Bureau of Customs

“Beg your indulgence”

Image credit: internetmonk.com

How the Catholic Church eliminated its own version of pork barrel and how the Philippines can too

Back in the Middle Ages, the Catholic Church was undergoing its developmental phase. It was not the huge global entity that it has become today. It was heavily dependent on the patronage of the landed aristocracy. As a result, the Pope did not have much clout and could not exert central authority to appoint priests and bishops to the parishes of feudal lords who would place their relatives in these prestigious positions.

Faced with limited means to address the missionary role of the Church, priests decided to engage in the practice of selling indulgence, “the remission of temporal punishment due to sin, the guilt of which has been forgiven.” Although the sale of forgiveness, which is what this amounted to was not really sanctioned by the church, it was nevertheless widely practised out of necessity. The funds raised went to pay for monasteries, schools and even Crusades to recover the Holy Land.

Despite the noble causes it supported, the practice undermined the legitimacy of church teachings. The abuse of indulgence eventually contributed to the Protestant Reformation which weakened the Church by splitting it in two. If such an organisation devoted to otherworldly spiritual endeavours can fall for such malpractice, what more a government not meant to be run by angels, solely devoted to temporal affairs?

The Philippine state is in a position much like what the early Roman church faced. You have the president of the republic resorting to the bully pulpit of his office, engaging in mini temper tantrums, to complain before the nation that he cannot even get lowly bureaucrats to comply with his orders to do their job and follow the rules set out by the law of the land. These bureaucrats are purportedly protected by wealthy elites who placed them there.

For the same reason, the Priority Development Assistance Funds (PDAF) or pork barrel, though it may go to some noble programs, actually corrodes and weakens our democracy by perpetuating many corrupt politicians in power. This limits inclusiveness in our politics as dominant clans have ruled many places since the time of the late-Spanish or early-American colonial period. Their exclusive control over most jurisdictions has been directly correlated with the severity of poverty across the nation.

The dominance of aristocratic political dynasties, undisturbed by the upheavals of the Pacific war or Marcos’s New Society, is actually facilitated by taxpayer’s money through the institution of pork barrel. These elites have also weakened the state by appointing friends and allies into strategic posts within key agencies and business units such as the Bureau of Customs which provide a revenue stream not for the government, but for the “padrinos” who have cornered it through such appointments.

When appointees are recommended by power brokers acting as “padrinos” and subsequently underperform, we know it is for a reason. Their appointments undermine the very rules that they as officers are meant to uphold. It is clear that the rules within these agencies are not set by the central government, but by power brokers who benefit from illegal activities. This weakens the very integrity of our state, as in the case of the customs agency since it erodes our ability to enforce our borders and puts this power in the hands of crime bosses.

According to Francis Fukuyama in the Origins of Political Order, the Church was able to gain financial independence from its patrons when it undermined the very notion of kinship and family. How did it do that? By refusing to sanction cross-cousin marriages, and recognising the rights of women to own and bequeath property. Previously, childless widows married back into the clan of their deceased spouses which allowed his land and other property to revert back to his family.

By changing this custom, the church encouraged childless widows and spinsters to convey their inheritance to itself. The church profited immensely from this. By undermining the family, the Church was able to wean itself off of the corrupt practice of selling indulgences to fund its missionary projects.

In the same way, the Philippine government needs to wean itself off the system of patronage. Banning PDAF won’t solve the problem, just as banning the sale of indulgences did not prevent corruption from continuing in some shape or form. It takes more than idealistic moral crusading to get rid of it. Apart from eliminating pork, state resources must be used to shore up political reforms that would make elections more inclusive and contestable.

The irony is that the large sum of money devoted to pork demonstrates that the state now has the capacity to directly finance political institutions and decouple our democracy from the “anarchy of families” as Alfred McCoy put it.

If we promoted meritocratic institutions within our political system through state funded electoral campaigns, political parties and better pay for elected officials, we would be able to remove the perverse incentives currently at play that motivate the abuse of PDAF and other appointive and recommendatory powers.

Let’s face it, political dynasties have begged the indulgence of their constituents (we the people) for far too long and gotten away with “patrimonial plunder” (hat tip: Paul Hutchcroft) – which is using the very money they have stolen from the public purse to pander to the needs of the very same people they are keeping impoverished by that act.

Short notes I: Dear Customs Commissioner Ruffy Biazon

I was floored by your statement on politicians who protect corrupt customs employees.

“We have come across situations wherein the corrupt ones have the audacity because they know some people are backing them up. One of my proposals is to insulate Customs from political influence. How do we do that? We come up with a policy or a law prohibiting recommendations for employment in the bureau.”

Seriously? Don’t you know that the only two people who can order you to do anything relating to your job are the Finance secretary and the President? Anyway, don’t bother me with why you can’t do your job. You are being paid to perform and not to make excuses.

But since the president is willing to give you one more chance… here’s what you can do to restore our confidence in you.

Take the twenty or fifty most powerful customs men, the ones with the toughest political and/or religious backers, and fire them.

However, if for some legal reason you cannot just fire them – because there are a lot of crooked lawyers and justices with TRO powers out there – then take those twenty or fifty customs lords out of their present positions, assign them to desks inside your office, make them cut paper dolls all day everyday and have them mail the dolls to their influential backers. Show them who is the meanest bastard in customs. Remember, in the position you hold, it is better to be feared than loved.

Long overdue: Bureau of Customs abolition

So, this morning’s banner story in the Philippine Daily Inquirer reads: Bureau of Customs abolition planned.

Who’s planning it? Malacañang. Who is proposing it? Embattled Customs Commissioner Ruffy Biazon. That’s right, the head of the agency itself who has been under the pump for failing to curb the rampant smuggling activities that are allegedly continuing despite the president’s mantra of Daang Matuwid.

In a face-to-face conference with editors of the PDI, Biazon offered up the possibility of overhauling the agency from the top-down, by replacing it with a new professionally led one. He says resistance to his reform measures from the frontline staff at the bureau has led him to take this view. In public policy parlance, we call this phenomenon the tail wagging the dog or “street-level bureaucrats” distorting the policy decisions made at the top. Here is a quote from the report:

Biazon cited the example of Peru, which, to defeat corruption and smuggling, abolished its custom department, put up a new one, adopted strict qualifications for hiring, and paid higher salaries to the new officers and employees running the new agency. In the case of the Philippines, Biazon said, corruption is deeply entrenched in the customs bureau’s culture and system so firing a few people or catching some smugglers will not solve the problem. [emphasis mine]

Well, well, well, I am happy to see that something I had recommended back in July 2011 in a piece called, the National Development Project, is finally being given some serious consideration although my proposal included not just the Bureau of Customs, but the Bureau of Internal Revenue and all other revenue generating agencies. Despite their best intentions, it has taken the palace nearly two years to catch-up to the policy conclusion I had already made regarding its anti-corruption campaign in the bureau.

Pursuing good governance doesn’t come cheap. I recognised this fact. But the administration of PNoy felt that it needed to wage a moral crusade first to separate “light from darkness”. My proposals at least acknowledge that if we are to address the cost impact of Daang Matuwid, we have to raise additional revenues. And to do that we need to ensure that our revenue generating agencies are professionally run. With respect to the proposal itself, here is a brief quote from my previous post:

Corporatization is the way by which the government has been able to pay its agents salaries commensurate to, if not exceeding that of, their private counterparts. Singapore achieved this for its entire bureaucracy, but it is the sole Confucian state to do so. The others achieved it through a combination of salaries, allowances and benefits.

The newly minted GOCC (Government Owned or Controlled Corporations) law now provides greater safeguards against abuse done by non-performing companies. It will govern the corporatization of the BIR and BoC. In exchange for the higher compensation, transition into the new agencies must be based on merit and not guaranteed for old bureau officials.

The boards of the new revenue agencies should be allowed to appoint people from among the ‘best and brightest’. Tougher qualifying exams, educational attainments, and past performance should all be part of the selection process. Where posts cannot be filled with existing staff, recruiting externally should be the resort.

Biazon supports the idea of the new corporate entity to takeover the Bureau of Customs to retain 3 per cent of the total revenue it produces to allow it to pay its staff according to their performance. This again was something I had broached before with regard to prosecutors of corruption cases.

It was my view that these state prosecutors were not paid well enough to exert best efforts in retrieving ill gotten wealth, and as a result, certain cases have been left languishing for decades, or worse, settled for a pittance through plea bargain arrangements. Here is what I said on the matter:

The Ombudsman and the Office of the Solicitor General (essential generals in the fight) which are given the task of prosecuting graft cases before the Sandiganbayan and Supreme Court respectively need to have more than a kind of altruistic motivation for performing their duties. They need to have protection and financial security.

Paying them higher salaries alone might not be enough to motivate them to exert maximum effort even in very winnable cases. Some sort of sharing in the spoils which would go both to their office and to chief prosecutors and their staff needs to be put on the table.

I know that some will argue that this is the people’s money and that any recovered ill-gotten or plundered wealth needs to be returned 100% to the coffers to fund social programs. This assumes that we are working with incorruptible Confucian super bureaucrats. That is not the case here. We need to live in the real world, not in some ideal fantasy land.

Apart from these two suggestions, I also proposed outsourcing the main functions of the Commission on Audit to private accounting firms, which is the practice in Australia. If we are to truly tread the good governance path, the government has to start taking seriously these recommendations. At least with respect to customs collection, they may finally be doing so.

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