MAHARLIKA INVESTMENT FUND HOLE: CORRUPTION-IS-ACCEPTABLE MINDSET

 

Maharlika Investment Fund will invest our SSS and GSIS money along with the Land Bank and DBP deposits to generate government revenues. The negative reactions have been spontaneous and emphatic.

“Keep your hands off our SSS, GSIS Money” (Jarius Bondoc, The Philippine Star)

“We’re not ready.” (Randy David, Philippine Daily Inquirer)

“Scrap the bill.” (Filomena S. Sta. Ana III, Business World)

“Dubious, pretentious and self-serving” (Sonny Africa, IBON Foundation)

“Nakakatakot” (Senator Imee Marcos)

Here’s my two-cent “scenario analysis” of the issue. Strictly speaking, “scenario analysis” is a process of examining and evaluating possible events or scenarios that could happen in the future and predicting the various feasible results or possible outcomes. No worry. We don’t need to go into the detailed process anymore. An actual “worst case” scenario took place in the past, was examined, and evaluated. We need only to pick up lessons to avoid it.

The Case: 1 Malaysia Development Fund (1MBD) Scandal

A paper entitled “1MDB corruption scandal in Malaysia: a study of failings in control and accountability” by David Seth Jones (Policy and Management Consultant, UK) summed up:

“The 1 Malaysia Development Fund Bhd (1MBD) scandal is perhaps the most serious corruption scandal that has been recorded. The corruption has involved the embezzlement and laundering of billions of US dollars from its accounts together with gains from bribery and bond pricing, facilitated by false declarations by its officials and others. The illicit money was often transferred and laundered outside Malaysia.

“A cohort of bankers, businessmen, and senior government officials mainly from Malaysia, but some from Saudi Arabia, the UAE, and other countries, have been implicated in the scandal. Increasingly from 2016, the spotlight has been placed on the former Malaysian Prime Minister, Najib Razak (who was also Chairman of the 1MDB Advisory Board), his wife, Rosmah Mansor, and Low Taek Jho a Malaysian businessman and associate of Najib.”

Low Taek Jho, the paper said, is alleged to have been the mastermind behind the scandal.

The main malpractice in the scandal, the paper reported, was EMBEZZLEMENT on an epic scale which knitted together with BRIBERY subsequently led to another corrupt practice – MONEY LAUNDERING. The ugly heads of FALSE DECLARATIONS and BOND MISPRICING also popped up in the scandal.

The main causes why the scandal broke out:

A. Weak internal controls and rules

B. Political meddling over anti-corruption watchdog & agencies

C. Lack of political will at the top against corruption

D. Dominance of the main political party

E. Corruption-is-acceptable mindset in societal upper class

The other side of the coin is the “best case” scenario analysis. Let’s assume the “best case” scenario as Bondoc’s Philstar neighbor Alex Magno held out hope in his column: “Any institutional design for the proposed sovereign fund must ensure transparency, of course. But it must also build in enough guardrails against the politicization of funding.”

The “best case” scenario conjures up a mental picture of a PH landscape, guarded against, if not cleaned out of, the above causes that cooked up the 1MDB scandal. Let’s try to take them out one by one:

A. WEAK INTERNAL CONTROLS AND RULES. Empowerment of COA: Exhibit A -- audit of the so-called confidential & intelligence funds and their variety, must not be, in the words of Rep. Edcel Lagman, “shrouded in mystery,” but must be disclosed to the Congress and the public. Exhibit B – Close monitoring and imposition of penalties on banks as to their compliance with the standard internal rules and anti-money laundering laws must be strictly enforced.

B. POLITICAL MEDDLING. Restoration and empowerment of the Presidential Anti-Corruption Commission which PBBM abolished and setting up safeguards against future political interference.

C. LACK OF POLITICAL WILL. Just as Najib acted as both the Prime Minister and Chairman of 1MDB, so too could PBBM acting as both President and Chairman of the MIF result in the lack of political will in dealing with corruption at the top particularly when the latter, like in the case of Najib, gets entangled himself with the scandal. In the 1MDB case, it took a change of government to lift the shackles from the investigation of corruption.

D. DOMINANCE OF MAIN POLITICAL PARTY. Bondoc’s warning put in plain words the pitfall of this cause: “The Congress supermajority is steamrolling its passage… the way they’re rushing things and with our history of kleptocracy, it can only end in disaster.” Sen. Panfilo Lacson hinted at the idea of “returning to the two-party system” which he contended would put an end to the “bastardization” of party affiliations. We’re not even talking here about the deleterious effects of well-entrenched “political dynasties” yet. Sigh.

E. CORRUPTION-IS-ACCEPTABLE MINDSET. If items “A” to “D” range from “not-so-easy” to “difficult” to set right, then this item “E” will be deemed “impossible” to straighten out. I recall a pompous wall poster in our engineering office during my corporate heyday: “The ‘difficult’ we will do right away; the ‘impossible’ will take a little time.”

While the corruption-is-acceptable mindset during the 1MDB scandal seeped into Malaysia’s mainly government and private sector’s high places due to high opportunities and large financial gains, here and now in PH, sad to say, the somber truth appears that such a corruption-is-acceptable mindset has blighted the whole landscape -- widespread and deep-rooted.

Let’s look over the following corruption facts to feel in our bones and wrap our minds around the grim reality of the corruption-is-acceptable mindset in our country today.

A. PH Corruption Perceptions Index

Based on the 2021 Corruption Perceptions Index, PH dropped two spots to 117^th place out of 180 countries and territories. By comparison, Malaysia ranked 62^nd place. The country perceived to have an honest public sector is ranked 1^st in the index.

B. PH Corruption based on World Bank study

The World Bank estimated in 2002 that PH had lost $48 billion (P2.7 trillion @ $1=P56, a trillion is a number followed by 12 zeros) to corruption from 1977 to 1997. That is equivalent to average corruption losses of P224 billion per year.

C. If we Google “Marcos Loot,” we will get 763,000 results in 0.38 seconds with this top result: “BREAKDOWN: P174B recovered from Marcos loot, P125B more to get”

D. If we Google “kleptocracy,” the top result is “Kleptocracy – Wikipedia.” If we click it, we will find a “Contents” sidebar showing item 5 “Examples” with a list of the top 10 self-enriching leaders released by German anti-corruption NGO Transparency International. Holding No. 2 in the list – Former Philippine President Ferdinand Marcos ($5 billion to $10 billion allegedly stolen amount) and No. 10 – Former Philippine President Joseph Estrada ($78 million to $80 million allegedly stolen amount)

E. The top 5 members of the Congress identified by the Inquirer as participants in the 2013 PDAF scam with the respective amounts (above P100 million) exposed (Source: Wikipedia):

1. Bong Revilla – P1.015 billion

2. Juan Ponce Enrile – P641.65 million

3. Jinggoy Estrada – P585 million

4. Rizalena Seachon-Lanete – P137.29 million

5. Bongbong Marcos – P100 million

Revilla and Estrada are now our senators, and Enrile is the Chief Legal Counsel of now President Bongbong Marcos.

Onli in di Pilipins. Maharlika Investment Fund, anyone?

Head still photo courtesy of pixabaydotcom