Detecting and Documenting Corruption

CHAPTER II
DETECTING AND DOCUMENTING CORRUPTION
AN OVERVIEW OF INVESTIGATIVE TECHNIQUES AND STRATEGIES

SHEILA S. CORONEL

Corruption is everyday stuff in the media. Newspapers and radio and
television programs regularly churn out allegations of malfeasance
committed by those in public office. Sari-sari store and coffee-shop
talk often centers on corruption as well, no doubt because citizens
encounter corruption, in all its multifarious forms, in the course of
their daily lives.

The challenge, whether for journalists, activists, researchers, and
plain concerned citizens, is to probe the allegations of wrongdoing and
see how far they go, while steering clear of partisan politics. Those
who probe corruption should keep in mind that their goal is not to
peddle scandal or to pit rival politicians against each other but to
provide citizens with information that will help them understand – and
grapple with – corruption and its impact on their lives.

Corruption scandals sell, and many politicians have gained mileage by
making damning exposés; many have also lost their careers because they
have been implicated in such scandals. The events that led to the fall
of President Joseph Estrada in 2001 are the most dramatic example of
this reality. Legislators who served as prosecutors in Estrada’s
impeachment trial were propelled to national prominence and won handily
in subsequent elections, while Estrada himself lost the presidency and
was later detained while facing graft and plunder charges.

It is not surprising that in the normal course of events corruption
investigations are often initiated by politicians. Many times the
probes are made through congressional committees like the Senate Blue
Ribbon Committee, a powerful body that can look into just about any
form of wrongdoing. At other times, supposedly nonpartisan government
investigative bodies, such as anti-graft commissions or the Office of
the Ombudsman, initiate the investigations. [See Chapter IX, “Combating
Corruption: How the Government Fights Malfeasance.”]

Contemporary Philippine political history is filled with numerous
accounts of politicos accusing their rivals of corruption. These
accusations, whether at the national or local level, provide the grist
that keeps the mill of politics going, and it must be added, also the
spice that keeps the public glued to the political stage.

The press often does no more than report on the allegations, getting
first one side and then the other. Too often the coverage of corruption
resembles a ping-pong match, with allegations and counterallegations
being traded, mostly with the help of well-paid publicists feeding
“scoops” or providing access to so-called witnesses, and sometimes even
to spurious documents. In the end, the public is unable to judge
whether the allegations are true. Once the furor dies down and the
media move on to the next scandal, the charges are forgotten and the
guilty often left unpunished. Follow-ups are seldom made.

To be sure, there have been numerous instances when the media
themselves have initiated investigations of corruption, but sometimes
they barely scratch the surface and are unable to produce documents or
credible witnesses who are willing to go on record about what they
know. Sometimes reporters do not do their own probing, relying instead
on “leaks” or “feeds” from sources. Given the deadline and other
constraints journalists have to work with, this is understandable.

But corruption should be the concern not just of journalists or of
politicians. Because it harms particularly the poor and the powerless,
fighting corruption should primarily be a citizens’ crusade.

This chapter outlines some techniques and strategies for doing a
corruption investigation. While it is based largely on the experiences
of journalists who have probed corruption, particularly those from the
Philippine Center for Investigative Journalism, these techniques can
also be used by other researchers and citizens who want to go out there
and find malfeasance. This chapter will help them head off in the right
direction and show them how and where to direct their efforts.

INVESTIGATING PETTY CORRUPTION

Small-time or so-called street-level corruption – such as policemen
mulcting a few hundred pesos from erring motorists or government clerks
asking for a small fee to “facilitate” transactions like licenses or
permits – is what most citizens experience in their daily lives. It is
also fairly easy to document using human sources. Unlike other types of
corruption, there is often no “paper trail” in petty graft; after all,
policemen and bureaucrats do not issue receipts for the bribes they
receive.

Journalists, however, have been able to expose petty corruption using
the following techniques, which ordinary citizens can use as well:

Interviewing victims or eyewitnesses

Because this type of corruption is so rampant, there is no shortage of
victims or witnesses. It is not difficult to get a jeepney driver to
confess that he paid off a policeman, or someone applying for a
business permit to admit that he gave money to a clerk at City Hall.
Businesspeople, if guaranteed anonymity, may confess that they pay off
clerks and even officials to get a building or business permit.

When sources are anonymous, however, it is difficult to convince others
that they are real. If anonymity cannot be avoided, then investigators
should try to get as many sources as they can and to ask these sources
to give as detailed a description of the pay-offs as possible. These
details, if put together well, can provide a convincing account of how
the pay-offs are made, the amounts involved, and the officials
implicated.

For example, a BusinessWorld report published in January 2002 began
with the story of two business partners who applied for a building
permit to set up a small eatery in Manila. One of the partners said she
paid close to P6,000, arranged through an engineer employed by 
the Manila City Hall, and got her permit in two weeks. In contrast, a
businessperson who went through the normal process obtained his permit
only after six months. Both businesspersons were not named in the
story, but the details, including a breakdown of how the money was
divided among various City Hall employees and officials provided
convincing proof of how systemic bribery was in the office.

The BusinessWorld report put these two cases together with the results
of a Development Academy of the Philippines survey of nine local
governments in Metro Manila, showing that the incidence of bribery was
highest among offices issuing permits and licenses and those handling
traffic enforcers. The result was an interesting and revealing report
that documented a well-known, but not well-reported, form of bribery
that increased the cost of doing business.

If victims cannot be found, or if investigators want to find more proof
of wrongdoing, it  may be possible to get witnesses who will
attest that bribery takes place. For example, a security guard posted
at a building near a traffic intersection can say that he sees
motorists regularly paying off the police. Or a Xerox operator at City
Hall can attest to seeing clerks regularly getting payoffs from
citizens applying for permits. Single eyewitness accounts like these,
however, will not suffice; they have to be corroborated by two or three
others or more. Only then can a report, complete with telling details,
be woven from their stories.

Catching wrongdoers in the act

The more dramatic way of exposing petty corruption is to catch
wrongdoers in flagrante. This is especially true for television, which
demands pictures. In an August 2000 episode of the TV program
“I-Witness,” for example, a TV producer with a hidden camera
accompanied a customs broker who was getting cargo shipments for his
client. The broker had to get a series of signatures, each one costing
anywhere from P20 to P100, depending on the signatory’s rank. The
hidden camera took shots of brokers dropping bills into the open desk
drawers of Customs personnel. Even the security guard charged those
entering the Customs compound an “entrance fee" of P20.

In February 2002, TV reporter Jessica Soho aired on her program footage
from airport surveillance cameras that showed returning overseas
Filipino workers slipping folded bills into the hands of immigration
officials at the Ninoy Aquino International Airport.  In Thailand,
an independent TV program made waves in the late 1990s by showing such
footage as truck drivers routinely paying off policemen at checkpoints.

No doubt, these videos provide visual proof of corruption. Not only
that, they make riveting viewing. The use of hidden cameras and other
surveillance equipment such as hidden voice recorders, however, can be
controversial and can cause both legal and ethical problems for those
who use them.

Even without surveillance equipment, it is still possible to witness
acts of petty corruption. Observing a policeman’s behavior from a
strategic vantage point is one way of catching wrongdoing. Carefully
noting how bills are slipped into the open palms of bureaucrats in a
crowded office is another way. This requires staking out for hours, but
the effort eventually pays off. In 1995, the PCIJ sent a photographer
and a writer to hang out at the Manila Western Police District
headquarters for six months. Although both identified themselves as
journalists, the policemen had been so accustomed to their presence
over the course of many months that the two were able to see how
policemen behaved in real life and documented routine violations of the
rights of suspects, including children.

Going through the process

Another way that journalists have documented wrongdoing is to see
whether it is attempted on them. Applying for a driver’s license or
getting a birth certificate and carefully observing how fixers bribe
clerks in order to speed up the process for their clients can provide
the initial material for an investigation. In 1999, the PCIJ sent one
of the journalists participating in a training course to get his birth
certificate at the National Statistics Office. The experience brought
him face-to-face with fixers who offered a range of fees for various
services.

One of the more famous cases of this type of reporting was done in 1995
by Soho for the TV program “Brigada Siete.” Soho’s crew tried to get a
driver’s license for a blind 45-year-old former accountant. They went
to two branches of the Land Transportation Office in Metro Manila,
where they were approached by fixers who offered to get the license
even if the man did not show up at the agency, sign any forms, or take
a driver’s test. In both branches, the TV crew got a license in three
days.

At the Pasig office, the blind man was given a professional driver’s
license even if he did not go through the mandatory six-month waiting
period during which applicants are issued a student permit. The fixer
asked for P600, which was presumably divided by various employees at
the licensing office. At the Sta. Cruz, Manila office, the fixer
demanded P1,200 but was able to produce only a student permit after
three days. The regular fee for a license then was only P160.

DIGGING DEEPER: WHAT TO LOOK FOR WHEN GOING FOR THE BIG TIME
The techniques described above are relatively simple. With imagination,
sufficient preparation, and the right state of mind, one can uncover
corruption and document it in an interesting way, touching a chord with
a public accustomed to dealing with petty graft.  This type of
story also has shock value, especially on television. Ratings-wise, it
is hard to beat video footage showing bills being shoved into open
palms or a blind man boasting of having acquired a driver’s license.
Moreover, this type of exposé sometimes has dramatic results –
officials are fired or procedural reforms are instituted.

The danger is that after a while, stories like these become merely
entertaining. They may give new information, but end up providing
mostly distraction. In the end, nothing is done. When this type of
exposés becomes ordinary, the public may become so jaded that they are
no longer shocked or enraged by a continuous stream of sensational
pictures.

This is one reason to dig deeper. The other reason is that there is
much waiting to be uncovered beneath the surface of petty corruption.
Quite often street-level corruption is only the tip of the iceberg.
Much bigger fish – and far more sensational stories – lie beneath it.

Corruption investigators are often too focused on finding evidence that
bribes have been paid that they overlook other ways of getting
information, especially of other, maybe equally damning forms of
wrongdoing. Finding proof of corruption does not always entail staking
out and taking pictures of money actually changing hands. In fact, the
most scandalous types of corruption rarely take such crude forms as
those described in the previous section on petty graft.

Anomalies involving government contracts, for example, can be
documented by looking at possible violations of the law, gaps in
established procedures, and irregularities in payments or deliveries.
[See Chapter VI, “Investigating Procurements.”] 

Sometimes, rather than investigating a corrupt act, the better approach
might be to document the fruits of corruption by doing a check on the
assets and lifestyles of corrupt officials. [See Chapter III,
“Investigating Officials.”]

At other times, it may be more productive to examine conflicts of
interest, divestments, unethical behavior, and problematic
relationships. For example, do legislators make laws that ultimately
benefit themselves? Are contracts being awarded to, or judgments made
in favor of, fraternity mates? Or, as in the famous case of former
president Estrada, are mistresses or former classmates involved in
lobbying for appointments or in wangling government contracts?

OFF THE BEATEN TRACK: GOING BEYOND THE OBVIOUS

Here are some ways to document corruption by burrowing deeper and doing
original investigations that go beyond the obvious and superficial.
These techniques can be used to uncover new information about
corruption – how it is organized, the officials involved, the amounts
paid, the damage caused. These techniques are also helpful in teasing
out trends and discerning patterns as well as in uncovering more
specific instances of malfeasance.

Find out how far or how deep the corruption goes

Behind the clerk or policeman receiving bribes and the customs or
immigration employee with an open desk drawer is an entire bureaucracy
that condones graft and provides positive incentives for committing
corruption.

Corruption seldom occurs in isolation. In many government agencies,
corruption is systemic, permeating the lowest to the highest rungs of
the bureaucracy. Corruption at the bottom is tolerated because those at
the top are inutile or are not themselves clean. Worse, they take a cut
from the collections below. Investigators, therefore, should not limit
themselves to the most obvious manifestations of corruption, which are
usually found at the level of clerks or frontline employees dealing
with the public.

The probe should also extend to higher-ups who, because of ignorance or
complicity, allow  corruption to flourish. One way to check the
involvement of high officials is to see whether they have investigated
wrongdoing, reformed procedures to make them less prone to graft, or
taken action against erring bureaucrats. Another way is to interview
agency insiders as well as those who do business with the agency to
find out whether malfeasance reaches the upper levels.

The case of the Bureau of Immigration (BI), as documented in the PCIJ’s
1998 book, Pork and Other Perks: Corruption and Governance in the
Philippines, provides a good example of top-to-bottom corruption. The
BI was given virtual police powers by a 1940 law as part of its mandate
to inspect the entry of planes and vessels in search of illegal aliens
and to keep track of foreigners living in the country. BI agents can
make arrests without warrants, and the immigration commissioner can
order the deportation of aliens.

Such powers allow corrupt immigration agents and officials to extort
money from foreigners living in the country. The PCIJ was able to show
how corruption had so permeated the BI bureaucracy that in 1996 alone
it was estimated that immigration personnel made from P50 to P60
million in payoffs from undocumented aliens entering the Philippines.
The pie was divided among various BI personnel ranging from immigration
agents all the way to commissioners.

At that time, the most stable source of illegal revenues at the bureau
was the residency permits that foreigners are required to obtain. The
report cited an episode in the TV program “Hoy! Gising!” which in 1997
accompanied Steven Ong, a Chinese national applying for an Alien
Certificate of Registration that would allow him an extended stay in
the country. Although Ong’s documents were in order, his application
did not move.

The bottleneck was the BI’s Law and Investigation Division, which a
“Hoy! Gising!” crew with a hidden camera visited together with Ong.
There, a secretary told Ong that he had to pay P30,000 to process his
papers. Half of the money, the secretary said, would go to the BI
commissioner; P5,000 each to the assistant commissioner and the head of
the Alien Registration Division; P1,000 to the fingerprint division;
P1,000 to the man taking the fingerprint; and the rest to the legal
officer who was the secretary’s boss.

Even immigration clerks take a cut. In an interview with the PCIJ, one
clerk admitted that her “small-time” fixing consisted of getting
departure and arrival stamps on the passports of overstaying aliens to
show that they had been in and out of the country. This way, they would
not be held liable for staying beyond the maximum number of days they
are allowed in the Philippines without a visa. The clerk acted as a
front person dealing with the “client”; another BI employee brought the
passport to the immigration officer who provided the stamps. The
officer got 40 percent of the payoff; the rest was divided among the
clerk, the BI employee who served as a conduit, and the government,
which at that time imposed a visa-waiver fee of P760.

A variety of research and reporting techniques were used to portray
systemic corruption at the Bureau of Immigration. These included
interviewing both the personnel guilty of corruption and their victims;
undercover operations by the “Hoy! Gising” team,
which uncovered extortion; and following the paper trail to get court,
audit, and other records, including those of a Senate investigation on
the bureau.

Other PCIJ investigations have relied mostly on available public
records and interviews to uncover corruption in such agencies as the
Department of Agriculture and the Department of Public Works and
Highways. In both these agencies, proof of corruption was obtained not
through undercover methods, as in the “Hoy! Gising!” case, but through
field visits which showed positive proof that public funds were being
wasted on corruption, as evidenced by unfinished roads and bridges and
by farmers saying they never received seeds and fertilizer allocated to
them by the government. [See section below, “Go to the Field,” and the
section “Field Inspections” in Chapter V, “Measuring Corruption.”]

The other method that the PCIJ has used is in-depth, open-ended
interviews. In a 1995 investigation of jueteng in a Pangasinan town,
interviews with key informants, including the jueteng lord, his
operators, and the members of the political family from which the
gambling lord came, provided a detailed description of the officials,
from local to national level, who protected illegal gambling.

Find out who has the power and who gets the money

How does one begin? How does an investigator go about tracing the route of corruption?
The surest way is to find out where the power lies, who makes the
decisions, who has the discretion to interpret or bend the rules, whose
signatures are required to sign a contract, an appointment, a permit,
or a tax audit. Corruption occurs where discretionary power is
exercised. Following the trail of corruption means following the trail
of power.

In April 2000, the PCIJ released a report on how tax officials were
skimming off huge amounts from businesspeople undergoing tax audits.
The Bureau of Internal Revenue (BIR), the country’s primary tax
collection agency, is tasked with ensuring that citizens pay the
correct taxes. To do so, the BIR undertakes tax audits that include
going over the books of individuals and businesses. Tax audits can take
place only after the issuance of a letter of authority by the BIR
commissioner who then authorizes revenue district officers (RDOs) to
examine the records of certain taxpayers in relation to their tax
liabilities for a specified period. The RDOs then authorize BIR
examiners to conduct the audits.

By interviewing both retired and current BIR personnel as well as
accountants and businesspeople who had undergone BIR audits, PCIJ
contributor Tess Bacalla was able to piece together how the extortion
was done. She traced the trail of money by following the flow of power.
She found that tax audits are powerful tools in the hands of corrupt
revenue officials because they can be used to extort money from
individuals and companies. People often choose to give in to the
extortion because even if they paid the right taxes, they would be
continually harassed by BIR personnel. Going to court to contest the
findings of a BIR audit is an option, but it is a long, tedious, and
expensive process.

Former and current BIR employees told Bacalla how tax personnel shared
their “loot.” The sharing was commensurate to the power wielded by
officials at various levels of the bureau. Her findings [see graph]
show that the bribes were divided among the tax examiners who did the
actual audits, their supervisors and assessment officials who sit at
their desks and go over the audit findings, the revenue district
officers who request from the commissioner the letters of authority
that allow the audits to take place, the regional director who is the
boss of the revenue officer and who forms another layer of approval.
Sometimes part of the payoff went to higher officials who issued the
letters of authority, and these could include even the BIR commissioner
and his deputies.

The BIR is not an unusual case. In bureaucracies where corruption is
entrenched, a sharing system with precise percentages very often has
evolved and been refined through years of practice. This type of
information, however, cannot be found in documents. Instead, data is
provided by key informants – agency insiders – who have intimate
knowledge of how payoffs are shared. [See Chapter IV, “The People and
Paper Trail.”] It is important, therefore, to find such insiders in the
agency one is investigating. Another option is to develop sources among
the people who deal with such agencies. This is particularly true of
agencies that purchase supplies, equipment, and services from private
contractors.

While investigating corruption at the education department, for
example, the PCIJ’s Yvonne T. Chua interviewed textbook publishers and
agents to find out how much they paid corrupt bureaucrats. Her report
began with the story narrated to her by a medium-sized book publisher
who set out on a trip to the regional office of the education
department soon after she got a P20-million contract  to supply
supplementary textbooks funded by a congressman’s “pork barrel.” The
publisher carried with her a bag containing P1.17 million in cash,
which she distributed thus: P1 million, or five percent of the
contract, to the regional director; P50,000 to the supply officer;
P15,000 to the accountant who obligated the money; P40,000 to the chief
accountant; P5,000 each to the accounting clerks; P10,000 to the
cashier who released the check; and P20,000 to the auditor.

Later, the book publisher gave the congressman who provided the funds
P8 million, or 40 percent of the contract. The congressman got the
largest chunk because it was he who had the power to choose which
agency (in this case the education department) and what kind of goods
(supplementary textbooks) he would spend his pork on.

All told, payoffs ate up more than 50 percent of the contract. Again,
in this case, the trails of money and power were closely intertwined,
with the stench of corruption leading all the way to Congress. This
case involved both petty and grand corruption, as well as both
bureaucratic and political corruption.

In both the BIR and education investigations, the reporters did not
focus on individual corrupt officials. In fact, no names – either of
corrupt officials or of the contractors or taxpayers who bribed them –
are mentioned in the reports. Instead, the journalists sought to
establish the prevailing practices – and percentages – in the agencies
they were investigating. Their aim was to draw a landscape with broad
strokes rather than to sketch damning individual portraits.

While a “macro” approach works, a case study focusing on a particular
official, firm, or contractor is also worthwhile, particularly in
showing in more graphic detail how corruption takes place and why it
remains persistent and pernicious. This was what Chua did in a 1999
report on a notorious supplier who had been doing business with the
education department for decades. Chua traced the supplier’s long list
of anomalous contracts that were marked by underdeliveries, “ghost”
deliveries, and overpricing. She also traced the trail of official
responsibility by looking at who had the power to approve contracts:
from the bid committees that kept awarding contracts to the supplier
despite the supplier’s record, to high education officials who approved
the bids despite the irregularities.

Find out who else benefits from corruption

Investigating corruption should not end with probing only the state
officials and employees guilty of malfeasance. The other end of the
corrupt transaction – private individuals, particularly businesspeople
who pay bribes, submit to extortion, or use their official connections
to wangle contracts, franchises, or government loans – should also be
subjected to scrutiny. As the cliché goes, it takes two to tango, and
telling the entire story means looking at the other half of a corrupt
deal.

For example, in 1999, two state pension funds, the Government Service
Insurance System (GSIS) and the Social Security System (SSS), bought
P1.8 billion worth of shares of Belle Corp. at the behest of President
Estrada. According to the graft case filed against the former
president, he received P189 million as commission from the sale. The
graft case, however, did not include the other parties who gained from
the transaction, among them officials of Belle, who convinced Estrada
to compel the pension funds to buy their shares, and Wealth Securities,
the broker that facilitated the sale.

Both government and the media are often less hardnosed in their
scrutiny of private individuals and entities that are party to
wrongdoing. But as seen in Estrada’s case, private individuals, among
them cronies like businessperson Mark Jimenez, formed the brain trust
of the ex-president’s money-making and money-laundering schemes. They,
too, got their share of the pie, but none of them have so far been
charged with Estrada. The laws governing private behavior are less
strict and the glare of public attention less harsh on those who
operate in the private sphere.

Experts have found that the most profitable locus of corruption is that
point where the public and the private meet. Sometimes the public and
the private meet in one person. Such was the case of businessperson and
musician Ramon ‘RJ’ Jacinto. He was named vice chairman of the
presidential committee on flagship projects during the administration
of Fidel V. Ramos, whose ally he was. While in that post, Jacinto
obtained P2.9 billion in loans from two government banks to finance his
various business enterprises.

The loans were unusually big, especially when compared to the size
of  Jacinto’s businesses, and their collateral was of questionable
value. It was also alleged that Jacinto paid bank officials to get
those loans, which remain unpaid. In this case, the focus of the
investigation should be Jacinto and not the government bank officials
whom he allegedly bribed. It is clear, as shown in a 1998 PCIJ report,
that he was the main beneficiary of the influence peddling and the
bribery.

Find out what the laws say

Corruption is often made possible by loopholes in, or the powers
granted by, the law. Sometimes the procedures designed to provide
checks and balances against graft just do not work and become corrupted
themselves. At other times, corruption thrives because agencies are
structured in a way that provides opportunities for malfeasance.
Investigating corruption, therefore, entails not just an ability to
cultivate insiders as sources of information in corrupt agencies but
also the patience to study what laws govern these agencies, how they
are structured, and what the routine procedures are for, say, awarding
a contract, hiring personnel, or giving out licenses, permits, or
clearances.

A familiarity with laws is crucial because the powers that agencies
wield are mandated by the law, and power is always prone to abuse
despite the best-crafted law. For example, the Office of the Ombudsman
has the power to investigate graft cases and recommend their
prosecution before the anti-graft court, the Sandiganbayan. The
Ombudsman is given vast powers to execute its mandate, but these powers
have also been used to dismiss, delay, or derail graft cases filed by
powerful and moneyed individuals. In 2002, a lawyer charged Ombudsman
Aniano Desierto with receiving P500,000 as a bribe to dismiss a case
against his client, a real-estate developer being investigated in
connection with a corruption case.

As can be seen from the examples in this chapter, it is the law that
gives the powers to various agencies: the power to deport aliens, to
audit tax payments, to issue licenses and permits, to arrest erring
motorists, to award a contract, or to determine how pork barrel funds
will be spent. These powers have been a lucrative source of illicit
revenues for corrupt officials. Therefore, part of the answer to why
agencies or officials are corrupt can be found in the kind and amount
of power they exercise and the cost, the “market value,” of using that
power to unfairly favor certain firms or individuals.

Reading the law is necessary because it gives an idea of the powers
wielded by an agency, by the subdivisions within that agency, and by
the officials at its various levels. Thus, for the PCIJ’s 1995
investigation on corruption involving local officials in Cavite, where
officials had made money from the conversion of farmland into
real-estate and industrial projects, it was necessary to read the Local
Government Code. The Code gives  local councils the power to
classify or zone land, which is a prerequisite to land conversion.

Little wonder that mayors and councilors were suddenly raking in money.
It was apparent that in fast-industrializing and -urbanizing Cavite,
local officials used their new power under the Code to make millions
from rezoning farmland and approving its conversion to other uses.
Often, we were told, the officials themselves were involved in land
deals, either as brokers or as land speculators. The next step in the
investigative trail was therefore to search for municipal and
provincial council resolutions that involved land reclassification.
After that, we searched for land and corporate records to show the
officials’ pecuniary interest in transactions involving land they had
rezoned.

Sometimes the opportunity for corruption is written into the law
itself. Chay Florentino-Hofileña found this out in 1996, while
investigating a PCIJ story on corruption in the Mount Pinatubo
Commission, which was tasked with rehabilitation of the areas damaged
by a volcanic eruption. Reading through Republic Act 7637, the law that
created the commission, she found a curious provision that allocated a
maximum of P50 million for the acquisition of amphibian trucks.
Interviewing congressmen, Hofileña found that military officers had
lobbied for the provision.

She saw for herself why: two trucks costing nearly P50 million were
lying idle in a military warehouse at the Clark Special Economic Zone.
She found that the Commission on Audit (COA) had questioned their
purchase, saying they were of doubtful validity. Their purchase was not
bidded out and they were grossly overpriced: similar trucks were
offered by a Finnish company at 20 percent of the price. The trucks had
not been used either, because they had not been tested for lahar, the
mixture of mud and volcanic debris that covered parts of Central Luzon.

Apart from knowing the law that governs an agency, one must also be
familiar with anti-graft laws. The first chapter discusses what actions
are considered violations of Philippine anti-corruption laws. It is
wise to read the provisions of the anti-graft law carefully, as they
provide clues on what to look for if evidence of money actually
changing hands cannot be found. For example, an overpriced contract is
a violation of the provision of the law that penalizes officials who
enter into contracts that are disadvantageous to the government. No
proof is needed that a bribe was paid to approve the contract.

Similarly, if an official approves a contract that benefits, say, his
son or his brother, he can be sued for violating the ant-graft law,
which prohibits any person with close family or personal ties to a
public official from benefiting from a contract or any transaction with
the government in which that official has to intervene. Philippine laws
are stringent; they fail because of weak prosecution and enforcement.
It is the investigators’ task to point out whether the laws are being
violated, where the prosecution of corruption cases has been
compromised, and the other weaknesses of the justice system that allow
those guilty of wrongdoing to go on with business as usual.

Look for the gaps in the structures or procedures

Apart from laws, a grasp of procedures is also invaluable.  The
case of the amphibian trucks purchased by the Mount Pinatubo Commission
is a good example of how corrupt acts are found out. The purchase of
the trucks was perfectly legal as it had been written into the law, as
explained above. The anomalies lay in the procedures that were followed
to acquire the vehicles. There was no bidding, and as a COA report
said, many other requirements were not followed, including submission
of “documents evidencing cost reasonableness, mode of award, papers
relative to the deposit in the opening of letter of credit and escrow
deposit as prescribed from the respective vouchers, and authority for
effecting advance payments.”

Investigators should be suspicious if procedures are not followed or
shortcuts are taken. These are often clues that wrongdoing has taken
place. This is especially true in the awarding of contracts:
investigators should start probing if a contract is not bidded out, if
qualified firms are mysteriously taken out of the bidders’ list, or if
bid announcements are not published, as these are indications that
something fishy is going on.  [See Chapter VI, 
“Investigating Procurements,” for a more detailed explanation of
procedures followed in government contracts.]

The same is true in other types of routine government transactions;
they can be applied to court procedures as well. As the PCIJ’s 1993
investigation of alleged anomalies in the Supreme Court showed, the
waiving of a case raffle or the unexplained transfer of a case to a
court division to which the case was not originally assigned were signs
that some behind-the-scenes deal making was taking place.

Thus, if evidence of payoffs cannot be obtained, a report on how
procedures have been set aside should alert concerned citizens that
anomalies are likely afoot. However, to find out whether prescribed
procedures have been violated, one must know them first.

For example, in her report cited above on a notorious supplier at the
education department, Chua needed to know the department’s procedures
in awarding contracts. From there, she was able to list down the
anomalies in the acquisition of armchairs for students from that
supplier: the bidding accredited only two suppliers instead of the
required minimum of three; the corrupt supplier’s bid was higher than
that of her competitor, yet she was awarded the contract; her armchairs
also came with features that were not in the original specifications of
the bid; and her bid was submitted past the deadline.

Moreover, contrary to standard procedures, the supplier was paid even
before deliveries were made, and she was paid with a letter of credit,
something that the education department had never done in the past. In
the end, the supplier never completed the delivery of the armchairs. In
detailing this story, Chua was able to demonstrate that something was
clearly anomalous in the contract, even if she did not actually say
that education officials had been paid.

Bid and other documents are important aids in examining procedures.
Bidding for government contracts requires rigorous paperwork, and a
careful examination of them will yield clues as to where the anomalies
have taken place. Interviewing informed insiders also helps, especially
if they can provide similar cases and show how procedures are normally
applied in the agency.

The structures that operate within an agency are also important to look
at as these provide a map of where the checks and balances lie within
an institution. Sometimes sudden changes in structures are an
indication that anomalies are taking place. In her 1995 investigation
of corruption in the health department, Gemma Corotan-Robles wrote how
Health Secretary Hilarion Ramiro issued a confidential order creating a
top-level subcommittee that could overrule any decisions made by the
department’s regulatory bodies, including those accrediting suppliers,
awarding contracts, and conducting bids.

The committee, made up mostly of bureaucrats who had a record of graft,
was also given control over the financial, audit, and legal affairs. In
effect, Ramiro removed the checks and balances in the department. As
Robles’ investigation subsequently showed, this lack of checks allowed
Ramiro to skim off as much as 40 percent in contracts from the purchase
of medicines and other supplies.

In a PCIJ report published in 2000, agriculture reporter Prime
Sarmiento used her stock knowledge of the structure of the agriculture
department and found that corruption there was rooted in the regional
field units which were given tremendous power and resources with little
monitoring by, and accountability to, the central headquarters. Through
interviews with agriculture personnel as well as a perusal of key
documents, she found that field units were given leeway to bend the
rules: they could do away with public biddings or rig the bids without
being found out. She used examples, including graft cases filed against
various regional field units, to flesh out the structural weakness of
the department that created what a top official there described as “a
culture of corruption and waste.”

Similarly, this writer’s investigation of the Supreme Court in 1997
showed how the separation of the high tribunal into three divisions,
each composed of five justices, facilitated improper approaches to the
court. Each division can decide a case on its own, if at least three
justices concur with a decision. This means that to ensure victory, an
enterprising lawyer or litigant has to approach only three justices in
a division.

Look elsewhere

The examples of the investigations cited above were mostly
investigations from the inside, using either key informants within an
agency or documents obtained from it. An alternative or complementary
approach would be to examine the agency from the outside – that is,
interviewing sources and getting documents from other bodies external
to the one being investigated.

An obvious starting point is the courts, the Office of the Ombudsman,
and the Sandiganbayan. If an agency or official is known to be corrupt,
it is likely that a court case has been filed or at the very least,
that information on alleged wrongdoing has been submitted to a
prosecutor or to the Ombudsman’s office.  Among the documents, for
example, that Sarmiento looked for in her investigation of the
agriculture department were records of court cases. These showed that
the most common complaint filed against agriculture personnel was the
diversion of funds meant for farm inputs to purchase costly but
worthless items. In one case, the regional field unit in Central Luzon
was found to have misused P1.5 million intended for the purchase of
corn for farmers: it allocated the money to buy overpriced document
keepers instead.

Reports from the Commission on Audit are another good source of
information on anomalies. COA reports are a mine of information, and
they are available for just about every government agency and nearly
every expenditure made from the national budget. [See Chapter III, “The
People and Paper Trail,” and Chapter V, “Measuring Governance and
Corruption .” ] The COA therefore is always a good place to start from
when one is embarking on an investigation.

Investigators have also not made enough use of the material produced by
the academe and by nongovernmental organizations (NGOs). The increasing
interest shown by NGOs and community groups in corruption issues has
resulted in so much information being produced on corruption. Some NGOs
specialize in particular aspects of governance – whether it is
procurement, public works, or tax collection – making it always
worthwhile to consult them for expert opinion or to ask them for leads
or contacts. Other groups conduct regular public opinion polls or
surveys of users of public services, which can be cited to provide more
flesh to reports on corruption. [See Chapter X, “Graftbusters: Citizens
Take up the Challenge.”]

INVESTIGATING THE CONSEQUENCES OF CORRUPTION

There are, in a manner of speaking, many ways of skinning the cat of
corruption. As described above, one approach is to investigate the
corrupt acts themselves. Another way is to probe the officials
responsible for them. One way to do this is to document the fruits of
corruption by looking at the lifestyle and assets of officials. [See
Chapter III, “Investigating Officials.”] Yet another is to go beyond
the officials and their actions by examining the consequences of
corruption.

Many times investigators overlook its impact and consequences of
corruption because they become so engrossed with documenting how it
took place and who is responsible for it. This is unfortunate because
it could well be that the impact of corruption is as big – and as grave
– a story as the corrupt act itself.  For instance, corruption in
the issuance and monitoring of logging permits could result in
large-scale deforestation that could in turn cause massive flooding,
with casualties in the thousands. As documented in the PCIJ’s 1999
book, Robbed: An Investigation of Corruption in Philippine Education,
the consequences of corruption in the education sector are a generation
of schoolchildren that learned only 50 percent of what they should have
and who scored among the lowest in the world in elementary math and
science tests. Some of the consequences of corruption are quantifiable;
others, less so.

The following are some tips on how to investigate the damage corruption has wrought:

Estimate how much is lost

An important way of showing the magnitude of the corruption is by
estimating how much of public funds is lost because of payoffs. This
can be done using the same techniques described in the sections above,
such as those on following the trail of money and power. One way to
drive home the damage caused by corruption is to show, even if only in
round figures, the amounts that are wasted because of it. Chapter V,
“Measuring Corruption,” provides various ways in which the amounts lost
to corruption can be estimated.

In general, journalists have tended to use rough projections based on
case-study findings. For example, when journalist Earl Parreño
investigated pork-barrel funds in three congressional districts in
Eastern Visayas, he interviewed contractors and suppliers, as well as
members of the congressional staff, to arrive at estimates of how the
money from pork was spent. Through these interviews, he established the
prevailing practice. He found that the leakage was greatest when
pork-barrel funds were spent on educational materials, where as much as
two-thirds of allocated amounts went to bribes. The percentage that
went to corruption was less – 36 percent – for public works projects.
[See chart.]

From these estimates, Parreño made an assessment of how much of
pork-barrel funds is lost was made. Budget records show that in 1998
each congressman got P30 million for public works funds for their
districts, or about P6 billion altogether for the entire House of
Representatives. If 36 percent of this amount went to graft, that
translated into P2.2 billion. This is of course a rough estimate, as
not all congressmen are corrupt, but the gross figure gives a general
idea of how criminal the waste is and how congressmen were in
partnership with corrupt bureaucrats, local officials, and contractors.
It is also an indication of why pork barrel has become so important in
the politics between Congress and Malacañang, where the release of
these funds is often traded for votes for bills endorsed by the
presidential palace.

Bacalla did a similar estimate of how much tax officials made from
rigged audits. Based on the calculations of a former BIR lawyer, she
said that a typical region with five revenue districts, each with 40
examiners, with each examiner raking in P200,000 a month in bribes, can
generate about P40 million in monthly payoffs. A corrupt BIR regional
director, therefore, can make P12 million a month, while the regional
district officers split another P12 million among themselves, and so on
down the line.

The estimate of losses does not have to be in monetary terms. It can
also be in terms of goods and services that the public would otherwise
have received if there were no corruption. For example, the P40 million
in monthly payoffs that each BIR revenue district gets can be
translated into the number of textbooks or kilometers of road that can
be purchased or built for that amount. The enterprising journalist or
researcher can ask procurements experts for cost estimates and make
calculations using these. An online catalogue available at the
government’s procurements website (http://www. procurementsservice.org)
lists the prices of hundreds of items regularly purchased by state
agencies.

Another way to estimate costs is to look at nonquantifiable
consequences, such as an upsurge in disease because money to build
water wells was lost to corruption or children who are unable to go to
school because funds to construct schoolhouses were pocketed by
bureaucrats. The diversion of funds to extravagant or anomalous
projects also means that government spending on other, perhaps more
worthwhile, projects would have to be suspended. While investigating
corruption in the construction of the white-elephant Centennial
Exposition at Clark, Hofileña discovered that because billions in
government funds were mobilized for it, 245 public-works projects and
the development of an industrial estate in Leyte had to be sacrificed.

Go to the field

Another way to investigate the consequences of corruption is to go to
the field and see for oneself whether bridges or schoolhouses funded
from specific allocations in government budgets have been built, or
textbooks and school desks delivered. Parreño, for example, saw for
himself half-built highways and runways funded from the pork of
congressmen. While investigating procurements at the education
department, a PCIJ video crew went to Leyte and Samar and found
schoolchildren making do with broken desks or taking their own chairs
to school because school desks that had been bought for them were never
delivered. When Sarmiento investigated corruption in the agriculture
department in 2000, she traveled to Sultan Kudarat to talk to farmers
to find out whether they got the seeds and animals that were supposed
to have been provided them as part of a project to boost rural
productivity.

Some NGOs have successfully done field inspections. Several of them,
notably the Concerned Citizens of Abra for Good Government and the
Philippine Governance Forum, have developed guides or templates for
conducting such inspections. This is discussed in more detail in the
section on  “Field Inspections” in Chapter V, “Measuring
Governance and Corruption.”