extended assistance to improve policies, skills, and systems that contributed to the Ombudsman’s Eight-Point Priorities for 2011-2018:

Disposition of high-profile cases;

Zero backlog;

Improved survival rate of fact-finding;

Enforced monitoring of referred cases;

Improved responsiveness of public assistance;

Improved anti-corruption policy and programme coordination among sectors;

Rationalization of the functional structure of the office; and enhanced transparency and credibility.

The list of these activities supported in PY3 are enumerated in the table below.

i3 has trained 69 Ombudsman personnel with frontline service roles in the Central Office and sectoral offices to

improve their customer service delivery skills so that they are able to render ‘meaningful, responsive, and

relevant public assistance’.


TABLE 2: i3 ACTIVITIES IN SUPPORT OF THE OMBUDSMAN’S EIGHT-POINT PRIORITY AGENDA

Time Period Details

September – October 2014

i3 sub-contractor Tetra Tech completed a review of select Ombudsman cases decided by Sandiganbayan. The review was used primarily for the development of training activities of the project for the office.

September – October 2014

i3 sub-contractor Tetra Tech completed the assessment of the Ombudsman’s IT governance framework and its alignment with the business operations of the agency. i3 proposed the creation of an IT governance committee, which will be responsible for leading conversations on budgets, financial management, strategic planning, project oversight, and prioritization of IT projects.

November 13- 14, 2014 [Batch 1]

November 20- 21, 2014 [Batch 2]

i3 conducted two batches of the Service Excellence Training to help improve the skills of personnel assigned to Ombudsman front-line service units. A total of 69 participants (21 males and 48 females) from the Public Assistance and Corruption Prevention Office’s (PACPO) Public Assistance Bureau (PAB), and sectoral offices of Luzon, Visayas, Mindanao, and MOLEO received training on technical writing, processing of requests for assistance, and customer service delivery.

November 28, 2014

i3 supported a dialogue with Visayas-based business leaders and investors of the Cebu Chamber of Commerce and Industry and the Mandaue Chamber of Commerce and Industry to learn about the legal mandate, services, and procedures of the Investment Ombudsman. The new unit has been tasked to resolve complaints and grievances related to the establishment or conduct of business by potential and existing investors in their transactions with government agencies involved in investment promotion and regulation.

October – December 2014

i3 completed an organizational development assessment of PACPO’s three units: Bureau of Resident Ombudsman (BRO), Community Coordination Bureau (CCB), and Public Assistance Bureau (PAB). i3 recommended the possible removal of the Alternative Dispute Resolution and Mediation functions as well as the restructuring of the BRO program to eliminate the duplication of services.


COMMISSION ON AUDIT Evidence management system at COA At the start of PY3, i3 procured a content central document management software from Ademero, Inc., completed the software installation and delivery of computer units and scanning equipment. On October 21-23, 2014 the project trained 12 COA officials (3 males and 9 females) from the Special Audit Office and the Information Technology Office (ITO). COA completed the refurbishment of the Document Management Unit room in April 2015 and the hiring of personnel in June 2015. The digitization of documents and evidence from priority audits allows COA to preserve a sizeable volume of paper records, manage vast amounts of paper records in a secure system, and have ease of access to consolidated electronic information for data analysis. As of the end of September 2015, a total of 231,275 pages of audit records have been scanned. Certified Fraud Examiner Training and Examination i3 with support of the Association of Certified Fraud Examiners (ACFE) – Philippines Chapter conducted for COA the third batch of Facilitated Study Sessions (FSS) for Certified Fraud Examiner’s (CFE) Examination on March 15-28, 2015. There were 24 state auditors and attorneys (11 males and 13 females) from 13 COA Regional Offices, Fraud Audit Office, and Office of the Commissioner who attended the ten-day classroom sessions and two-day mock examinations. The FSS and CFE Exam cover financial transactions and fraud schemes, legal elements of fraud, fraud prevention and deterrence, and fraud investigation techniques.

The third batch who took the online CFE Exams on April 23-24, 2015 and achieved a 100% passing rate were assigned to fraud audit teams. COA Chairperson Michael Aguinaldo, Commissioners Heidi Mendoza and Jose Fabia gave messages of support at the closing ceremony held on April 24, 2015.

Because of i3 support, 84 COA state auditors and attorneys have been accredited as Certified Fraud Examiners.


i3 with support of ACFE-Philippines held in year 2 the first two batches of FSS in October- November 2013 with 62 participants (18 males and 44 females) coming from COA’s Central Office, one Regional Office, and from the Special Audit Office, who also garnered a 100% passing rate. To date, 32 i3-supported CFEs have been assigned to work on fraud audits. Strategic Planning Process In response to the assistance request of COA Chairperson Aguinaldo, the project began supporting the development of the agency’s strategic plan for 2015-2022. i3 held a series of one-on-one leadership interviews and focus group discussions with about 100 senior officials and employees representing 11 audit and administrative sectors from the Central Office and Regional Offices. The results of the consultations were presented to COA on August 3, 2015. The meeting was a side activity during the Citizen Participatory Audit event with leaders and representatives from the International Organization of Supreme Audit Institutions, Asian Organization of Supreme Audit Institutions, development and donor organizations, and the diplomatic community. The initial priority areas in the COA strategic plan are: expand focus on impact; build a Commission that empowers and enables; improve delivery of high quality, fair, and timely audits; strengthen capacity and capability; enhance support infrastructure; and increase stakeholder ownership and understanding. In September 2015, i3 also began conducting interviews of external stakeholders from government agencies and COA program partners. The effort was part of the environmental scan for strategic plan development. Regular meetings have been held with the COA Strategic Planning Advisory Group composed of assistant commissioners. The regular meetings provided an opportunity to validate the focus of the strategic planning initiative, gather feedback on the initial findings, and identify and agree on the next steps of the strategic planning process. A plenary session is scheduled in quarter 1 of year 4. Performance Auditing On August 20, 2015 Chairperson Aguinaldo shared COA’s ongoing strategic planning process to identify emerging priorities at the Integrity Initiative Forum on Protecting Private and Public Sector Integrity. Chairperson Aguinaldo discussed the agency’s desire to focus more on value-for-money or performance audits, thus the possibility of hiring external auditing firms to conduct the financial audits and compliance audits. As part of its support to COA’s strategic planning process, i3 held key interviews with assistant commissioners and directors of various audit sectors on August 24-28, 2015 to assess the agency’s proficiency and experience with performance auditing. The conversations also discussed performance audit and reporting standards. The preliminary results identified 10 decision points that COA needs to explore for the agency to successfully implement the shift to performance auditing in the next few years. Operational priorities are high-impact areas for COA including wider


implementation of performance audits, enhancement of a risk-based approach to planning and executing financial and performance audits, and improvement in communication of audit results. U.S. knowledge sharing and exchange visit The project organized COA’s official visit to Washington, D.C. on September 19-26, 2015 Chairperson Aguinaldo headed the 13-person delegation (5 male and 8 females). They met with the U.S. Government Accountability Office (GAO), U.S. Department of Transportation’s Office of Inspector General (OIG), the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) Fraud and Internal Investigation units, the Alexandria Virginia City Manager and its citizen’s “Call-Click-Connect” team, Deloitte Consulting’s Proactive Policy Analysis (PPA) team, the World Bank (WB), U.S. Department of State, and USAID offices. The discussions on U.S. best practices will serve an important reference in developing the COA strategic plan. Some of the key learning points include, among others, lessons from the U.S. GAO:

The historic shift and evolution of the GAO from a primarily financial and compliance audit- oriented organization into a performance audit-centered organization;

The need to hire professionals from disciplines other than accounting to support performance audits;

The importance of a robust institutional quality assurance framework to prioritize and focus the impacts of audits;

The value of risk based approach to start and staff audits; and

Active engagement and strategic communications with social and traditional media.

Chairperson Aguinaldo and Commissioner Mendoza also delivered a joint lecture, “Innovations in the Fight Against Corruption: The Experience of the Commission on Audit of the Philippines” on September 25, 2015 hosted by Georgetown University’s (GU) Walsh School of Foreign Service, the Office of Global Engagement, and the US-Philippines Society. The lecture was attended by 55 participants from GU’s Master of Science in Foreign Service Program, GU Global Futures Initiative, and the US-Philippines Society.

Support for COA Priorities on Technical Competence and Strategic Partnerships i3 also supported COA in developing workforce and succession planning, strengthening citizen involvement in the public audit process, and enhancing technical skills of its personnel. These year 3 activities are enumerated in Table 3.

i3 coordinated with Georgetown University for the

lecture of COA leaders at the end of the U.S. visit.

http://www.usphilippinessociety.org/


TABLE 3: COA CAPABILITY BUILDING ACTIVITIES WITH i3 SUPPORT

Time Period Details

October 15, 2014

i3 supported the Planning Workshop for the Roll-out of the Citizen Participatory Audit (CPA) Guidelines that discussed CPA as an audit strategy that brings together civil society organizations, citizens, and auditors of COA. The CPA is a joint initiative of COA and the Affiliated Network for Social Accountability in East Asia and the Pacific (ANSA-EAP) to increase transparency and accountability in the delivery of government programs and public services.

October 16, 2014

i3 supported the Re-Echo Seminar on Performance Auditing and Anticorruption where COA Directors Celso Vocal of the International Affairs Office and Fortunata Rubico of the Office of the Commission Secretariat were able to share their experiences and key learnings to 48 COA officials (36 females). i3 funded the overseas training of Director Vocal in the ten-day Summer Academy of the International Anti-Corruption Academy held in Luxemburg, Austria on July 3-12, 2014 and Director Rubico’s participation in the four-month International Auditor Fellowship Program of the U.S. GAO on March 26-July 18, 2014.

November – December 2014

i3 deployed the CYPRESS methodology on capacity performance and sustainability and the PPA Tool that provides quantitative decision-making analytics. COA leadership initially recognized the need to develop and implement a strategic talent management plan in 2015 in response to a significant number of its officials and employees expected to retire in the next five years.

January 12-14, 2015

i3 supported the participation of COA Director Carmelita Antasuda of the Local Government Sector in the USAID Regional Development Mission – Asia (RDMA)“Supreme Audit Institutions (SAI) Performance Measurement Framework (PMF)” workshop in Bangkok, Thailand.

DEPARTMENT OF FINANCE

Project Laya In year 2 to 3, i3 engaged the Ateneo School of Government (ASOG) to assist the DOF and revenue generating agencies in implementing integrity building initiatives. For Phase 1 (implemented in January-May 2014) and Phase 2 (implemented in June-October 2014), training and related technical assistance were provided most significantly to the DOF Revenue Integrated Protection Service (RIPS), Bureau of Customs’ Run After The Smugglers (RATS) Program. ASOG also supported and institutional and policy improvements of the DOF.


i3 is acknowledged by CSC for its support to

reduce bureaucratic red tape.

COMPONENT 2: OPPORTUNITIES FOR PUBLIC SECTOR CORRUPTION REDUCED

i3 supports CSC in monitoring efforts to strengthen compliance with the Anti-Red Tape Act (ARTA).

CIVIL SERVICE COMMISSION Anti-Red Tape Act – Report Card Survey Republic Act No. 9485 or the Anti-Red Tape Act of 2007 (ARTA) is a law that aims to improve the efficiency and prevent graft and corruption in the delivery of government services by reducing bureaucratic red tape, and increasing accountability and transparency in governance. The Report Card Survey (RCS), implemented by CSC as a component of ARTA, is “an evaluation tool that provides quantitative measure of actual public service user perceptions on the quality, efficiency and adequacy of different frontline services, as well as a critical evaluation of the office or agency and its personnel”. i3 supported the assessment done by the ASOG from January 2014 to February 2015 of the ARTA-RCS implementation process, particularly to improve RCS and effect reduction of red tape, graft, and corruption in frontline services of government agencies. The assessment resulted in the following recommendations on ARTA-RCS: enhance the tool; improve implementation; develop a program management framework; and ensure that results are translated into specific agency actions to improve their efficiency, transparency, and accountability. CSC adopted recommendations across all the major areas for improvement cited by the assessment. The enhanced RCS incorporated recommendations of the i3-supported assessment study to standardize the conduct of the survey by administering inspection checklist, spot check on researchers, standard translation of survey questionnaires to key local languages, and conduct of time and motion study to measure actual compliance with the Citizen’s Charter. i3 also supported the CSC in the first “ARTA Testimonial Rights for CSC Partners in Making a Customer Oriented Government” on October 22, 2014. Approximately 220 representatives from government offices, international donor agencies, non-government organizations, and media participated in the ceremony. The CSC acknowledged agencies that performed well on the 2014 version of the RCS and presented i3 with a Plaque of Appreciation as a vital supporter of the agency’s efforts to enhance its RCS.


Administrative disciplinary process i3 with support of Tetra Tech provided technical assistance in the conduct of a needs assessment towards enhancing the administrative disciplinary process implemented by the CSC. The assessment was done from August to October 2015. It looked into the organizational, adjudicatory, interagency, case management and information technology, and gender- related and training needs through consultation meetings, informal workshops, and site visits at the CSC Central Office, selected CSC Regional and Field Offices, the Ombudsman, Bureau of Internal Revenue Central Office, and Quezon City Local Government. These activities made possible the collection of data on disciplinary and non-disciplinary cases, and case processing systems and timelines. Among the recommendations presented to CSC’s top officials based on the preliminary findings are:

Increase use of judicial affidavits at Office of Legal Affairs (OLA) and Regional Offices;

Revision of Revised Rules on Administrative Cases in the Civil Service (RRACCS) to establish consistent penalties;

Deploy OLA Action Officers to Regional Office-National Capital Region (NCR), Regional Office-III, and Regional Office-IV on a regular basis to reduce backlog of cases;

Gather data from agencies regarding sexual harassment and other gender-related cases handled informally;

Prioritize technical support for the Integrated Case Management System (ICMS); and

Increase training at agencies particularly in advance of re-organizations, prior to elections, and with newly elected local government officials.

CSC endorsed i3’s recommendations to improve the administrative disciplinary process based on the needs

assessment.


COMPONENT 3: CORPORATE GOVERNANCE IN PUBLIC AND PRIVATE SECTORS IMPROVED

i3 works with the SEC and the GCG to strengthen their respective oversight of private and public sector corporations’ compliance with corporate governance standards. SECURITIES AND EXCHANGE COMMISSION

Corporate Governance and Regulatory Amendments i3 supported the SEC and the Philippine Stock Exchange’s (PSE) Corporate Governance Forum 2014 on October 21, 2014 that was attended by 241 chief executive officers (CEOs) and corporate compliance officers (117 males and 124 females).

Discussions concentrated on the proposed amendments to the Corporation Code and Securities Regulation Code, recent SEC Corporate Governance Rulings, the Investment Ombudsman initiative, as well as alignment of corporate governance standards in the Philippines with the ASEAN Corporate Governance Standards (ACGS). ACGS is an initiative of the ASEAN Capital Markets Forum (ACMF), a body composed of the capital market regulators from the 10 ASEAN members wherein SEC sits as the official Philippine representative.

Philippine Senator Juan Edgardo “Sonny” Angara as keynote speaker spoke about the importance of public and corporate governance As a follow-up activity based on the recommendation of business association leaders, i3 with support of Makati Business Club (MBC) organized a roundtable discussion on December 1, 2014 with the Philippine Business Groups – Joint Foreign Chambers (PBG-JFC) to discuss the proposed amendments to the Corporation Code. The proposed revisions seek to contribute to the ease of doing business, strengthen corporate governance, solidify anticorruption measures, and fortify the regulatory authority of the SEC. i3 also provided technical assistance to analyze the key legal regulatory amendments being proposed by conducting benchmarking that contrasts the Philippines with other ASEAN countries in Southeast Asia; examining global best practices and the results of current studies and reports on corporate governance; addresses specific pragmatic challenges that the SEC, Philippine companies, and professionals might encounter in implementation; and discusses the legal how the SEC could begin to approach the subject of whistleblowing policies across companies.

i3 invited prominent speakers to discuss the

ASEAN Corporate Governance Standards at the

Corporate Governance Forum.


Competency Model and Strategic Training Plan i3 developed a Competency Model and Strategic Training Plan for six operating departments within the SEC to maintain and strengthen the capacity of its personnel in fulfilling the agency’s mandate. The Competency Model, which is aligned with international best practices, has three pillars: (1) Professional - knowledge and skills in interpersonal relations, decision-making, and performance; (2) Technical - knowledge and skills needed to complete the SEC Mission; broken into global and department-specific; and (3) Leadership - behaviors that are expected of SEC leaders now and in the future. The creation of a Strategic Training Board (STB) is crucial as it will take charge of executing the policy adopted by SEC on implementing a competency-based Strategic Training Plan, which includes comprehensive curricula across departments with course descriptions and learning objectives. The Human Resource and Administrative Department (HRAD) and the Economic Research and Training Department (ERTD) are in the process of seeking approval from the SEC En Banc to formalize the roles and responsibilities of the STB. SEC Case Management Operations From August to September 2015, i3 with support of Tetra Tech provided technical assistance for the development of uniform case management operating procedures. The technical assistance seeks to address inconsistencies in practices between the SEC’s Enforcement and Investor Protection Department (EIPD) Divisions as well as the development of a more efficient case screening process, uniform case classification protocols, standardized use of time standards, and uniform case tracking and management reporting on a regular basis among the EIPD Divisions. An assessment of EIPD’s existing case management system and information technology functions was conducted in March 2015. Extensive discussions were held with SEC officials and among the key recommendations for this more recent assessment are:

Case classification needs to be used and consistent screening criteria used for all complaints;

Develop WordPerfect Macros for common reports, memoranda, etc.; and

An effective case management system should be implemented. As part of improving their respective case management systems, i3 also supported the interagency visit to the CSC on September 18, 2015 of 8 SEC and GCG officials (7 males and 1 female) to learn about the Integrated Case Management System (ICMS) and the Contact Center ng Bayan (CCB) operations.

SEC Oversight Assurance Review and Risk Management

i3 supported the SEC's Office of the General Accountant (OGA) in the development of baseline considerations for the SEC Oversight Assurance Review (SOAR), a quality review system that allows the agency to check on the quality of financial reports of publicly listed companies (PLCs). The SOAR system seeks to strengthen the adherence of auditing firms to applicable international auditing standards and regulatory requirements, specifically the standards of the Public Company Accounting Oversight Board (PCAOB).


i3 conducted two trainings to support the SOAR implementation by SEC. The “Workshop on Quality Assurance Review” was held on March 11, 2015 with 10 OGA personnel (2 males and 8 females) while the “Workshop on Review of Financial Statements” was held on September 28-29, 2015 with 12 participants (2 males and 10 females), majority of which are from OGA with one personnel each from the Corporate Governance and Finance Department (CGFD) and the Markets and Securities Regulation Department (MSRD).

i3 also conducted risk management training on “Application of Risk Management in the Financial Sector” on March 12-13, 2015 participated in by 20 SEC officials (10 males and 10 females). The same training that was also provided to GCG aimed to strengthen the skills of participants to efficiently uncover both public and private sector corruption and fraud such as identifying red flags and detecting fraudulent patterns and behaviors of companies. GOVERNANCE COMMISSION FOR GOVERNMENT OWNED OR CONTROLLED CORPORATIONS

Dashboards for the Integrated Corporate Reporting System i3 provided technical assistance in November 2014 to improve GCG’s capability to monitor and analyze Government Owned or Controlled Corporation (GOCC) reports by creating dashboards to visualize and compare performance scorecards in the Integrated Corporate Reporting System (ICRS). ICRS is a sector-wide uplink of crucial data and information on all GOCCs which includes financial reports and non-financial information such as GOCC Charters, Organizational Structures, and GOCCs’ incumbent appointive directors. In addition to improving internal monitoring capabilities, the GCG plans to make GOCC performance dashboards available to the public to increase awareness and understanding of the GOCC performance rating process.

Whistleblowing Policy for GOCC Sector i3 provided technical assistance in October-November 2014 to strengthen the implementation of the GCG Whistleblowing Policy by developing internal whistleblowing protection protocols that included a comprehensive overview of good practices on managing whistleblower systems and a GCG-appropriate design to receive and record whistleblower complaints and enable secure case management of allegations. GCG is in the process of developing a web portal in their website that would allow potential whistleblowers the proper avenue to air their complaints aside from the already existing whistleblowing mechanisms such as email correspondence, phone calls, and courier mail.

i3 has trained 22 SEC personnel on the implementation of

the SOAR System.


GCG Performance Scorecard i3 provided technical assistance in May and September 2015 to evaluate the GCG Performance Scorecard Methodology used to monitor GOCC compliance with standards aimed at improving integrity and corporate governance in the GOCC sector. The recommended strategies to enhance GCG’s capability to monitor the performance of GOCCs include: accelerating activities to digitize data collection; automating compliance and internal control functions; and amending policies to strengthen the scorecard strategies and measures. The evaluation also identified relevant information that should be monitored to detect red flags and/or non-compliance with performance standards. Risk Management Training for GCG Officials i3 conducted risk management training on “Application of Risk Management in the Financial Sector” on March 9-10, 2015 participated in by 25 GCG officials (12 males and 13 females). The activity builds upon the previous risk management trainings conducted in November 2013, and February and June 2014.

Harvard Kennedy School i3 helped facilitate the USAID-sponsored participation of GCG Official spokesperson and Corporate Governance Office-A Director Paolo Salvosa in the “Strategic Management of Regulatory and Enforcement Agencies” Executive Education Program offered by Harvard University’s John F. Kennedy School of Government on September 27-October 2, 2015. This program aims to equip senior regulatory agency managers with the tools and knowledge to address critical challenges in regulation and enforcement.

i3 has trained a total of 79 GCG officials on basic and

advanced modules on risk management.


CROSS-CUTTING: STRATEGIC COMMUNICATIONS AND GENDER STRATEGIC COMMUNICATIONS i3 engaged EON The Stakeholder Relations Group (EON), a stakeholder relations agency in the Philippines, to provide strategic communications support to the six counterpart agencies. Behind its reputation is EON’s unique approach to communications – the relationship imperative, which highlights the significance of building trust-based relationships with various audiences that go further than just disseminating messages. There are three phases to the provision of strategic communications support to each of the agencies. The first is the assessment phase, which provided the foundation for the development of communication strategies and approaches. The second phase is strategic communications planning, which includes the identification of priority stakeholders, development of compelling messages, and identification of strategies and tactics to enhance the agencies’ communication efforts. The third phase focuses on capacity building to address the needs of the agency in terms of competency in accomplishing communication tasks. This phase helps ensure that the strategic communications plan developed in the second phase is properly implemented. Under the assessment phase, a combination of primary and secondary research activities was conducted: focus group discussions, the training needs assessment, and the review of existing communication outputs and tools. Inherent to the development of the communications plan is the stakeholder identification and prioritization, message development, and actual identification of communication objectives and strategies. In line with this, two preparatory training activities were conducted – messaging workshop and the communications planning workshop. The results from both activities formed the foundation of the strategic communications plan for each agency. The two activities for each agency are summarized in the table below. TABLE 4: SUMMARY OF MESSAGING AND COMMUNICATIONS PLANNING WORKSHOPS

Agency Activity Date – 2015 No. of Participants

Male Female Total

COA

Messaging Workshop March 3 12 12 24 Communications Planning Workshop

March 4 12 12 24

CSC

Messaging Workshop March 13 1 8 9

Communications Planning Workshop

March 20 1 10 11

DOF

Messaging Workshop February 9 5 2 7


February 24 4 4 8

March 17 3 3 6

Messaging Workshop February 11 1 3 4


Agency Activity Date – 2015 No. of Participants

Male Female Total

GCG Communications Planning Workshop

March 11 5 6 11

Ombudsman

Messaging Workshop N/A N/A N/A N/A


September 29 11 10 21

SEC

Messaging Workshop January 30 7 4 11


February 27 5 4 9


The last phase of the strategic communication support is the conduct of training sessions. Based on the results of the assessment phase, training modules were developed to address the identified knowledge gap and priority skills for improvement. The training modules provided to each agency are summarized in the table below. TABLE 5: SUMMARY OF COMMUNICATIONS TRAININGS

Agency Training Module Date – 2015 No. of Participants Male Female Total

COA

Writing 101: Press Release and Press Kit Materials

March 5 11 10 21 Developing Effective Communication Materials and Collaterals

Media Relations 101 March 6 11 12 23

Training the Trainers

CSC

Developing Effective Communication March 31 3 14 17

Social Media

Understanding the Media May 4 10 27 37

Media Engagement

DOF

Media Relations April 17 9 11 20

Crisis Communications

Understanding the Communications Landscape

August 6 8 13 21 Issues and Risk Management

Preparing for a Media Encounter

GCG

Media Engagement May 28 6 8 14

Understanding Media

Social Media July 7 2 2 4


Agency Training Module Date – 2015 No. of Participants Male Female Total

Ombudsman

Media Perceptions July 1 22 16 38

Media Relations September 22

8 6 14

Social Media 101 8 5 13

Executive Media for Spokespersons

September 23 8 8 16

SEC

Dealing with Media

April 6 14 5 19

Preparation of Media Communication

Crisis Communications

Preparing for a Media Encounter

Developing Effective Communication May 6 9 9 18

Social Media

Media Relations for Executives July 31 2 2 4


The proposed Strategic Communications Plan is drawn from the analysis and recommendations of EON based on the information gathered from the assessment and communications planning activities mentioned above. A communication plan defines the strategic communication imperatives relevant to the anti-corruption initiatives of the agency as well as the overall communication messages and approaches that will help them in achieving the desired objectives. By developing a broad range of communication approaches, the communication plan seeks to help the organization address communication gaps and issues affecting internal and external stakeholders and to aid it in meeting its anticorruption objectives.

i3 has trained a total of 424 government officials from counterpart agencies on messaging and strategic communications planning, social media, developing communication materials, media engagement and

relations, and risk mitigation and crisis communications as part of its strategic communications support.


GENDER i3 updated its Gender Action Plan (GAP) and developed a gender and development (GAD) results framework, which reflects a gender mainstreaming approach across the Project’s activity outcomes on improving anticorruption skills, internal systems, and policies. Several activities involving i3’s counterpart agencies were undertaken between October 2014 to March 2015 in order to update the Project’s GAP, and to ensure that both the requirements of USAID and the Philippine government of mainstreaming gender in all foreign-assisted projects are adequately addressed. A roundtable discussion and training was conducted on October 9, 2014 with 10 GAD representatives and focal persons (2 males and 8 females) of all i3 counterpart agencies. The discussion aimed to clarify provisions of GAD mandates such as the requirements for gender mainstreaming in their respective agencies and to come up with gender strategies and indicators for the Project. Each of the counterparts shared their GAD initiatives and identified which GAD activities intersect with i3 priorities. The Project also provided follow-on technical assistance with counterparts, which enabled identification of anticorruption related activities for consideration in GAD plans and budgets of SEC and GCG. i3 provided trainings on gender analysis as well as GAD planning and budgeting to 10 GCG officials (7 males and 3 females) on December 18-19, 2014 and January 7, 2015. Engagement with counterparts on GAD also helped renew and raise awareness on appropriate consideration of gender issues such as in the case of CSC which issued Public Assistance and Information Office (PAIO) Memo No. 513 s. 2015 and provided an orientation on use of gender-sensitive language to Report Card Survey staff. As part of its efforts in mainstreaming gender in its activities, i3 also included a gender sensitivity module in strategic communications trainings it conducted for its counterparts. Appropriate consideration of gender in project activities also continued during the second half of PY3 and results are being used to enhance follow-on activities in PY4. The needs assessment of CSC’s administrative disciplinary process undertaken in August-October 2015 identified the need to improve CSC’s tracking of sexual harassment cases and other gender-related cases, including tracking cases that go through alternative methods of resolution. CSC management has agreed in principle to the recommendations from this assessment, which informed follow- on technical assistance that will be provided to the agency to improve its ICMS to help further develop the case management system at the Central Office.


RESULTS BY RESULTS ANALYSIS TABLE 6: i3 PERFORMANCE INDICATORS

Indicators1 Units FY 2014 FY 2015

1. Transparency International Corruption Perceptions Index Score

Score out of 100 38 Data available by December 2015

2. Social Weather Stations enterprise survey rating on those with personal knowledge of public sector corruption in the last three months in their line of business

% N/A2 32%

3. Sandiganbayan conviction rate3 % 38%

69% as of July 31, 2015

(Full year data

available by 2016 Q2)

4. Number of cases filed by the Office of the Ombudsman in the Sandiganbayan

Number of cases 452

149 as of July 31, 2015

(Full year data


5. Office of the Ombudsman caseload clearance rate4

% 118%

127% as of August 31, 2015

(Full year data


1 Calendar year data was used for all indicators reliant on Philippine government data (Indicators 3-5 and 9-10). 2 Survey data released in 2015 covered 2014/15 time period. 3 Formula using Sandiganbayan data: total number of convictions (of at least one accused in a case) including pleaded guilty divided by total number of decided cases (consisting of all terminated cases plus pleaded guilty) in a given year. 4 Formula using Ombudsman data: total number of outgoing/disposed cases divided by total number of incoming/newly received cases for the period.


Indicators1 Units FY 2014 FY 2015

6. Number of government officials receiving USG-supported anticorruption training

Number of participants

1,441 (484 males,

957 females)

1,112

(492 males, 620 females;

871 from government, 241

from private sector)

7. Percentage of work of anticorruption offices managed through the improved systems5

% N/A 20% as of

September 30, 2015

8. Progress in achieving milestones (qualitative)6

Number of policies All targets met

Targets met except for PA.

PL, CB, and PA

milestones also met for other policy

reforms 9. Percentage of errant entities sanctioned by the SEC7

% 100%

(22,831) 5,442 as of June 30,

2015

10. Number of covered entities recommended by the GCG for remedial action8

Number of entities 19 2 as of

September 30, 2015

5 Formula using Ombudsman data: total number of cases uploaded to the CCMS divided by total number of cases processed in DMS. 6 PL: Policy legitimization; CB: Constituency building; PA: Policy adoption; RA: Resource allocation; OD: Organizational design; MI: Monitoring impact. 7 Errant entities sanctioned include both firms and individuals imposed with the appropriate fines and/or penalties. 8 Entities recommended for remedial action are GOCCs that failed to meet their performance objectives. Remedial actions that can be recommended are corporate restructuring measures such as rationalization of functions, abolition, or privatization.


USAID Integrity for Investments Initiative (i3) 3F Herco Center, 114 Benavides Street

Legaspi Village, Makati City, 1229 Philippines Telephone: +63 2 843 0612

Fax: +63 2 823 7835

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