M5

• Corruption


  The abuse of private and public office for personal gain. It includes acts of bribery, embezzlement, nepotism, kickbacks and state capture.
• Corruption is often associated with and reinforced by other illegal practices such as bid rigging, fraud, or money laundering, extortion.
• Corruption


  Receiving, asking for or giving any gratification to induce a person to do a favour for private gain. It covers not only public corruption involving misuse of public power by elected politician or appointed civil servant but also private corruption between individuals and businesses.
• Corruption


  The misuse of entrusted power (by heritage, education, marriage, election, appointment) for private gain. It covers not only the politician and the public servant but also the CEO, CFO and but other employees of a company.
• Corruption may take place in the following forms/ways

  • A company paying a bribe to win the public contract
  • A politician redirecting investments
  • Public official embezzling funds
  • A private company manager recruiting an ill-suited friend
  • Local officials demanding bribes from ordinary citizens
  • A salesman bribing the purchasing manager
• Reasons why a person becomes corrupt

  • Opportunities, when risk is minimal in comparison to benefits obtained, career advancement, earning of more income, financial problems caused by illness, loss of property, etc.
  • Risk is less than the benefits ( in any form) obtained
• Those engaged in corruption learn how to be dishonest. The next corrupt actions become easier to do unless one is firmly rooted on solid principles and has been nurtured in an upright manner.
• Ill effects of corruption

  • Economically, it adds up to 10% of the total costs of doing business and up to 25% of the cost of procurement programs in developing countries. It leads to waste or the inefficient use of public resources. It corrodes public trust, undermines the rule of law, and ultimately delegitimizes the state. It creates unfair competition and increases the cost of doing business. It is a cancer that spreads rapidly all over the body.
• In the Philippines, figures from 1960 to 2016 indicate that an average of P550 billion is lost yearly to crime, corruption and tax evasion.
• Corruption in developing and underdeveloped countries (especially Afghanistan and Somalia) is still a critical problem.
• Characteristics of corruption


  • Recipients and payers, Extortion, Lubricant of society, An ethical dilemma, Poverty alleviation, Culture, 'Kindness among friends'
• The Former Secretary of Finance reported in 2016 that the Philippines loses P200 billion from smuggling and P400 billion from tax evasion perpetuated through collusion with some personalities in the government agencies.

  -total of 600B?
• P2.6 trillion is lost annually in corruption globally.
• Corruption in the Judicial System in the Philippines

  • Bribes and irregular payments in return for favorable judicial decisions are common. The rich and powerful have frequently influenced proceedings in civil and criminal cases. Procedural fairness and transparency are severely undermined by nepotism, favoritism, and impunity. Low salaries for judicial officials perpetuate the problem of bribery.
• Corruption in the Police in the Philippines

  • The national police force is widely regarded as one of the most corrupt institutions in the country. Reports of the police and military engaging in corruption, extortion, and being involved in local rackets are widespread. Businesses rate the National Police's commitment to fighting corruption as 'poor'.
• led an administrative complaint in the country's Supreme Court against Makati City judge for allegedly asking for a PHP 15 million bribe in exchange for a favorable ruling in an insurance claim. At the time of review, no further updates on the case were available.
• Police


  • There is a high-risk of corruption when dealing with the police
  • The national police force is widely regarded as one of the most corrupt institutions in the country
  • Reports of the police and military engaging in corruption, extortion, and being involved in local rackets are widespread
  • Companies report that they cannot rely on the police services
  • More than half of firms pay for private security
  • Businesses rate the National Police's commitment to fighting corruption as 'poor'
  • President Duterte has accused several police generals of being involved in the trafficking of illegal drugs
• Police Commissioner Mr. Sombero, is under investigation for allegedly facilitating a PHP 50 million bribe from gambling tycoon Jack Lam, who tried to bribe immigration authorities in order to release approximately 1,300 Chinese nationals who were working in his resorts illegally.
• Public Services


  • Companies contend with a high corruption risk when dealing with the public services
  • Approximately half of business executives reported being asked for a bribe by someone in the government in 2017
  • Nearly three out of five business reported expecting to give gifts in order 'to get things done, but only one in ten reported expecting to give gifts to get an operating license
  • Irregular payments and bribes in the public services sector sometimes occur
  • Philippine officials involved in processing documents related to civil and property registration and building permits are more likely to solicit bribes compared to officials dealing with other types of services
  • Inefficient government bureaucracy is ranked as the most problematic factor for doing business in the Philippines
  • Civil servants often do not have the resources or abilities to fulfill their tasks free from corruption and red tape
  • Civil servants are generally not recruited in a competitive manner; appointments are based on a practice of patronage
• The total number of procedures required to set-up operations, including registering the company with local government and getting a construction permit, are significantly higher than regional averages. Getting electricity takes significantly less time than elsewhere in the region.
• Land Administration


  • Corruption risks in the land administration are high
  • Two out of five companies report expecting to give gifts when obtaining a construction permit
  • Property rights are formally recognized and protected in the Philippines, but in practice, the law is not always upheld
  • Businesses have insufficient confidence in the protection of property rights
  • Corruption and arbitrariness in the application of the law are common
  • Multiple agencies are responsible for land administration, which has led to overlapping procedures for land valuation and title registration; this has made the process costly
  • The court system is slow to resolve land disputes
  • Land records are not properly managed due to a lack of trained personnel and funds
  • Foreigners are not allowed to directly own land, but they may lease land for up to 50 years with a possible one-time extension of 25 years
  • Expropriation is possible under Philippine law; the law calls for fair market value compensation, but coming to a mutually acceptable price can be a lengthy process in the court system
  • Registering property takes nine procedures in the Philippines, which is double the regional average. However, the total time required is less than half of the regional average
• Tax Administration


  • There is a high risk of corruption when dealing with the tax administration
  • Around one in seven companies indicate they expect to give gifts in meetings with tax officials
  • Tax regulations are among the most problematic factors for conducting business in the Philippines
  • Companies indicate that they perceive that only a fifth of businesses in their line of business pay their taxes honestly
  • Officials at the Bureau of Internal Revenue (BIR) are believed to be prone to corruption and known for embezzlement and extortion
  • A typical example of this can be found in a recent case in the city of Bacolod; an officer with the BIR was caught extorting PHP 125,000 from a local company
  • Businesses rate the BIR's commitment to fighting corruption as poor
  • On a more positive note, there are signs that the BIR is pursuing more cases of tax evasion
  • Companies make twenty-eight tax payments a year, which is higher than the regional average
• Customs Administration


  • There is a high risk of encountering corruption when dealing with the customs administration
  • Companies indicate that irregular bribes and payments in import and export procedures are very common
  • About a quarter of companies indicate they expect to give gifts when obtaining an import license
  • A business survey indicates that the Bureau of Customs (BOC) was the only agency receiving a rating of 'very bad' when it came to its commitment to fighting corruption
  • Companies cite burdensome import procedures and corruption at the border as being among the most problematic factors for importing
  • The efficiency and time predictability of procedures are rated as poor
  • Border compliance costs in the Philippines are significantly higher than the regional average, whereas the time required is in line with the regional average
  • The Bureau of Customs (BOC) has indicated that smuggling of goods, among which cigarettes, vehicles, and oil, into the Philippines has led to the evasion of taxes worth at least USD 1 billion yearly
  • Consistent fraud in the form of under-invoicing when importing and exporting costs the state USD billions in revenues each year
  • In 2016, the BOC alleged one of its employees accepted as much as USD 4 million in bribes monthly
• Public Procurement


  • There is a very high risk of corruption in the public procurement sector, which is subject to rampant corruption, irregularities, and inconsistent implementation of legislation
  • More than a fifth of businesses report they expect to give gifts in order to win a government contract
  • Two in five companies indicate that most companies in their sector give bribes in order to win contracts
  • Diversion of public funds, as well as favoritism in the decisions of public officials, are very common
  • The public sector is obliged to procure goods and services from companies with at least 60% Philippine ownership
  • Local-level public procurement lacks transparency, fostering a culture of corruption through the misuse of the pork barrel system
  • Philippine law allocates responsibility for monitoring, investigating and sanctioning irregularities in public procurement to a number of different state institutions, leaving potential misconduct, inefficiency and impunity unchecked
• Natural Resources


  • Companies operating in the natural resources sector face a high risk of corruption
  • The Philippines has shown marked improvements in its natural resource governance in the past few years; the country has a good enabling environment and its regulatory quality and control of corruption are judged as adequate
  • However, poor value realization and revenue management have caused the country's overall resource governance to be judged as 'weak'
  • The Philippines has been working to achieve compliance with the Extractive Industries Transparency Initiative (EITI) since joining in 2013
  • Some mining contracts are publicly disclosed via the EITI portal
  • While transparency in the sector has improved, poor regulation and overlapping policy responsibilities between local and central governments have meant that small-scale mining is still a contentious issue
  • Government corruption has allowed mining companies to evade government regulations, which has resulted in large-scale deforestation, flattened mountaintops and water pollution
  • The government responded by cracking down on illegal mining operations; and as of 2017 Secretary of the Environment Gina Lopez shut down 28 of the country's 41 mining companies for polluting the environment. However, Lopez was removed from her job by Congress in May 2017 after mounting complaints from the pro-mining lobby
• Corruption in Singapore is under control. However, a clean system is not a natural state of affairs. Corruption comes from weakness of human nature - greed, temptation, the desire to amass wealth or to obtain business through unfair means. Even with harsh penalties, corruption cannot be eradicated completely.
• Measures businesses and organizations can adopt to help prevent corruption in the work-place


  1. Having defined workflows, clear directives on financial approving authorities, and standard procurement instructions can help flag irregularities in a business or organization

  2. Diligent record-keeping and regular audits are also good practices to deter corrupt activities

  3. Setting a policy on when gifts and entertainment may be given and accepted and what records need to be kept

  4. Instituting a declaration system for conflict of interest that is applicable to all levels of employees

  5. Establishing a corruption reporting system with a whistle-blowing policy or feedback channel where staff can conveniently raise concerns and feel protected from being identified or retaliated against
• The Anti-Graft and Corrupt Practices Act criminalizes active and passive bribery, embezzlement, extortion, abuse of office and conflict of interest in the public sector.
• Bribery of public officials and trading in influence are also criminalized in the Anti-Red Tape Act. The Act forbids office-holders from accepting any gifts or material benefits in exchange for any government permit or license.
• Under the Revised Penal Code, gifts are classified as indirect bribery. An exception is made for gifts of insignificant value given as a token of friendship in line with local customs. Facilitation payments are not addressed in the law. Private sector bribery is not criminalized.
• The Anti-Money Laundering Act criminalizes money laundering and organized crime.
• The Act Establishing a Code of Conduct and Ethical Standards for Public Officials and Employees formulates standards for the personal integrity and accountability of civil servants.
• The Government Procurement Reform Act requires competitive and transparent bidding. Philippine legislation does not contain any provisions on protecting whistleblowers who report on corruption.
• The Philippines has ratified the United Nations Convention against Corruption.
• Companies should note that the legal anti-corruption framework in the Philippines is complicated and poorly enforced; there is a lack of cooperation between law enforcement agencies, and officials are rarely prosecuted and convicted for corruption crimes.
• Civil Society


  • Philippine civil society is active and is represented by a wide variety of different organizations
  • Public participation is high and civil society organizations (CSOs) enjoy a high level of social capital
  • CSOs are normally not included in formal decision-making, but they play a large role in initiating legislation and steering debate in Congress
  • There are a multitude of watchdog organizations monitoring implementation of policy
  • The Constitution guarantees freedoms of speech and of expression, but in practice these freedoms are not consistently upheld
  • The media environment is largely privately owned and diverse, and the state generally exercises very little censorship
  • The views represented in the mainstream media are heavily influenced by the oligarchical owners of many of the outlets
  • The Philippines is the second most dangerous country in the world for journalists to operate in, as measured by the number of journalist deaths
  • The existence of libel and defamation laws remains a problem and are frequently used by officials and powerful individuals to try to silence journalists
  • Independent observers report that bribes and other incentives are often used by high-level officials to motivate journalists to create one-sided reports for the official's benefit
  • Internet access is widely available, but there are concerns about the government trying to install some degree of censorship
  • The Philippine press is classified as 'partly free'