White Collar Crime,

Fraud & Corruption:

Catch Me If You Can?

By Malou Mangahas, Executive Director, PCIJ

White Collar Crime?

• Lying?

• Cheating?

• Stealing?

In a word, Government?

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In FBI’s book…

• “That’s white-collar crime in a nutshell.”

• “The term—reportedly coined in 1939—is now

synonymous with the full range of frauds

committed by business and government

professionals.”

• “It’s not a victimless crime.”

• “A single scam can:

– Destroy a company

– Wipe out life savings of families

– Cost investors billions of dollars

– Trigger financial, economic crisis, ruin

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Fraud, Inc.

• Advance Fee Schemes

• Anti-Aging Product Fraud

• ATM Skimming

• Bankruptcy Fraud

• Corporate Fraud

• Credit Card Fraud

• Financial Institution Fraud

• Foreclosure Fraud

• Funeral Fraud

• Prepaid Funeral Scams

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Fraud, Inc.

• Grandparent Scam

• Health Care Fraud

• Hedge Fund Fraud

• House Stealing

• Identity Theft

• Insider Trading

• Insurance Fraud

• Internet Fraud

• Internet Pharmacy Fraud

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Fraud, Inc.

• Investment Fraud

• Letter of Credit Fraud

• Lottery Scams

• Mass Marketing Fraud

• Mortgage Fraud

• Natural Disaster Fraud

• Nigerian Letter or “419” Fraud

• Online Auction Fraud

• Online Auto Auction Fraud

• Online Rental Housing Scheme

•

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Fraud, Inc.

• Phishing

• Ponzi Schemes

• Prime Bank Note Fraud

• Pump-and-Dump Stock Scheme

• Pyramid Schemes

• Ransomware

• Redemption/Strawman/Bond Fraud

• Reverse Mortgage Scams

• Scareware

• Securities and Commodities Fraud

• Senior Citizen Fraud

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Fraud, Inc.

• Smishing

• Social Security Card Fraud

• Spear Phishing

• Staged Auto Accident Fraud

• Stock Options Backdating

• Swatting

• Telemarketing Fraud

• Telephone Denial of Service Fraud

• Timeshare Schemes

• Vishing

• Work-at-Home Scams

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Fraud in Public Sector

. • Plunder, corruption

• Unexplained wealth

• Commissions/Kickbacks from Contracts

• Collusive bidding in civil works contracts

• Ghost projects, ghost employees, ghost

deliveries of goods and services

• Overpriced contracts, chopped-chopped

contracts

• Favored, unqualified contractors

• Bad projects, projects below specs

• Incompetence, inefficiency, bad performance

• Conversion, realignment of public funds, etc.

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The original PPP?

• Corruption a Supply-Demand Equation?

• Behind every crooked deal in the public

sector lies a crooked deal in the private

sector?

• Crooks in the public sector nearly always

have secret partners among crooks in the

private sector>

Fraud & corruption:

A public-private partnership!

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Examples, examples…

• The secret world of offshore accounts: PCIJ-International Consortium of Investigative Journalists, May 2013

• After 15 months of work, investigative journalists

from 46 countries — including the Philippine Center

for Investigative Journalism — verified and data

enrolled in 260 gigabytes of about 2.5 million files,

including more than 2 million e-mails.

• The subject matter of inquiry: 122,000 offshore

companies or trusts, nearly 12,000 intermediaries

(agents or “introducers”), and about 130,000 records

on the people and agents who run, own, benefit from

or hide behind offshore companies.

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Examples, examples…

• In the Philippines, of 527 persons with

offshore accounts in tax havens overseas:

– Local company head or officer, 21%

– Professional, 9%

– Conglomerate owner/officer and family, 9%

– Government official and family, 4%

– MNC subsidiary head/officer, 3%

– Religious or philanthropic leader, 1%

– No or unclear online profile, 51%

» ICIJ/PCIJ Database, 2013

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Examples, examples…

• The Ampatuans of Maguindanao, the second

poorest of PHL’s 80 provinces:

• MANSIONS: Property records show that the

Ampatuans have acquired at least 113 palatial

homes, cache of expensive jewelry, a fleet of

cars, real properties.

• GUNS: Records of the Philippine National Police

(PNP) show that at least 103 persons surnamed

Ampatuan have registered a total of 274

firearms, 43 of them classified as high-powered

firearms. Three clan members, however, own 66

of these or almost a fourth of the registered total.

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Examples, examples…

• The Ampatuans of Maguindanao, the second

poorest of PHL’s 80 provinces:

• In banks we trust? So did the Ampatuans!

• A Manila court, on petition of the Anti-Money

Laundering Council had issued a freeze order on

597 bank accounts, 142 firearms, 132 motor

vehicles, and 113 houses and lots, recorded in

the names of 27 Ampatuan family members and

their associates.

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Examples, examples… • Joseph Estrada; Mistresses, mansions, millions, PCIJ stories,

2000

• Gloria Macapagal Arroyo: Stacks of stocks, wealth rises faster

than Cory, FVR, Erap, PCIJ stories, 2008

• PEA-Amari: ‘The Grandmother of All Scams’, PCIJ stories,

March 1998

• Fertilizer fund scam, PCIJ stories, September 2008

• IMPSA-Napocor CBK contract, August 2002

• The ODA Trail: 7 in 10 projects fail to deliver promised results,

PCIJ stories, 2008

• Funds conversion, graft in AFP contracts, PCIJ, 2000, 2012

• The wealth of ‘the Gods of Padre Faura” and “The best

Supreme Court money can buy”, PCIJ stories, 2012 and 2013

• Pork a la Pinoy: The PDAF syndicate, PCIJ stories, March

2013

• Donors, Inc., PCIJ stories, May 2010 and May 2013 elections

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About the PCIJ • WHAT:

– Independent, non-profit media agency founded in 1989

• VISION:

– To help nurture a culture for investigative reporting

PROGRAMS:

– Investigative reports across multimedia platforms, Training seminar-workshops for print, radio, TV, Netizens, CSOs

– Data journalism and online publications: www.pcij.org, pcij.org/blog, i-site.ph, moneypolitics.pcij.org

– Documentatries, books,, and training/resource tools for journalists, CSOs, studnets

– Advocacy and networking on FOI, FOE, media killings, good governance, campaign finance, transparency, etc.

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About the PCIJ OUTPUT/OUTCOME: In 25 years:

• 1,000+ investigative reports; 1,000+ feature and

analysis stories

• 110+ Gigabytes of data/documents on 6,000 elective

and appointive officials, public funds, campaign

finance, corporate files, public policy issues, etc.

• 120+ training seminar-workshops in PHL, Southeast

Asia, the Pacific Islands, and Africa

• Six full-length films; dozens of video documentaries;

• Dozens of books/monographs on journalism,

campaign finance, governance, environment,

education, women and children, health, etc.

• Over 150 various awards and citations from national

and international institutions and agencies

And miles to go before we sleep…

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About the PCIJ • Founiding member of the Southeast Asian Press Alliance

(SEAPA) that leads access to information and press freedom

campaigns and training programs in SEA

• Founding member of the Freedom Fund for Filipino

Journalists (FFFJ), which is monitoring media killings in PHL

• Founding member of the Right to Know, Right Now!

Coalition in the Philippines, FOI Act advocacy

• Founding member of the Global Investigative Journalism

Network (GIJN)

• Philippine partner of the International Consortium of

Investigative Journalists (ICIJ)

• Philippine researcher or peer reviewer for the Open Budget

Survey, OGP Independent Reporting Mechanism,

Committee to Protect Journalists, Reporters Without

Borders, Worldwdie Web Index, Global Transparency, etc.

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More PCIJ Reports

The Wealth of Presidents and Public Officials

Fidel V. Ramos, PEA-Amaru: ‘The Grandmother of all Scams’

Joseph Estrada: ‘Millions, Mansions, and Mistresses’

Gloria Arroyo: ‘Wealth rises faster than Estrada, Ramos, Cory Aquino’

Benigno S. Aquino III: Campaign donors and sudden uptick in wealth after rise to presidency

Asset records and accountability issues: Senators, congressmen, local elective and appointive officials

Politics, political clans, conflicts of interest, the ties that bind

Campaign Finance: Candidates, donors, election expenditures

The environment and extractive industries: logging, mining, protected areas

Civil Works contracts: Bad projects, corruption and collusion of bidders

Public utilities: power, water, energy

Health, education, women, children, disease outbreaks, MDGs

The armed services: Contracts, corruption in the Armed Forces and Police

Internal conflict, peace and order, national security

Human rights: Media murders and attacks on civil liberties

Indigenous peoples, internal refugees, migration

Media freedom, practices, and journalism ethics Who own the media?

Investigating the investigators and integrity agencies: the Ombudsman,

Commission on Audit, Commission on Elections, Commission on Civil Service,

Commission on Human Rights, quasi-judicial disciplinary agencies

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PCIJ Data Assets, as of March 2013

Campaign finance reports, 53GB

Certificates of candidacy, 8GB

Asset disclosure records, 8GB

Political ads (AV), 5GB

Corporate records, 3.5GB

Pork barrel documents, 8GB

PCIJ Multimedia and print products, 30GB

Books, training modules/tools, documentaries,

story files, vertical files, etc. in PCIJ Library still

to be digitized, more GB

21 The wealth of Public Officials

Raw document

Time-series data

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Candidates,

campaign

donors,

social

networks

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How officials spend public funds

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Private purses, public contracts, etc.

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Investigating Power & Corruption

Some results of PCIJ investigations:

• President Estrada impeached by Congress, charged and

convicted of plunder and perjury chatges by

Sandiganbayan

• Health secretary, Supreme Court associate justice, other

public officials investigated, resigned, fired, transferred,

etc.

• Cases filed against implicated officials by Bureau of

Internal Revenue, Ombudsman, Commission on

Elections, Office of the President, Commission on Human

Rights, courts, etc.

• Citizen awareness of public policy issues and problems

• Public goodwill for investigative journalism, PCIJ

• Public and private sources, whistleblowers, and even

those accused of wrongdoing in previous PCIJ stories

trust, report,, break stories to PCIJ

• Etcetera, etcetera….

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The role of Financial Institutions

In PCIJ investigations:

• The good ones: – Whistleblowers

– People sources

– Paper sources

– Reference, guide in analysis of data

• The bad ones: – Broker, arrangor, facilitator, intermediary,’ architect’

of fraudulent deals

– Keeper of secrets

– Coddler of crooks

– Defender, promoter, ‘the creatives’

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The role of Financial Institutions

In PCIJ investigations:

Where would crooks be without bad financial institutions?

CONCERNS, CONCERNS:

- The use of numbered accounts (Jane Ryan and

William Saunders et. al)

- Blind trusts and stock deals

- Insider trading

- Corruption intermediated through stock markets (Era

and BW)

- Currency speculation

- Ponzi schemes

- Courtship of politicians’ accounts to shore up ADBs

- Offshore havens, etcetera

BUT…. Not a single broker, creditor, fund manager,

tax agent. PR had been prosecuted

for participation in these deals

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The role of Financial Institutions

• KYC: Due diligence or token check of

personal and social ties/status?

• PEPs: Political exposed persons and

multiple variants of the Ampatuans and

other corrupt politicians

• United Nations Convention Against

Corruption (UNCC) Chapter V, Article

52: Prevention and detection of transfers

of proceeds of crime

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The role of Financial Institutions

• KYC Test: CREDIT OR CHARACTER?

“There is a defined gulf

Between credit and character

If you doubt this, ask any banker;

He will advise that character is nice

But it is not collateral.”

― Evan Rhys, Poems from the Ledge

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In banks we trust? • Entitled, favored, pampered?

Unequal equation: Bank secrecy vs. bailouts

“All the mega corporations on the planet make their

obscene profits off the labor and suffering of others…

As with the banking sector, they play games

with the lives of millions, hysterically reject

any kind ofgovernment intervention when

the profits are rolling in, but are quick to pass the

bill for the cleanup and the far- reaching

consequences of these avoidable tragedies to the public

when things go wrong.”

- Michael Hureaux-Perez

•

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In banks we trust?

• Global transparency movement and

bank reforms: Swiss banks and the Marcos

accounts (and many other dictators across the

world who were ousted thereafter)

• Justice and human rights as greater

values than bank secrecy

• BUT WHAT HAPPENS WHEN BANKS

ARE HONEST AND OPEN, AND

GOVERNMENT IS DISHONEST AND

CORRUPT?

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Contact the PCIJ!

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Check us out!

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