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Investigating Corruption in the Philippines: a former

Tanodbayan’s Experience∗

By: Atty. Simeon V. Marcelo∗∗

∗ ∗ Though the Head of the Office of the Ombudsman of the Philippines is named Tanodbayan under the Philippine Constitution, he is usually referred to by the public as the Ombudsman.

∗ Former Tanodbayan of the Office of the Ombudsman. Delivered during the 12th Regional Seminar of the ADB/OECD Anti-Corruption Initiative for Asia and the Pacific held in Dili, Timor-Leste on 24-25 July 2013.

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Introduction Corruption in the government has been a perennial problem not only of developing countries but even of developed countries. Of course, corruption is usually more widespread and deep-rooted in developing countries. In developing countries, aside from its immediate effect on the limited resources of the government, corruption leaves a piercing adverse impact in the integrity and competency of the government in alleviating poverty.

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Investigative Department

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Investigation Department

The cornerstone of any successful crusade to fight corruption is a strong field investigation department which is staffed with an adequate number of competent and honest field investigators and provided with sufficient resources to accomplish their bounden task.

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Investigation Department

Field Investigation Office (as we named our investigation unit):

• should specialize in investigating

corruption cases, with its personnel well-trained in detecting and gathering sufficient vital evidence to convict in court perpetrators of graft and corruption against the government

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Result of my research on successful anti-corruption agencies abroad ➔

Hong Kong’s Independent Commission Against Corruption (ICAC)

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Investigation Department

• ICAC - established as a response to pervasive corruption in the police organization and other government agencies in Hong Kong in the 1970s

• Government of Hong Kong - considered

today as one of the cleanest in terms of corruption.

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Investigation Department

• Likelihood of similarities b/w the culture of corruption in Hong Kong and the Philippines

➤ very high b/c of common Asian background

• What if we replicate ICAC’s experience

at the Office of the Ombudsman?

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Investigation Department

• By coincidence, in January 2003, an anti-corruption convention sponsored by ICAC was scheduled to be held

• Two (2) senior officials of the Office of the Ombudsman attended the convention to get information about Hong Kong’s ICAC

• By stroke of luck, they met Mr. Tony Kwok - retired ICAC Head of Operations: the unit in charge of investigating corruption

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• a very fruitful collaboration between the Office of the Ombudsman and Mr. Tony Kwok ensued

• Incidentally, Mr. Tony Kwok rendered his services to our Office free of charge

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Who is Mr. Tony Kwok?

– He has 33 years experience in the anti-corruption field, ,including 27 years of service with the Hong Kong Independent Commission Against Corruption (ICAC)

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Investigation Department

Mr. Tony Kwok • Joined ICAC shortly after its inception in

1974 • Witnessed and participated in the

successful battle in transforming Hong Kong from a very corrupt place to one of the cleanest city

• retired as Deputy Commissioner and Head of Operations in 2002

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• When I assumed office in October 2002, I could not immediately take off with new anti-corruption plans and programs

• The Office of the Ombudsman- severely lacked the necessary personnel, skills, funding and equipment to wage its war against corruption

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Investigation Department

OFFICE OF THE OMBUDSMAN

• Had only thirty-two (32) full-time prosecutors handling approximately two thousand (2,000) cases at the Sandiganbayan (our anti-graft court for high-ranking government officials) and thirty-seven (37) field investigators despite jurisdiction over a bureaucracy of 1.5 million government officials and employees

• Grossly underpaid/severely undermanned

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Investigation Department

Comparison of Ombudsman vs. Hong Kong’s ICAC

Ombudsman ICAC

Investigators 37 837

Bureaucracy 1,500,000 174,175

Ratio of Investigator to Public Official

1:17,241 1:208

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REORGANIZATION & RATIONALIZATION

• Department of Budget & Management

granted additional funds to the Office of the Ombudsman

• Creation of 56 new positions for Field Investigators

• Field Investigation Office was created and organized with the help of Mr. Tony Kwok

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Investigation Department

REORGANIZATION & RATIONALIZATION

• Recruitment of fresh college graduates from

diverse backgrounds

• Despite more competitive salary from the private sector, many applicants graduated from the top state university in the Philippines- University of the Philippines

– also, many of the recruits were honor students

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Investigation Department

INTENSIVE TRAINING PROGRAM FOR THE FIELD INVESTIGATION OFFICE

1. Basic course:

Seminars on graft and corruption offenses and their elements under the Revised Penal Law and special laws on graft and corruption

- conducted by veteran lawyer-investigators

Seminar-workshops evidence gathering and case build-up - conducted by senior veteran investigator

Seminars on audit of government financial records - conducted by senior lawyer-accountant-investigators - additional lectures by veteran auditors of our

Commission on Audit

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Investigation Department

INTENSIVE TRAINING PROGRAM FOR THE FIELD INVESTIGATION OFFICE

2. Advanced Courses on Investigation

a. Financial & Forensic Accounting

- Forensic accounting (investigative accounting) involves the application of accounting concepts and techniques to legal problems

- Seminars conducted by experts from the US Internal Revenue Service and Immigration and Customs Enforcement of Homeland Security Department

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Investigation Department

INTENSIVE TRAINING PROGRAM FOR THE FIELD INVESTIGATION OFFICE

2. Advanced Courses on Investigation

b. Seminar-workshops on Corruption Detection and Investigation (conducted by ICAC’s Mr. Tony Kwok and Mr. Paul Dickenson)

- Interview techniques, document analysis, surveillance, undercover operations, etc.

- Mr. Paul Dickenson – retired Senior Investigator of Hong Kong ICAC

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Investigation Department

INTENSIVE TRAINING PROGRAM FOR THE FIELD INVESTIGATION OFFICE

c. Seminars on Investigation, Surveillance &

Money Laundering ➤ conducted by veteran FBI investigators

- Surveillance lecture included use of court-authorized wiretaps, high power binoculars/telescopes, cameras with telephoto lens and disguises to avoid detection

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Investigation Department

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Training Courses Abroad COURSE TITLE PLACE CONDUCTED BY

Public Corruption Course

FBI Academy Quantico, Virginia

Federal Bureau Of Investigation

Enforcement & Implementation Aspects of Anti-Money Laundering for Criminal Justice Officials

International Monetary Fund Office, Singapore

Department of Foreign Affairs of Singapore

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Training Courses Abroad Senior investigators of our Field Investigation Office were also sent abroad for training:

COURSE TITLE PLACE CONDUCTED BY

Leadership Development Program

Bangkok, Thailand

International Law Enforcement Academy

Working Visit on Swiss Systems on Combating Terrorist Financing and Money Laundering

Berne, Switzerland

Swiss Federal Department of Foreign Affairs

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Training Courses Abroad

COURSE TITLE PLACE CONDUCTED BY

Supervisory Criminal Investigator Course

Bangkok, Thailand

International Law Enforcement Academy

Specialized Course in Corruption Investigation and Integrity Assurance

Bangkok, Thailand

International Law Enforcement Academy

Executive Course in Advance Security Studies

Hawaii, U.S.A. Asia-Pacific Center For Security Studies

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• Forensics engineering - a failure analysis program for litigation support. The goal of such a program is to positively identify the sequence of events leading to ultimate failure.

• needed for investigating reported anomalies in the construction of roads, bridges, buildings and other public infrastructure

• Tried recruiting graduates of engineering courses but were unable to attract any

• To fill the gap - sought the services of anti-corruption NGOs with engineers among their volunteer-members.

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• Senior officials of the Office of the Ombudsman, including Mr. Tony Kwok and myself - quite convinced that the training of our field investigators should be more formal and rigorous

• Technical Working Group - created to

study the feasibility of establishing a Training Institute for Field Investigators

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• Training program - expected to cover 6 semesters or 3 years

• Only the new investigators who have

graduated from the Institute would be qualified for promotion to the next level

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The Lifestyle Probe: An Illustrative Project

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The Lifestyle Probe:

• A priority project of the Inter-Agency Anti-Graft Coordinating Council (IAGCC)

Office of the Ombudsman Commission on Audit Civil Service Commission Department of Justice National Bureau of Investigation Presidential Commission Against Graft

and Corruption

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The Lifestyle Probe:

• The private sector (private citizens, church and community-based NGO’s, and people’s organizations) - assisted in the gathering of data about the illicit wealth acquired by government officials

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The Lifestyle Probe: • The Office of the Ombudsman, as the lead

agency, decided, due to limited resources, to engage in strategic agency targeting, i.e., focusing on the three most corrupt (or perceived to be most corrupt) agencies:

1. The Bureau of Internal Revenue 2. The Bureau of Customs 3. Department of Public Works and Highways

• The Military was subsequently covered by the Probe

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• Numerous high-ranking officials of the Department of Public Works and Highways, Bureau of Internal Revenue, Bureau of Customs, and the Armed Forces of the Philippines - suspended and dismissed from the service – Counterpart criminal cases and petitions for forfeiture

of ill-gotten wealth were also filed in court against them

• Field Investigating Office, as a result of Lifestyle Probe - uncovered and recommended, within just a period of two (2) years, the forfeiture of suspected ill-gotten assets with a total estimated value of around One Billion Two Hundred Million Pesos (Php1,200,000,000.00) more or less.

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MUTUAL LEGAL ASSISTANCE

TREATIES

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MUTUAL LEGAL ASSISTANCE TREATIES • Example 1: Major General Carlos Garcia case

- Freezing of his assets and gathering of evidence from U.S.A. that would be admissible in our anti-graft court - resort to the use of the provisions of our Mutual Legal Assistance Treaty with the United States needed.

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• Initial Challenge: Our Field Investigation Office, our Legal Office (and even the assigned officials of the Department of Justice) - not familiar and adept on the use of the Mutual Legal Assistance Treaty.

• Initial Solution: Sought assistance of U.S. Department

of Justice through U.S. Embassy • The head of our Field Investigation Office created a

special team of lawyers-investigators with the primary duty of specializing in the use of Mutual Legal Assistance Treaties.

MUTUAL LEGAL ASSISTANCE TREATIES

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• The U.S. Embassy provided a resource person from the U.S. Department of Justice who gave a crash course to the team on what were the requirements prescribed by the U.S. Department of Justice for processing and approval of requests for assistance under the Mutual Legal Assistance Treaties.

• Also, he provided the team of investigators with

redacted copies of several requests from foreign countries that were previously approved by the U.S. Attorney General.

MUTUAL LEGAL ASSISTANCE TREATIES

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• Example 2: Corruption Case Against A Former Secretary Of Justice

• Initial Challenge: Crucial pieces of

evidence needed for indictment and conviction - bank documents from a Hong Kong bank and a Swiss bank. – at that time, our country did not have any

Mutual Legal Assistance Treaty with both Hong Kong and Switzerland.

MUTUAL LEGAL ASSISTANCE TREATIES

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Re: HK bank documents • Hong Kong’s Department of Justice - Provided only xerox copies of needed bank documents due to lack of Mutual Legal Assistance Treaty • Mutual Legal Assistance Treaty b/w Hong Kong and

Philippines - Already ratified by Hong Kong Parliament - Ratified by Philippine Senate only on 02 February 2004 • After going through required legal processes - Hong Kong’s Department of Justice provided certified true copies of the pertinent bank documents which were admissible in court in 3rd Quarter of 2005

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• Swiss bank documents: Sough assistance from the Swiss Ambassador

- able to give only xerox copies • Two years later, when her tour of duty was about

to end and there was yet no Mutual Legal Assistance Treaty executed between the Philippines and Switzerland, she was able to furnish us certified true copies of the bank documents which she obtained officially from Swiss authorities which are admissible in court.

MUTUAL LEGAL ASSISTANCE TREATIES

TRENDS

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Importance of Executing Mutual Legal Assistance Treaties • The above discussion shows the importance of

executing Mutual Legal Assistance Treaties with foreign countries, especially with those where corrupt government officials would probably hide their ill-gotten wealth.

• To complement the execution of these treaties, a special team of lawyer-investigators should be trained to specialize utilizing their provisions.

• At present, the Philippines has Mutual Legal Assistance Treaties with Australia, China, Hong Kong, Korea, Spain, Switzerland, United Kingdom, United States and the ASEAN countries.

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COMPUTER FORENSICS

• Increasing importance - the application of computer science to the

investigative process

• Important tool of forensic accountant in his task of retrieving and analyzing evidence to uncover fraud

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Private Sector & NGO Assistance

– Working with nongovernmental actors - a crucial component to broadening an anticorruption coalition.

Importance of Media & Journalism

– Media – capable of sustaining an open and transparent flow of information, fostering a climate of opinion that is increasingly intolerant of corruption

– Exposès of grand corruption scams

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International Corruption Hunters Alliance (ICHA)

– Membership in international anti-corruption organizations is now recognized as an indispensable tool in the struggle against corruption

– Office of the Ombudsman – now a member under Supreme Court Justice Consuelo C. Morales (Ret.)

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ICHA The concept of a global alliance of anti-corruption agencies/personnel has been tried in the past with mixed results. However, the launching of the International Corruption Hunters Alliance (ICHA) by the World Bank, through its Department of Institutional Integrity (INT), as a universal mechanism, “has the potential to make a big difference” (R. Zoellick, ‘Founding the International Corruption Hunters Alliance’, 7 December 2010) and ‘open new frontiers for cooperation in the fight against corruption at regional and international levels’ (L. McCarthy, ‘What the Alliance Means’, 7 December 2010).

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High Level Reporting Mechanisms (HLRMs) • According to Fritz Heimann, one of the founders

of Transparency International and former vice-chair of the Anti-Corruption Commission of the International Chamber of Commerce - the development of high-level reporting mechanisms (HLRMs) provides “a way to overcome the reluctance of companies to report extortion demands to agencies where solicitation occurs”.

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Creation of Reporting Mechanisms By Anti-Corruption Agencies • Philippines: mobile phone users - 89% of the

population

• 53% of the population – use smartphones

• Reporting mechanism can be set up to receive via SMS and emails complaints against corrupt government officials and information of their ill-gotten assets

• Need for sufficient member of competent and honest investigators to act productively on the complaints and data received

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Growing focus on investigating “Gatekeepers” “It is imperative that investigators and prosecutors of corruption and money laundering cases as well as those who focus their efforts on the recovery of assets should develop an understanding of the way in which so-called gatekeepers are used. Gatekeepers, as the name would imply, are the people who facilitate ‘access’ to the world of financial services, enabling criminals to disguise their profits. These individuals and institutions are frequently bankers, corporate service providers, trust companies, lawyers, accountants or other organizations which have access to the financial system.”

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Final Statement: • Foundation of the current administration of the

Philippines - the crusade for good governance and anti-corruption.

• After three years of President Aquino’s “Daang Matuwid” (or in English, “The Straight Path”) crusade - already yielded positive results, validating the theory that corruption is the biggest obstacle to economic development and poverty alleviation.

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• IMF – Philippines’ economic performance was remarkable and resilient to global problems

• IMF - noted that reforms in governance implemented by the Philippine government “complemented efforts to keep the economy healthy”.

• Also noted that the “focus on good governance has buoyed confidence and is supportive of more inclusive growth.”

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Thank you!!!