Philippines

Information on the Philippine military's legitimate sales and disposals of weaponry is difficult to obtain, perhaps because the military reveals more information on acquisition of weapons rather than their sales. There have, however, been some long-standing media accusations that rogue elements in the military and the police have been selling arms to communist and Islamist insurgents.

The most important case in this issue is the sale of military camps, particularly Fort Bonifacio already discussed in Question 13. Apart from complaints about the ‘loss’ of the AFP-MATF when co-mingled with the General Fund held by the National Treasury during the Ramos period, the distribution of the proceeds of the sales to 15 other government agencies that are independent of and not related to the AFP itself is a continuing unaddressed issue.

As part of the reform efforts of the AFP, the PA much earlier than the other major service commands and the entire AFP itself, embarked on its Army Transformation Roadmap 2028 (ATR), the PA’s 18-year strategic plan, and created a Multi-Sectoral Advisory Board (MSAB-ATR) to assist it in the realisation of the ATR. Among the prioritised areas to help the PA transform itself into “a more credible, dynamic, responsive, capable, and professional Army committed to its mandate of serving the people and securing the land”. It is committed to good governance in undertaking activities in the ATR. Among the programs selected by the MSAB is the goal to raise additional funds for the PA to supplement its budgetary allocation. The use of parts of military bases to generate income through Public-Private Partnerships (PPP) was approved with the proviso that the use of these lands would be on the basis of lease, rather than outright sale and that the PA is to have a substantive share of the proceeds of the PPP enterprise operating on military land. Assured of controls by the responsible MSAB-ATR committee chair and the CGPA, MSAB-ATR supported the program.

The proceeds from these sales, like all public funds, are audited, but the issue of transparency remains problematic as seen in the description of internal and external audits in Questions 14-15 in particular.

Response to Government Reviewer:

The Government Reviewer has provided information concerning the sale of assets, but more evidence of transparency over the proceeds of sales is needed for a higher score to be awarded.

Scrutiny of asset disposal is conducted by the DND as part of its internal audit mechanism. The results of such scrutiny are not readily available to the public. Information on asset disposals conducted by defence establishments will be available publicly once the Freedom of Information Bill has been passed, but this is generally believed not to be considered as a political priority despite pressure from the media, academia, and CSOs.

As regards asset disposals relating to the sale and lease of military camps, public scrutiny comes largely from members of the investigative and mainstream media, during times when public press conferences on developments regarding sales and leases occur. For its part, the Bases Conversion and Development Authority (BCDA), has a website, publishes periodic newsletters, and used to publish Annual Reports with Financial Statements, although as of the time of writing this assessment, the last uploaded annual report was for 2011.

Response to Government Reviewer:

The Government Reviewer has not provided any additional information on on the availability of asset disposal figures. The comment above only focusses on base conversion as it is an issue where at least some information could be obtained publicly.

It is not clear in the defence budget whether and how much is spent on secret items relating to national security and intelligence services, although provisions for 'intelligence funds' are present. As a matter of fact, and as stated in Question 12, there are only entries in the defence budget for Personnel, MOE, Capital Outlay and Total. In none of the various 10 agencies covered by the defence budget, including the major service commands, is there an item on secret items relating to national security and intelligence services. Even the military’s Intelligence Services (ISAFP) is not among the 10 agencies covered by the Defence budget.

The National Intelligence Coordinating Agency (NICA) is under the budget of the executive department and is allocated a total of PhP510,166,000 for operations covering Intelligence Management Services, out of a total budgeted funds of PhP590,956,00 for NICA for 2014. Its budget does not show any entry on secret items.

The Philippine National Police (PNP) is a civilian organisation distinct from the military and is under the Department of the Interior and Local Government (DILG). Its programs are General Administration and Support, Support to Operations, Operations (the two are Crime Prevention and Supervision Services, and Crime Investigation Services). Out of its total budget of PhP72,053,060,000, the total for what might be considered as probably including expenditures for intelligence would be PhP70,332,408,000. If the premise is correct, it would mean a huge percentage of the PNP budget for intelligence purposes.

Similarly, NSC is under the executive department and is allotted only PhP 18,043,000 for Support to Operations, and PhP23,785,000 for its Operations of providing situational awareness and policy advice to the President, as well as coordinating security policy implementation and management and supervision of the intelligence community, or a total of PhP41,828,000;

Meanwhile, the NBI’s main function of investigating crimes is allocated PhP768,041,000 out of its total appropriation of PhP978,277,000.

Like in the defence budget, there is no mention of secret items relating to expenditures for national security and because these agencies are in the executive department, even for civilian intelligence.

Consequently, a score of 2 is appropriate. There is no entry at all for ‘secret items’ in the 2014 GAA, although such expenditures are generally known to occur in the country, as Intelligence Funds. Further to these, there are discretionary 'social funds' ) as mentioned in the response to Question 13, and it is unclear how much of these trickle down to the defence and security forces.

Response to Government Reviewer:

The Government Reviewer has provided important additional information. The score has been changed from to 2, and comments above reflected accordingly.

Even if members of the HCA who participate in the Senate Finance Committee ask for information on the spending of secret items relating to national security and military intelligence, full information is not provided, and certainly not all secret items. It is precisely their nature as secret items relating to national security and military intelligence that provides a shield for such expenditures from public scrutiny. This is also why the issue of intelligence structures, mandates, expenditures, and related matters is such a critical issue in SSR and good security sector governance.

Legislative oversight is limited within the Philippine government structure where the three branches of government are co-equal, though provided with checks-and-balance mechanisms. The latter seriously limits legislative oversight of agencies under the executive department headed by the President, who is also Commander-in-Chief of the armed forces. Although the sources do provide some evidence of Congressional questioning over levels of intelligence spending, there is a limit to legislative oversight in this case. This is compounded by the present political reality where the President’s party or coalition enjoy a majority in both houses of Congress. A powerful executive, especially one that can dispense financial and other favours without the benefit of a prudent and independent auditing system does not enable a system of checks-and-balance.

In recent budget hearings for the 2015 budgets of the DND and the AFP, several legislators have questioned an insertion made by the Department of Budget and Management (DBM) giving authority to the AFP Chief of Staff to re-allocate or re-prioritise budget items without the approval of Congress.

Response to Government Reviewer:

Peer Reviewer 2's comment is supportive of the judgement that legislative oversight is not able to provide sufficient independent scrutiny. The Government Reviewer has pointed to the COA as an alternative oversight mechanism, and in January 2015, the Commission on Audit (COA), together with the Department of Budget and Management (DBM), Department of the Interior and Local Government (DILG), Department of National defence (DND) and the Governance Commission for GOCCs (GCG) signed a Joint Circular covering Guidelines on the Entitlement, Release, Use, Reporting and Audit of the Confidential and/or Intelligence Fund. This may translate into stronger internal controls and interestingly includes a requirement for quarterly &quoute;accomplishment reports&quoute; to the Senate President and Speaker of the House of Representatives. But that said, it does not amount to a level of legislative oversight which would warrant a 2.

There is no evidence that this process takes place other than in a very limited, selective, and non-transparent manner. Although the 1987 Philippine Constitution tasks the Commission on Audit to submit all audit reports to the President and to Congress, the institutionalised practice, from the 15th Congress (1995) onwards is for oversight of intelligence and confidential funds to be conducted by Senate Select Oversight Committee on Intelligence and Confidential Funds, Programs and Activities. Drafting of new auditing rules and the proposal to have a joint oversight committee from both houses of Congress on intelligence and confidential funds have been proposed.

However, legislative debates on matters pertaining to controversial topics like corruption in the military tend to take place in the context of investigations in aid of legislation, which have only been of limited effect. Investigations of this kind lie within the purview of the Philippine Senate. Most investigations conducted by the legislative committees, particularly the Senate Blue Ribbon or Ethics Committee are televised and reported in other forms of media but the media has attributed political motives to some of these investigations.

Response to Government Reviewer:

No further specific evidence has been provided that legislators are provided with audit reports in any more than a limited, selective manner.

The practice of off-budget military expenditures especially for national security and intelligence purposes is quite common in the Philippines. The discussions in regard to secret items in Questions 24-26 above are pertinent to this question and should be similarly applied here. Officially and under the law, such off-budget expenditures are prohibited, but there is a huge gap between official statements, the law and effective implementation and enforcement of sanctions for violation of the law. Given the poor auditing practices including on defence and security matters, there is no evidence that these prohibited off-budget expenditures are being ‘well-controlled’.

Peer Reviewer 2 has also provided useful examples of off-budget expenditure.

As noted in Question 27, there are off-budget military expenditures particularly in relation to national security and intelligence-gathering activities. Expenditures for disaster relief are in the defence and PNP budgets since these organisations have a formal mandate in this area of responsibility. There is a National Disaster Risk Reduction and Management Council (NDRRMC) headed by the SND which includes other relevant government agencies. The uniformed services undertake the physical discharge of this function. This function is highly valued by affected communities as seen in Typhoon Bopha in Davao del Sur in Mindanao especially. It is not evident that these off-budget military expenditures involve illicit economic activities. Police involvement in the illicit drugs trade appear to be not institutional but personal, much like alleged military involvement in illegal logging and illegal mining activities.

Response to Government Reviewer and Peer Reviewer 1:

The Government Reviewer's proposed score change is not possible, given there clearly are off-budget expenditures, as noted elsewhere in this assessment. A score change to 0 proposed by Peer Reviewer 1 is also unwarranted because while the 2011 AFP Scandal allegedly involves large-scale graft, illicit economic activities do not involve defence and security institutions, but merely key military personalities (generals).

There appears evidence that the law allows the classification of information on the grounds of protecting national security, such as confidential, highly confidential, top secret, for-your-eyes only (FYI). The Philippine Anti-Terrorism Law provides for this. However, for various reasons, there is the tendency of those involved in classification to ‘be better safe than sorry’ by putting documents under a higher classification category. Even with legal evidence, the lack of capacity, inclination, and other conditioning factors surrounding oversight institutions to scrutinise these matters inhibits effective scrutiny.

As military ownership of businesses is prohibited by law and technically does not exist, the closest the military ever gets to commercial ventures is through private-public partnerships. The operation of these ventures, however, are not wholly transparent and some are alleged to be exposed to graft and corruption. A case in point is the ill-fated AFP Retirement and Separation Benefits System (RSBS). Established in 1973 to augment the pension system for retired soldiers, the RSBS was abolished in 2006 after it failed to live up to its mandate and its officers became involved in anomalous land development deals.

It should be noted that the military's involvement in business and commercial ventures is limited by existing legislation. However, as the case of the RSBS demonstrates, public-private partnerships entered into by the military are subject to scrutiny, although the level of scrutiny could be improved. The RSBS, for example was subject to annual auditing by the Commission on Audit, but its long-standing mismanagement only became public knowledge following investigation by the Senate Blue Ribbon Committee in the late 1990s, investigation by the Feliciano Commission in 2003, and reports from the investigative and mainstream media in 2006. Unless greater access to information on public-private partnerships are allowed, instances like this are still likely to occur.

There are also issues with the effectiveness and transparency of external auditing by the COA, as discussed in Question 15

There is evidence that some military or even defence department employees own unauthorised private enterprises, such as in the procurement process through businesses that supply clothing, shoes, and even arms and ammunitions. This is a complaint heard often from military personnel in past troop visits, or private conversations with officers and DND employees. The formal reaction of government is to investigate, although evidence indicates it is usually lower echelon personnel who are incriminated.

A prominent example is the use of the Civilian Defence Force Geographical Units (CAFGUs) by private businesses, both local and foreign, with the knowledge of their superiors, although the practice is slowly declining. Created as a force multiplier in the military’s ISO in the past, CAFGUs were generally recruited from the local communities where they live. (See, ISDS, Developing a SSR Index in the Philippines, especially the case study of the municipality of Leon in Iloilo Province on pp. 121-153). CSOs, particularly those that work with indigenous peoples (IPs) in Mindanao decried their use in illegal mining and illegal logging operations in collusion with their superiors who allegedly received a percentage of the salaries of the CAFGUs from these operations.

According to an interviewee from the AFP, this practice is declining. This is likely partly due to the IPSP Bayanihan which essentially changed the strategy in dealing with domestic conflict (involving both military and civilian agencies in addressing insurgency, for example), and left the full burden to the military in dangerous conflict areas where armed violence persisted. In those areas, civilian authority was largely absent, with local chief executives showing up in their offices on the 15th and 30th of every month to collect their pay. They became known as 15-30 officials. A decline in this practice in regard to CAFGUs and the incremental change taking place on the ground, including the application of sanctions against violators according to insiders, suggest a score of 2.

Response to Reviewers:

The information on CAFGUs came from a source in the AFP, and is corroborated by field visits to various military camps conducted in 2003-2007. But more importantly, a score of 2 seems most appropriate, given the evidence of unauthorised private enterprise, including the additional examples described by Peer Reviewer 2

There is a publicly-declared commitment to transparency from PNoy down to the DND, SND, and the chiefs of each of the three major commands of the AFP. All of them are bound by various laws on anti-corruption and codes of ethical conduct and standards as already noted in Questions 7 and 8 in particular. In addition, these officials have often made public commitment to anti-corruption in their speeches as seen in the following examples: the President's State of the Nation Address for 2013, public speeches by reigning DND officials especially the SND, also the speeches of the chiefs of the PA, PAF and PN when they assume their command. Highly relevant here is the AFP-wide transformation that began with the PA and now spread to the entire AFP. In an interview, a high ranking military official in charge of the PA's research arm, spoke about his office now being reshaped to incorporate inquiries on corruption in the military.

As seen in previous answers to Questions 7-8 in particular, the AFP has taken steps to address the issue of bribery and corruption among its personnel. One of the most important cases of such measures taken by the AFP and DND is the widely-known case of retired General Carlos Garcia, former AFP Comptroller who was prosecuted both in military and civilian courts for extensive bribery and corruption after his wife and sons were caught bringing into the U.S. hundreds of thousands of US dollars without declaring them. The testimony of his wife and subsequent documentation by the authorities in the US and the Philippines revealed habits of bribery and corruption, in which the family had been engaging for years. The General was convicted in a Court Martial, and was in jail while his cases in the SB became another source of controversy due to a plea-bargaining agreement he entered into through one of the SB divisions. Unfortunately, however, there is evidence that the decision to prosecute those involved in bribery and corruption is often coloured by political considerations where political allies or those who have access to the highest offices are often not even investigated. Even if there is some evidence to prosecute them, they often do not get sanctioned. In short, the application of punitive measures continues to be selective.

In one case involving a retired officer by the name of Jaime Ligot, the Senate Blue Ribbon Committee investigated his unexplained wealth, including suspected funneling of unexplained wealth to his brother-in-law, but the lengthy investigation widely covered by the media did not lead to the filing of any case of corruption either against him or his wife and brother-in-law.

Response to Government Reviewer:

Increased efforts in 2013 onwards to tackle bribery and corruption are evident in response to the 2011 AFP Corruption Scandal, but more evidence over a longer period is necessary to ascertain whether measures are effectively and consistently carried out.

Whistleblowing is encouraged by the Philippine government in civilian cases such as the Napoles cases already described in Question 15 above. Other fairly recent cases of whistleblowing involved those against PGMA, her husband, and key government officials during her term in connection with the alleged bribery by the Chinese telecommunication company ZTE.

While there are laws against corruption as cited in Questions 7-8 and offices within the
AFP to promote anti-corruption, there is no culture or practice of whistleblowing within the military. This is due to many factors including the military’s bureaucratic structure, the importance attached to seniority in the service, the military’s sense of honor and loyalty, and socialization in the PMA resulting in officers becoming ‘closer than brothers’.

In fact, opinions have been expressed in the media that retired General Garcia could be covering up for his superiors in the AFP on the corruption and plunder cases filed against him in both military and civilian courts.

There is no enacted legislation encouraging military and official personnel to report corruption even as there is an Anti-Graft and Corrupt Practices Act, the Code of Conduct and Ethical Standards for all Government Officials and Employees, and the AFP Code of Ethics already discussed in Questions 7-8. Although the lower house of Congress has already passed bills to protect whistleblowers, these is yet to happen in the Senate. Whistleblowing is also not actively encouraged in the military, although it is so in the civilian government sector.

Response to Government Reviewer:

The Government Reviewer describes efforts to develop a policy to encourage whistleblowing DND-wide.This is welcome, but is not sufficient evidence that whistleblowing is yet actively encouraged. In addition, it is noted that the Office of the Ombudsman provides an alternative route. Score maintained.

It is not evident, according to publicly available information, that special attention is paid to the selection, time in post, and oversight of personnel in sensitive positions including officials and personnel in defence procurement, contracting, financial and commercial management. As already discussed in Question 20 in relation to the vetting of intelligence officers, political factors and even nepotism in some cases hinder the recruitment of people with integrity and unimpeachable character and competence into the government sector, whether military or civilian. It is often the political and/or personal connections of a prospective employee that determine appointments even in sensitive positions. In fact, the practice of hiring one’s child or sibling in positions requiring confidentiality and trust is common, according to available media sources, throughout the public sector and is believed to be widely known by the public also.

Response to Government Reviewer:

The Government Reviewer has noted that the DND Bids and Awards Committees and its members are regularly rotated by the Secretary of National Defence through annual department orders. While this evidence is relevant evidence which suggests that there may be special attention paid to personnel in sensitive positions, it is not sufficient to warrant an increase in score. Peer Reviewer 2's comments support this judgement.

The issue of the number of civilian and military personnel in the DND and AFP has been a nagging problem for many years. This issue is shared at all levels of governance, from national to local government units. The number of personnel on the list is not necessarily the same as those working at their desks according to the description in official records – these are called ‘plantilla’ positions in the Philippines. In the AFP, the issue of ‘ghost soldiers’ remains, although there has been a decrease in the number of personnel involved in recent years, according to one interviewee.

The practice of padding the list of personnel is a source of corruption as the head of office can produce fake signatures of fake recipients and pocket their salaries and other benefits. This is seen in the case of the CAFGUs that are an augmentation force or force multiplier in the PA’s former counterinsurgency operations on the ground. The same anonymous source reported that he saw the names of ghost CAFGUs in the payroll of his unit whose payments went to the highest-ranking officer in his unit.

The House Committee on national defence and security headed by former CSAFP Rodolfo Biazon, conducted a series of hearings and investigation in regard to ghost soldiers and apparently helped reduce this practice through wide media coverage of the hearings and investigation. It must also be pointed out that the leadership in the AFP under Lt. General Emmanuel Bautista - the author of IPSP Bayanihan, to reform the approach to internal security and also the Multi-sectoral Advisory Board of the Philippine Army Transformation Roadmap (PA-ATR) when he was still CGPA - is committed to the transformation of the entire AFP and has caused the creation of offices in all the major service commands and the AFP—GHQ, to address the general issue of military reform. In its own structure, the current SND, retired General Voltaire Gazmin, has also created counterpart organisations for the purpose of defence reform for transparency. All these efforts and commitments still need proof of effective implementation.

Response to Reviewers:

The Government and Peer Reviewers have provided useful sources. Score changed to 3. A higher score can only be awarded if there are reliable measures detailing the composition and number of CAFGUs and SCAAs.

The issue of pay rates and allowances for civilian and military personnel and personnel in the public sector is covered by the Salary Standardization Law (SSL) enacted more than a decade ago. The SSL provides for corresponding levels in military ranks, and some public institutions like the UP have succeeded in being exempted from the SSL for specific reasons including their different character and mandate. Having said this, however, each agency has its own internal operating rules and procedures in compensating their personnel beyond the basic salary. The public outcry against huge allowances and other benefits enjoyed by Government-Owned and Controlled Corporations (GOCCs) including the central bank or Bangko Sentral ng Pilipinas (BSP), the GSIS, and others in recent years is due to the information widely publicized by media that the officers of these bodies especially, were receiving large allowances and other benefits that are paid for by people’s taxes.

Due to the secretive nature of the military and defence organisations, there is no hard information one can obtain on benefits of their officers, although personnel benefits like clothing allowances, combat pay, re-enlistment support, housing allowances, education allowances for their children, pensions, and the like are known widely in defence and military circles. Rumours like the payment of millions of PhP to incoming CSAFP called ‘pasalubong’ (literally a welcoming present on arrival), and outgoing CSAFP called ‘pabaon’ (literally a going-away present) continue to remain in the public narrative even for past CSAFPs known for their honesty and integrity.

Response to Government Reviewer:

The Government Reviewer has references sources covering pay, but no information could be located regarding allowances - such as housing or education.

Defence and military personnel receive their correct pay on time, the system of payment is well-established, routine, and published within these organisations.

While this is not directly relevant to the question and has not been taken into account in the scoring, EPs are always short of funds; their earnings are very low compared to their personal and family requirements. Thus, although they receive their pay and other financial benefits through the ATM, their cards are often held by loan sharks who withdraw these funds at a discount since they had been given to the soldiers ahead of time. A recent reform in the military is on the re-enlistment allowance in cash and in kind that is accessed through a card. Without safeguards against the urgent need for cash by EPs in particular, the card system is not likely to impact on anti-corruption.

There is a system requiring certain qualifications for the selection of middle and top management AFP officers. There is a set of criteria to be promoted to the level of Colonel in the AFP, and director level in the DND – these are: seniority, professionalism, potential, performance review, and aptitude. However, the Davide Commission report described the military culture as a ‘bata-bata’ system (patronage). This, alongside the officer-recruitment source (PMA or the former Reserve Officer Training Corps or ROTC) has meant that implementation of these criteria has been varied.

Even though the ROTC has been abolished in civilian universities, the patronage system essentially remains even at colonel level in the AFP and operates through a system of appointment within the AFP structure. This includes assignment to military schools for advanced training at home and abroad which contributes to the accumulation of qualifications that are formally required for certain mid-level military positions.

As provided for in the 1987 Constitution, the congressional bicameral and bipartisan CA confirms military appointments from the rank of colonel in the PA and PAF and captain in the PN, but the confirmation process is itself not transparent. Thus, while a set of formal requirements is in place, there is no assurance that the appointments system is meritocratic.

Response to Government Reviewer:

The Government Reviewer has set out the formal process for appointments, but has not provided enough information on the appointment system - particularly on the specific criteria on which assessment processes depend to warrant a score change. Peer reviewer 2's proposed score change to 2 would imply that there is no oversight on appointments, which is not the case, since there is the bicameral Commission on Appointments. Score maintained.

There are no promotions boards outside the command chain – other than the President as Commander -in-Chief of the armed forces. The promotion board consists of the Board of Generals that selects appointees from those submitted to it by the PA, PAF, and PN. There is no strong publicly available evidence of a strong appraisal process as vetting continues to be shaped by the ‘bata-bata’ system, and other non-meritocratic factors. In fact, after each round of promotions one would hear many complaints from their peers and lower-ranking officers and even EPs. Knowledgeable private individuals also criticize outcomes of the promotion process. The CA does not have a creditable record of operating as an independent and objective oversight institution for military and defence leaders. Depending on the political weight of presidential incumbents, the has CA tended to act accordingly.

Response to Government Reviewer:

The Government Reviewer has highlighted the provisions in the Executive Order covering civil service Personnel Policies and Standards. This does state that &quoute;each department or agency shall establish merit promotion plans which shall be administered in accordance with the provisions of the Civil Service law and the rules, regulations and standards to be promulgated by the Commission. Such plans shall include provisions for a definite screening process, which may include tests of fitness, in accordance with standards and guidelines set by the Commission. Promotion Boards may be organized subject to criteria drawn by the Commission.&quoute; Media articles suggest there is some internal debate over whether existing systems are sufficiently meritocratic, but do also confirm that there are formal processes in place. Score has been increased to a 2, but more evidence of how these processes work in practice would be needed to score higher.

Conscription is currently not mandatory in the Philippines. Article 3, Section 4 of the Philippine Constitution, however, states that: &quoute;The Government may call upon the people to defend the State and, in the fulfillment thereof, all citizens may be required, under conditions provided by law, to render personal, military or civil service.&quoute;

The closest the Philippines ever got to compulsory conscription is through the Reserve Officer Training Corps (ROTC) Program, implemented from 1967 to 2001, which made military training compulsory for male college students. The ROTC was abolished in 2001 due to the death of a male college student through hazing by ROTC officials in the student's school. The ROTC has since been replaced by the National Service Training Program (NSTP), which made military training voluntary and also open to females.

Voluntary conscription applies for those in the reserved service who wish to go on active duty, the cases of re-enlistment of EPs already mentioned before, and the recruitment of CAFGUs. There might be cases of bribery to obtain preferred positions in active service, or even in the recruitment of CAFGUs, but these are strictly prohibited by existing laws and the internal rules of the AFP as cited in Questions 7-8 above. In practice, due to a well-entrenched system of political patronage and the prevailing culture, such corrupt practices have proven to be difficult and politically-challenging to political, military, and defence elites. Recent reports have also circulated saying that both armed forces officials and CAFGU members are receiving funding from private corporations in mining towns in Southern Philippines.

There have been cases of ‘ghost soldiers’ as discussed in Question 38 above, although the number is allegedly decreasing over time. Evidence of media reports on this issue have also been cited above. In spite of efforts to reduce this source of corruption, it remains likely that the lack of focused accountability in the payments system as already noted in Questions 38-39 above can offer opportunities for corruption. More specifically, even if the number of ghost soldiers has allegedly declined in recent times as one interviewee alleged, the phenomenon nevertheless exists.

The system of electronic payment is well established, as discussed in Q40, and the chain of command and the chain of payments are strictly separated in both the AFP and the DND, and this has been strictly observed though is not a published policy. The DND has an office dedicated to financial management, and another one on human resources. Electronic payment systems for defence and security personnel are also in place. Although there have been criticisms on both institutions regarding the perceived and actual cases of military and defence corruption, issues regarding chain of command and chain of payment, according to key informants, are exempt from these.

As already discussed particularly in regard to Questions 7- 8, the Philippines has laws prohibiting graft and corruption in all public personnel including military and defence personnel. RA 3019 have detailed provisions against bribery, gifts, hospitality and the like for public officials. This legislation is buttressed by RA 6713 detailing the proper conduct and ethical standards for all government officials and employees. Defence and military personnel are included here. Earlier research on corruption in the Philippines like the article cited by the late Ledivina Carino trace the sources of graft and corruption to the clash between traditional culture and modernity, where the former values privilege and the latter values achievement or merit criteria. Moreover, as already noted in regard to the issue of the application of sanctions, it is often only the lowest-ranking personnel that are incriminated. Public servants are known to receive gifts from clients. The meaning of 'conflict of interest' is not understood and many officials are known to engage in such practices. Further &quoute;post-separation activities&quoute; are not covered in legislation either.

Corruption cases involving high-ranking military officials are relatively well-documented by both the mainstream and investigative media. Breaches of the Code of Conduct, however, regarding military adventurism, exposing corruption and involving destabilisation plots largely go unpunished due to the penchant of administrations to grant unconditional amnesty to adventurist soldiers.The Oakwood Mutiny of 2003 and The Manila Peninsula Siege of 2007 are examples in this reference.

There have been substantial violations of the Code of Conduct in the defence and security sector during the past several years. Several police and military officials are currently being prosecuted and are now behind bars. The media and civil society organisations have been vigilant in monitoring the cases of these public officials. The main challenge however is sustaining the efforts of the current administration in investigating and prosecuting corrupt officials in the security and defence sector.

Score 2 has been selected as while there is some evidence of breaches of the Code of Conduct being addressed, the Code does not cover &quoute;conflicts of interest&quoute; or &quoute;post separation activities&quoute; which limits its credibility.

There is some evidence that anti-corruption training is given to personnel in sensitive positions such as legislative oversight bodies, COA, OMB, SB, and both the AFP and DND. However, the majority of training in anti-corruption is undertaken through funds made available to the government by multilateral institutions including the World Bank (WB), the International Monetary Fund (IMF), UNDP, and the ADB, Bilateral aid programs provided through AUSAID and USAID are another major source of anti-corruption training programs. Although these donor agencies conduct repeat training programs, it is not clear if the defence and military institutions carry them out on their own regularly or otherwise.

Response to Reviewers:

Both reviewers have provided useful additional information concerning other offices in government that are involved in anti-corruption efforts.

There is a policy of publicising the prosecution of corruption cases involving military and defence personnel. As the functions of the state are relatively open compared to many others in the developing world, media coverage of these prosecution cases is extensive. Outcomes of such prosecutions are also accessible to interested persons. For instance, the prosecution of retired ex-AFP Comptroller General Carlos Garcia on plunder charges before the SB is open, and outcomes can be accessed through the SB records office if individuals request it. The same is true of military and police procurement cases involving those in connection with the RSBS cases extensively documented by FelCom in its report. The conviction of retired General Garcia by Court Martial is also available publicly.

In terms of prosecutions being inappropriately suppressed, there have been cases in the past where investigations did not result in convictions, and this was particularly seen in the cases of senior serving and retired officials (this is discussed in Questions 1 and 7). However, as mentioned above and in Question 35, there have been positive examples of the enforcement of sanctions as well.

Facilitation payments are strictly prohibited by law and internal regulations. There is, however, strong evidence that they are practised, including by spouses and close friends of defence and military personnel occupying sensitive positions in procurement and assets disposal in particular. Extremely revealing are the statements made by the wife of retired General Garcia when caught bringing into the US hundreds of thousands of US$ without declaring them to the US Customs authorities - she admitted that she had obtained this money via facilitation payments from grateful clients of her husband (who was AFP Comptroller at the time). The Garcia case was a cause célèbre during the PGMA administration. Garcia remains in jail and his wife and sons, being US citizens, live and work in the US. He remains silent as to his military and defence co-conspirators – as the scale of corruption and its illicit gains makes it highly unlikely that it was the work of one person alone. Like the unsolved assassination of PNoy’s father, the truth will probably die with Garcia in this case.

It is unlikely that the practice of facilitation payments even if strictly outlawed has been stemmed despite a commitment to transparency by the military and defence high command, due to the fact that reforms are challenging; those who stand to lose out block them, and reforms in any case take time to institutionalise. The reforms need to be made sustainable not simply through hortatory injunctions, but through effective and systematic enforcement.

Response to Reviewers:

The Government, Chapter and Peer Reviewer 2 all offer useful insights on how facilitation payments operate, and provide an idea on how perceived misconducts can be reported. Score changed to 2.

The IPSP contains the AFP’s military doctrine in its internal security operations – as the focus remains internal with territorial defence to be addressed especially in the light of the SCS/WPS dispute with China primarily. A careful reading of the IPSP suggests that security is seen as a broad concept with stakeholders beyond the military and defence establishments, and government including the military and defence institutions. The IPSP also recognises the multidimensional environment of internal security and will address it in relation to political patronage and poor delivery of basic services to the people. Still, there is no specific mention of &quoute;corruption&quoute; or even behaviour associated with it other than political patronage, having transparency as a primary goal, and the maintenance of “a professional armed forces serving under firm democratic civilian control”.

Response to Peer Reviewer 1:

Agree. The IPSP mentioned is not AFP doctrine per se, but relates to how internal security operations are conducted. Score changed to 1 as this document does recognise issues related to corruption (i.e. such as patronage, and poor delivery of services) as significant/strategic issues.

There is no known training on corruption from within the ranks of the Philippine Armed Forces. Reports by investigative media state that corruption in the defence forces has been endemic and institutionalized even following the restoration of democracy in 1986. During validation meetings for the UNDP-supported project of the Institute for Strategic and Development Studies on Security Sector Reform in the Philippines in 2008-2011, military and police officers participating, however, expressed eagerness to participate in and support anti-corruption programs for the military, if these are ever institutionalized.

Response to Government Reviewer:

The Government Reviewer has provided detail of several courses/training programs covering aspects of anti-corruption, however these does not seem to be geared towards corruption in operations. It is also unclear however whether these courses are mandatory or how frequently they take place; nor is there any further detail on who teaches and offers these courses, what the content entails, or whether they form part of any wider anti-corruption initiative, so a score of more than 1 could not be awarded. Nor do Peer Reviewer 1's comments provide any further detail which would warrant a score increase.

There are no trained professionals regularly deployed to monitor corruption risk in the AFP’s field of operations, whether in regard to areas where the NPA remains active or places in Muslim Mindanao including those covered by the peace agreement between the Philippine Government (GRP) and the Moro Islamic Liberation Front (MILF). Apart from the high risks of violence in these areas for non-military personnel, other reasons for the lack of trained capable professionals to monitor corruption risk include the absence of such trained professionals within the country, the sheer expense involved in this deployment that is beyond the limits of the military budget. The confidentiality of armed operations often constrain even the media personnel engaged with them. The monitoring of corruption risks by the media also does not happen in the field, but is informed by public documents or information leaks from informants. Even former president Fidel Ramos, who was also former AFP Chief of Staff has alluded to the lack of opportunities to better monitor military and defence logistics.

Response to Government Reviewer:

The Government Reviewer has provided evidence of training and the source outlines the remit of the Office of Ethical Standards and Public Accountability, but this does not contain specific evidence of corruption monitoring in the field. Score maintained.

As a rule of thumb, the AFP Code of Ethics is regarded as the basic determinant of acceptable behaviour especially of military commanders. However, in practice, there is evidence of AFP personnel being involved in corruption during operations. The practice of ‘conversion’ has gained a high degree of notoriety within the defence and military establishments. As explained in the reports of the two fact-finding bodies to investigate the coup attempt against Cory Aquino in 1989-1990 and the Oakwood Mutiny against PGMA in 2003, 'conversion' has been resorted to by field commanders whose budgets do not provide for ‘hutting’ materials. Since temporary shelters like huts are required in field operations, the commander would convert allowed items in the budget into cash in collaboration with both COA auditors and suppliers on the ground.

There is evidence that auditors and suppliers exact as much as 30% of the budgeted amount as ‘cost of money’ which can be regarded as some form of facilitation payment. Conversion is a corrupt practice even if the goal is to provide for an operational necessity. However, there is evidence that the practice is widespread, involves large sums of money, and that some of this may have either been pocketed or used to purchase luxury items for personal use. Collusion between and among external auditors represented by auditors from COA assigned to various units in the military and defence institutions, suppliers, and military and defence leaders is well-known and has been reported on (see media article referenced).

In the deployment for peacekeeping operations (PKO) abroad such as under the United Nations (UN), interviewees report that apart from the domestic codes of conduct, a UN-level Code of Conduct governing behaviour including corruption risk whilst deployed is provided to each peace-keeper. Training is also provided, but the problem is that infringements of the code and unethical and corrupt behaviour are left to the sending country to address. It is, however, not the case that corrupt behaviour is sanctioned at home. An example in the Philippine case is the transfer of guns issued to Filipino peacekeepers in Cambodia by those among them from the police. It is not clear whether they were subsequently sanctioned.

Response to Reviewers:

The Government Reviewer has provided useful background on training and guidelines, but there is no evidence that is relevant to the reported instances of defence and security sector-related corruption outlined in this assessment. These instances are widely reported in Philippine investigative media, and are referenced. Peer Reviewer 2 has offered additional information on peacekeeping missions, but there is a lack of evidence that efforts to address corruption risks are anything more than &quoute;irregular&quoute;. Score maintained.

The research referenced suggests that private military and security contractors (PMSCs) are not employed in the Philippines, but Filipino soldiers and policemen have been increasingly in demand by foreign PMSC recruiters.

The closest that the Philippines perhaps comes to employing PMSCs could probably be the use of Civilian Armed Forces Geographical Units (CAFGUs) in community developmental efforts. CAFGUs, together with Civilian Volunteer Organizations (CVOs), have also been reportedly employed by the military in counter-insurgency efforts. Private armies of local politicians and bosses, tolerated by local government units, police, and the military, especially in Southern Philippines have also gained notoriety especially following the Maguindanao Massacre in 2009. Public scrutiny of CAFGUs, CVOs, and private armies are of a lower level compared to the military and the police, but this is increasing especially following the Maguindanao Massacre.

Response to Government Reviewer:

The Government Reviewer has not provided any evidence or relevant provisions for regulating the use of private militia, so it is not possible to endorse the score changes proposed. While PMSCs are technically prohibited and are not employed, the provision of operational support in military environments are taken up by CAFGUs and private armies. This is a nuance that is particular in the Philippine context, and this question can include procurement, as well as operations and the provision of security as well. The Executive Order that serves as the basis for the creation and organisation of CAFGUs as well as research and media reports that state the vagueness of its wording. No evidence in terms of managing issues of corruption, or the provision of sanctions could be found.

The Philippines only has a single piece of legislation that covers all government procurement including for military and defence spending - The Government Procurement Reform Act of 2003 (Republic Act 9184) and its Implementing Rules and Regulations (IRR). Since there is only one law on public procurement, the DND and AFP adopted their own procurement systems and processes within the ambit of the law. Since 2003, various defence officials and military officers have tried to reform their procurement systems. There was even an initiative made by PGMA to improve transparency in the DND by creating the office of Internal Control at the Under-Secretary level and putting a technically competent and trusted individual in the post. The ceilings for procurement for the DND, AFP, PA, PAF, and PN were also fixed and the bidding system made more transparent through various mechanisms, including CSO participation as noted in Question 4. Moreover, bidders had to comply with requirements such as various certificates to demonstrate financial viability, registration with the Securities and Exchange Commission (SEC), proof of having paid taxes from the BIR, and previous satisfactory delivery of procured items from end users in the AFP, among others.

At present, the bidding requirements and items being procured are published online and are accessible to the public. One of the perennial issues facing procurement is the difficulty of preventing collusion among suppliers to ensure a winning bid by one of them, or dividing up the required items among themselves to ensure one of them wins the bid, or of a supplier renaming its company to evade non-performance in the past that can be a cause for disqualification. That the procurement process remains problematic is evidenced by alleged corruption by a DBM Under-Secretary, Mr. Relampagos, who had been in the DBM prior to the PNoy administration.


Response to Government Reviewer:

The Government Reviewer has set out some useful detail. The country has legislation covering defence and security procurement and an increase of score to 2 has been awarded on the basis that there are formal controls and sytems in place, as detailed in other questions, to ensure that the systems are not frequently by-passed. However given the shortcoming as described above - i.e. the disconnect between the policies of the uniformed services and the executive agencies, and the irregularity of published contracts in the Philgeps and DND websites, a higher score could not be awarded.

The Philippines Defence Transformation White Paper links capability requirements with strategic need, though how that then translates into procurement planning is less clear. One needs to find out from insiders about the cycle to obtain specific details, though it is unlikely that information would be forthcoming without a relationship of trust and confidence. Information on planning does reach the public domain, e.g. such as press reporting relating to Noy's approval of AFP modernisation planning, though there is no evidence that this is systematically conveyed or that much detail emerges before invitations to bid emerge. As the Government Reviewer makes clear, procurement related information is available to the public. The procurement process from invitation to bid until the notice to proceed is published.

Oversight mechanisms regarding defence and military matters exist by virtue of both constitutional and legal provisions as already noted in several questions above, particularly Questions 1-2. At the strategic level, the Republic Act No. 9184 or &quoute;Government Procurement Reform Act” and the Republic Act No. 7898 or &quoute;Revised AFP Modernization Act”, specifically provides for Congressional oversight of the major program to upgrade military capabilities or the &quoute;Revised AFP Modernization Program&quoute;. This includes approving the Revised AFP Modernization Act Trust Fund, which covers all expenses &quoute;to implement the procurement of equipment&quoute; . There is evidence that the National defence and Security have discussed the AFP Modernization plan, including a request in July 2015 that the AFP submit to the Committee a report on the result of its final investigation relative to alleged irregularities in the AFP procurement system and a report on the sources of the AFPMP funds and on fund utilisation.

Defence procurement oversight is performed by congressional bodies as a matter of course during the discharge of their functions, i.e., the HCA and Senate Finance Committee during budget hearings described in Questions 12, 12A,12B, 24 and 25; the CA during confirmation hearings, at which its members can inquire about any issue they wish to raise with the candidates for high positions in the defence establishments; or the Senate Blue Ribbon committee that has the power to conduct investigations, including on defence and military issues as in the RSBS and PDAF cases addressed in Questions 1 and 15, among others; there is evidence of this Committee looking into issues over defence procurement - such as the investigation into the P1.2 billion UH-1 helicopter procurement (see final source). The Commission of Audit also exercise oversight over procurement and media reporting (see sources) suggests that this is active.

Response to Government Reviewer:

The Government Reviewer has also listed other oversight mechanisms, both at the level of strategy and acquisition. However, although there is evidence of both active oversight and transparency, existing oversight functions cannot be judged to be consistent or entirely effective, particularly in the context of procurement scandals, and in the context of the overall effectiveness of parliamentary oversight as detailed in earlier questions.

In the Philippines, especially at this time under the PNoy administration, when the official mantra is ‘daang matuwid’ or the straight (and narrow) path in American idiom, there are efforts to increase transparency in some areas. One such area of greater openness is in defence and military acquisition, including in the bilateral military relations with the US. The US President's recent visit to the Philippines earlier in May 2014 was capped by the signing of the EDCA already cited in Questions 6 and 13. In the past few years, as the stand-off with China has heated up, the country has acquired two coast guard cutters from the US which were converted by the Philippines to naval warships in an attempt to boost national morale and the public's perception.

It is not clear whether these new acquisitions are subjected to annual audits. Openness in relation to plans for future purchases or acquisitions from major Philippine security allies (US, Japan, and South Korea, for example) is also practiced for the above-cited reasons. Although the Government Procurement Reform Act states that &quoute;[t]ransparency in the procurement process and in the implementation of procurement contracts&quoute; is a principle that guides government procurement in general, there is no single reliable public database for information on defence acquisitions.

Response to Government Reviewer and Peer Reviewer:

The Government Reviewer has affirmed that there is a clear policy to ensure that all defence procurements are made publicly available and are subjected to audit by the Commission on Audit. However, as Peer Reviewer notes, there is insufficient detail surrounding e.g. the value of military transfers, to make this transparencymeaningful.

There are formal bidding requirements for companies seeking work with the DND and AFP. However, the Government Procurement Reform Act and its Implementing Rules and Regulations only identify three major sets of documents - legal documents, technical documents, and financial documents - as eligibility requirements for bidders. Nowhere in the law and its implementing rules is regulations is a mention of no-corruption clauses as requirements for bidders.

Response to Government Reviewer:

The Government Reviewer has set out provisions in the Philippine Bidding Documents. These include definitions of “corrupt practice”, e.g. &quoute;the offering, giving, receiving, or soliciting of anything of value to influence the action of any such official in the procurement process&quoute; and &quoute;to deprive the Procuring Entity of the benefits of free and open competition.&quoute;; a commitment that proposals will be rejected if it determines that the Bidder has engaged in any of the practices; and that the Procuring Entity will seek to impose the maximum civil, administrative, and/or criminal penalties available under applicable laws on individuals and organizations deemed to be involved in any of the practices mentioned in ITB Clause. Score changed from 0 to 1.

Procurement requirements are derived from the IPSP and the NSP 2011-2016, documents that can be downloaded from the respective websites of the AFP and NSC. The IPSP clearly states that “the thrust of the DND [is] to fully equip the AFP with needed capabilities to enable it to perform its mandated functions” and capability upgrade includes equipment, accountability and transparency. Procurement will also be in consonance with the security challenges the country faces. The NSP 2011-2016, on the other hand, matches the security challenges facing the country with measures to capacitate it to exercise national sovereignty over its territory and other strategic interests. Capacity-building includes defence capacity development including in equipment for the AFP. However, it is not certain that defence procurement, though derived from an open, transparent, and publicly available IPSP and NSP 2011-2016, is verified through an effective audit process.

Apart from the IPSP, the procurement requirements of the Armed Forces of the Philippines are also derived from a national defence and security strategy presented in various other documents. The main challenge however has been the inconsistency and incoherence of the national security strategy. The significant contrast between policies of the past few administrations has distorted the procurement of much needed military hardware and development of critical infrastructure.

Incoherence is manifested in the conflicting priorities of the last few governments that led to the underdevelopment of the military. Inconsistency is reflected in the shifting policy of the government towards military operations. During the past two decades the policy of the government towards the insurgency in Mindanao for instance, has shifted from peace talks to all out war to peace talks once again. Due to these shifts the main focus was internal security operations that eventually led to the neglect for modernisation and preparation for external security threats. A score of 2 is given.

Response to Peer Reviewer 1:

Comments incorporated above, sources included and score changed to 2.

As far as formal procedures are concerned, there is strong evidence that defence purchases are clearly identified and quantified. No bidding process can begin without these specifications. Very detailed and quantified specifications for small items such as medical supplies, combat boots, and assorted clothing including uniforms for the major service commands as well as for big ticket items such as equipment - helicopters and patrol boats, for instance are publicly available. These are published online at the Department of National defence's website with calls for bids and the bidding requirements.

There are not so much unplanned purchases, but changes in strategic considerations that oftentimes result in the halting of planned purchases. This only shows that strategic planning with regard to defence purchases need to be improved. A score of 3 is given.

There is strong evidence that defence procurement is conducted as open competition among suppliers who obtain their supplies either locally – for clothing and some types of combat boots for example – or abroad – for supplies not produced locally such as helmets, some medical equipment, and big ticket items like aircraft and naval ships. As provided for in Republic Act 9184, all procurement must be open, competitive, and transparent. Observers from civil society and other non-military groups are encouraged to attend these bidding exercises to promote transparency. There are, however, procurement floors – in terms of total procurement costs that are too small to be subject to a complicated and costly bidding process -- for the different military and defence units where bidding is no longer required. Emergency or contingencies not foreseen in the procurement process can also be exempted from the bidding process. The extent of single-sourcing - a practice that is discouraged but not prohibited - unfortunately cannot be determined, as there is very little information on this, and it applies mainly to contracts with foreign suppliers. A score of 3 is given, based on our estimation from news and media reports, that single-sourcing is at more than 10%.

Like most military and defence procurement processes, those of the Philippines also have tender boards that consist of comparable officers in the DND, GHQ of the AFP, the PA, PAF, and PN with the highest-ranking official – the SND, CSAFP, CGPA, CGPAF, and FOIC as ex officio chairs. These boards are bound by the overarching AFP Code of Ethics and subject to scrutiny by OESPA. Their transparency and independence are, however, not clearly established, again due to reasons extraneous to appropriate defence procurement, including their inability to discharge their functions properly as a result of powerful corruption incentives and opportunities. The ability of OESPA to conduct an independent audit of the decisions made by tender boards is also not well established in part due to the military sub-culture and patronage system as detailed in the references to the question. Because formal structures are at least in place, including the AFP Code of Ethics and the OESPA, a score of 2 applies here.

In the Philippines, the law in place to punish collusion among bidders is Republic Act 9184 or the Government Procurement Reform Act of 2003. Even with this law in place, collusion and other corrupt practices are observed as mentioned in the references provided here of such instances by the DND in the procurement process.

Response to Government Reviewer

The Government Reviewer has raised the sanctions which may be applied in the case of collusion. However with no further evidence that collusion is actively discouraged or evidence of offending companies facing punishment it is not possible to award a higher score for this question.

Sources from the government office previously tasked to monitor the implementation of the recommendations of the Feliciano Commission that investigated the 2003 Oakwood mutiny attest that procurement staff have limited technical knowledge of the procurement process itself. What complicates the process even further is that bidding instructions, are often misread and misinterpreted by bidders, and that oftentimes, members of the Bids and Awards Committees (BACs) are themselves unfamiliar with bidding rules.

Article XVII of the Government Procurement Reform Act identifies protest mechanisms for bidders against decisions of the Bids and Awards Committee. Included in the filing of protest actions are the &quoute;filing of a verified position paper&quoute; and payment of a &quoute;non-refundable protest fee.&quoute; However, these protest mechanisms are generally seen as weak and lacking independence. The World Bank report cited noted, five years after the law took effect, that there were hardly any protesters, &quoute;because of restrictive provisions on protests and the lack of an independent review body.&quoute;

A variety of punitive measures are in place. The Government Procurement Reform Act of 2003 identifies imprisonment of 6 to 15 years for offenses such as opening of sealed bids, delaying the bidding process, exerting undue pressure on any member of the Bids and Awards Committee, splitting of contracts, and abuse of power. This applies to both public and private individuals.

Response to the Government Reviewer:

The Government Reviewer mentions a case of the blacklisting of a supplier, demonstrating that there is clear evidence on application of sanctions. However there is not sufficient evidence that such sanctions are applied regularly to warrant a higher score.

The Philippine International Trading Corporation (PITC), under the Department of Trade and Industry, is in charge of carrying out the offset program of the Philippine Government. However, very limited information about this particular government agency is available. As of 15 May 2014, the PITC's website (www.pitc.gov.ph), although providing a list of bid announcements and awarded contracts, never indicates whether due diligence is carried out during the procurement process.

As mentioned in the answer to question 70, this list is offered by the PITC, and may be accessed at: http://www.pitc.gov.ph/index.php/bidannouncement. Copies of awarded contracts are uploaded, although at of the time of writing these are limited to the 2012-2014 period. Details on the supplying companies provided include the following (although at times, certain information are left blank):

Award Date ,Publish Date, Associated Component, Award Type, Contract Amount, Proceed Date, Contract Start Date, Contract End Date

Memorandum Circular CT 95.4/02 (Inclusion of Countertrade Undertaking of Foreign Suppliers in Bidded or Negotiated Contracts Covered by EO 120 S. 1993 and its Implementing Rules and Regulations) issued by the Department of Trade and Industry in 1994, states that the government procuring office shall give preference and/or priority to the foreign supplier who offers the most favorable counter-trade agreement for the Philippines. The level of competition and regulation with regard to offset contracts compared to main procurement contracts, as of the time of writing, appears indeterminate (based on publicly available information) and remains solely within the purview of the Philippine International Trading Corporation (PITC).

Government control of agents and intermediaries in the procurement process is virtually nonexistent. Although the Government Procurement Reform Act has a specific provision that may be interpreted to pertain to agents and intermediaries, collusion with these informal agents and intermediaries and 'conversion' (as described in previous questions), in the context of defence procurement, reportedly remain rampant practices.

Response to the Government Reviewer:

The Government Reviewer has referenced specific clauses relevant to the control of agents and intermediaries in the procurement cycle. Score changed from 0 to 1, but there is insufficient evidence of enforcement to justify a higher score.

Lists on the financing packages of arms deals are available on the website of the Philippine International Trading Corporation. However, documents uploaded in the website are not permanently accessible, and are taken down after an unspecified period of time. As of this writing, only 14 documents covering the periods of March to May 2014 are uploaded. Notices from the Bids and Awards Committee, including Contracts, and Notices to Proceed, are subsequently uploaded after the signing of contracts. Details such as payment timelines, interest rates, commercial loans or export credit agreements are not made publicly available.

There are no explicit anti-corruption provisions in Executive Order 120, Series of 1993, Its Implementing Rules and Regulations, and Subsequent Memoranda Circular issued by the Department of Trade and Industry regarding its implementation.

Response to Government Reviewer:

Although the Government Reviewer has provided evidence of laws with regard to the control of the companies’ use of sub-contractors and/or subsidiaries in the procurement cycle, there is no evidence that the government requires subsidiaries and sub-contractors to adopt anti-corruption programs.

Although government documents such as the AFP Modernization Act, the Philippine Internal Peace and Security Plan (IPSP) Bayanihan, and the Philippine National Security Policy 2011-2016, have sovereignty as their cornerstones, there is evidence that defence acquisition decisions are still influenced by the United States. The US is still a significant presence in the Philippine Strategic environment, given the Mutual Defence Treaty between the Philippines and the US, the continuing conduct of Joint Military Exercises through the Balikatan Program, and the recent signing of the Enhanced Defence Cooperation Agreement between the Philippines and the US.

Data from the SIPRI Arms Transfer Database on sets out detail of US Arms supplies to the Philippines. That said, apart from the US, there is a diversified pool of suppliers such as Canada, Italy, Poland, S Korea, Germany, France, Spain etc.

Response to Reviewers:
As Peer Reviewer 2 notes, the government has welcomed shifts in US strategic defence that result in bigger windfalls in terms of military assistance - the extent to which that translates into influence over procurement over specific acquisition decisions is difficult to determine. The signing of the Enhanced Defence Cooperation Agreement with the US, without formal ratification by Congress, has caused some public controversy, and raised questions over the level of public accountability over US-Philipinnes defence relations.