By Edgardo B.
Espiritu
View in PDF
I
had two major stints in government. The first one was when
President Cory Aquino asked me to head the Philippine
National Bank, then the largest government financial
institution, and to do some other special assignments for
her government. The second one was when I was appointed
Finance Secretary by President Estrada. (I have not counted
here my first job as a young lawyer in the Bureau of
Internal Revenue and my first assignment from President
Cory, which was to chair the National Power Corporation’s
Board of Directors. Although both of these jobs also gave me
some insights into the nature of government work, I did not
specifically include these work experiences because of the
only short period of time covered and the limited depth of
my involvement in government issues then.)
These two
experiences in government service were really of different
levels and nature. One was as head of a chartered and
somewhat independent government corporation and the other
was as a member of the Cabinet and therefore an alter ego of
the President. My experiences in these two positions under
two different administrations gave me two vantage points
from which to view many aspects of and issues in government
work. Some of these are common to both positions (or maybe
to all public positions) and some are peculiar to a
particular level.
I assumed
the presidency of PNB in the early post-EDSA 1 period, when
the bank was trying to recover from the devastation wrought
upon it by the deposed dictatorship. What I saw then was
already the end result of the avariciousness and misuse of
power by the dictator and his cronies – a bank squeezed dry
of its resources and overburdened with worthless assets and
large obligations. But of course, this was just one more of
the numerous problems left by the previous government, which
has after all already been judged by the people,
particularly the multitudes at EDSA, as corrupt and
detestable. But that was the past and the new government was
supposed to be doing everything to undo or correct the
wrongs done by the old one. For PNB, it has drawn a
rehabilitation plan and it was my job as new bank president
to implement it and bring its objectives to fruition.
As head of
a chartered government corporation like PNB, one could still
have a lot of leeway in instituting internal reforms. I
found PNB, despite the sorry state it had come to at that
time, to be still a goldmine in terms of goodwill, of the
latent talents and capabilities of its workforce, and of
various assets that have potentially high values. All that
we needed to do was to tap and release all these latent
energies, capabilities and values. This was basically what I
did. I just tried to provide clear directions and to boost
the morale of and inspire the bank’s workforce, mainly by
showing them that their labors would bear much fruit. It was
essentially a matter of linking hard work with the results
in terms of growth and good performance for the institution
as well as professional advancement and rewards for the
individual employee.
This
formula was still much the same as what has worked well in
the private corporate world and was still within the range
of my experience so far. The only difference was that
whereas in the case of a private corporation, management’s
main responsibility was to the private owners (although in a
service institution like a bank, it would also need to
protect the interests of the bank’s clients), in a public
entity like PNB, although management is also answerable to
the owner, namely, the government, it is also and ultimately
answerable to the taxpayers. Moreover, a government bank’s
activities must result not only in profits but also in
benefits for the country in general in terms of helping
improve people’s lives and bringing development to
communities.
Overall,
my experience at PNB still allowed me to keep a reformist’s
positive view of things. I still believe that with the right
priorities, a sense of mission, and dedicated work, one
could still bring about meaningful changes, albeit within a
limited area of public service. Although we have not been
spared from the usual scrutiny by various agencies,
congressional investigations and pressures from politicians,
we were confident that as long as we were doing the right
thing, we could defend ourselves and obtain enough support
for our programs. The result proved the soundness of our
approach and the efficacy of our efforts. We were able to
turn around the bank within a very short period of time and
restore it to strength and stability. The bank’s officers
and staff regained their pride and faith in their
institution. The bank’s clients and the general public’s
trust and confidence in the bank gradually came back.
We were even able to successfully launch the bank’s
privatization. Indeed, for a long time the bank’s stock was
the darling of the local equities market, reflecting the
investors’ confidence in the bank. Our little experiment at
PNB thus became one of the clear success stories in the new
administration.
But I also
got my first big disappointment with government at PNB when
just before the presidential elections of 1992, the
administration in power issued directives that would make
the bank an instrument of politicking. They wanted the bank
to release funds that will in effect be used to support the
administration’s chosen candidates, contrary to existing
policies and to the bank’s character as an independent,
neutral and professional organization. As dictated by
conscience and principle, therefore, I resigned as president
of the bank.
However,
as things turned out, my bigger disappointments with
government were reserved for my second stint in public
service. When I was appointed to the Cabinet, and therefore
became an alter ego of the president, I got more intense
exposure to the dynamics of politics and high-level power
play. Of course, when I joined the Estrada Administration as
Secretary of Finance, I no longer had the innocent idealism
of the uninitiated, but I still kept the reformist’s
optimism that I had when I was at PNB. Indeed, I helped in
the Erap campaign because I sincerely believed then that
with his mass base and with what appeared then to be a
genuine concern for the poor on his part, there might still
be hope for a truly responsive and people-centered
government. But, of course, subsequent events proved me
wrong.
When I
accepted the position of Secretary of Finance, the mission I
set for myself was basically to help improve the
deteriorating business environment and thus help put back
the economy on the road to recovery and growth. The economy
was of course then still mired in the region-wide financial
and economic crisis. Foreign capital had all but completely
left the country, investor confidence was at record lows,
interest rates were very high, business activity was in the
doldrums, pressures continued to bear on the local currency
that had already fell steeply at the onset of the crisis,
and jobs were being lost rapidly. But what was really of
serious concern about the crisis was that it had a negative
impact on basic social services, such as education and
health, and therefore had long-term or permanent
repercussions on the welfare of the population and on future
growth.
In this
regard, it was particularly important to address the
problems in the fiscal sector, the Secretary of Finance’s
area of concern. We had to see to it that we were able to
raise enough funds and spend these efficiently on the
correct priorities. We had some success in raising funds
abroad and did better than other emerging countries in this
area because we still had substantial goodwill in the
international financial markets and investor community. But
as we now know, this goodwill was slowly eroded by certain
scandals and unfortunate events that rocked the local
business scene and that seriously damaged investor
confidence in our country. The first one was the BW fiasco,
which not only exposed the weakness of our stock market and
its susceptibility to manipulations but also left a dark
stain on the Estrada presidency in view of its apparent
involvement in the matter. Then, there was the acquisition
of PCI Bank by Equitable Banking Corporation with the help
of SSS and GSIS under rather questionable and allegedly
anomalous circumstances. These are only a few of the cases
where there were indications that the President and his
cronies used their power and influence to meddle in business
transactions.
Raising
money through borrowing, both abroad and locally, was not
intended to be permanent solution to the country’s fiscal
problems. I knew from the start that the only lasting way of
strengthening the country’s financial-fiscal position was to
reform the tax system, addressing the weakness in both tax
policy and tax administration. But I also realized that we
could not bring about permanent improvements in this regards
without addressing the critical issue of corruption.
That
corruption in government exists no one would doubt. But for
a long time, corruption was not considered a major factor in
economic development. It was taboo to speak about it in
international forum. Even the multilateral institutions like
the World Bank and the IMF avoided talking openly about it
in their dealings with governments. Moreover, the
development experience of the last several decades,
particularly of the East and Southeast Asian economies,
showed that major drivers of development are high rates of
savings and investment among the population; a focus on
education, training and productivity; sound macroeconomic
policies; and so on. Development would proceed as long as
these major factors were present, whether or not corruption
existed. But recent experience, particularly the Asian
economic-financial crisis, showed that corruption and good
governance, both in the public sector and in the corporate
world, are important issues in development. When corruption
is being done on a massive scale and is prevalent even at
the very top of both government and business, the harm done
on the economy would be substantial. The widespread presence
of corruption would discourage investment in general, would
lead to distortions and inefficiencies in business
decisions, and would eat up resources for important public
expenditures on basic social services and thus retard
productivity growth and future development. In the sector of
my involvement, namely the fiscal sector, the impact of
corruption was particularly pernicious. It affected both the
revenue administration side and the public expenditures side
of the fiscal program and led to massive wastage of
resources.
Realizing
all of these, trying to help combat corruption, in whatever
modest way I can, in the areas I was involved in was high in
my personal mission in government service. I even asked the
World Bank to conduct a study on corruption in the
Philippines. They did so and came up with very good
recommendations and proposed direction for an
anti-corruption strategy that can be initiated by
government. But despite the initial token agreement and
promises on the part of the government, the recommendations
really fell on deaf ears and whatever interest there was in
them just faded away.
This was
not at all surprising. The basic approach in fighting
corruption, as presented in the World Bank study and as now
widely recognized by experts in the field, is to reduce
opportunities for it and to punish it swiftly and adequately
when it occurs. Thus, a serious anti-corruption strategy
would involve systems reform and strict enforcement of
rules. This would in turn require strong political will and
resolute action from a high moral ground on the part of the
country’s leadership. Initially, I kept hope and was willing
to wait until the President grew into his job and until the
said requisites came into being. But having experienced so
many disappointments along the way, I eventually gave up all
hope that good governance will ever be achieved in his
administration.
The
factors that worked against good governance during the
Estrada Administration were partly systemic and partly due
to the personal leadership and working style of the
President. In my particular area, for example, the systemic
factors pertained to the unclear and loophole-ridden tax
laws, the weaknesses in the tax administration system, and
so on. With regard to these, I realized that the solutions
could only be put together in the medium-to-long term, since
they would need legislation in many cases and a
re-orientation of the bureaucracy. There could still be
hope. But with regard to the personal factors, it soon
became clear that there was little hope for change.
The former
President has blurred or distorted notions of what is right
and what is wrong. But it is hard to realize unless you get
the chance to observe him up close because his public
pronouncements often varied greatly with what he says
privately and with his actions. But even with regard to
distorted standards of right and wrong, although he may have
had a kind of Robin Hood mentality, even this he lost
somewhere along the way. Whatever concern for the poor he
may have had was eventually taken over by greed. His
pro-poor rhetoric thus ringed shallow to those who have
gotten a glimpse of his private side. He also seemed to have
kept a misguided distinction between outright stealing of
the people’s money, say from government revenues or funds
for government projects, and using power and influence for
personal gain, although even this he ignored when it was
convenient for him to do so.
Another
major characteristic of the Estrada presidency that made it
impossible to attain good governance under it is its utter
disregard for the principle of accountability. In simplest
terms, public accountability means that those who hold
positions of public trust should account for their actions
to the people. This applies not only to elected public
officials but also to appointed officials and, indeed, to
all those in civil service. One of the reasons that drove me
to reassess my involvement with the previous administration
was my disappointment with the proliferation of various
informal advisers without accountability but who exerted
tremendous influence not only in government but also outside
of government. The notoriety attained by his so-called
“midnight Cabinet” and its harmful impact on governance
seemed to have been a major reason why legitimate business
and foreign investors shoed away from the country.
My
confidence in government, that is, with the Estrada
Administration thus reached its lowest ebb after only a year
and a half of such disappointing experiences. With the
growing conflict between my own personal principles and the
way the government was being run, I deemed it most
appropriate to resign from my position.
Subsequent
events, however, saved me from being a complete cynic. I saw
the impeachment trial as a cleansing experience for the
country and I therefore decided to testify in the trial.
Contrary to what those who are close to the former president
may say, there was nothing personal in my decision to
testify against him. I was not out to take revenge. Rather,
it was just a logical extension of my personal mission to
help in the fight against corruption. I could not bear not
speaking and standing up for the truth at a time when the
country was being threatened by political turmoil and
economic collapse. It will be remembered also that at the
time I testified, the odds were quite different from the
final turn of events. The overwhelming prospect then was
that the president would still be able to get away with it
since all indications point to his being acquitted by the
majority of the senator-judges. The public outrage that
would be ignited by the vote against the opening of the
second envelope could not have been foreseen yet at that
time. Moreover, my whole family has expressed in very strong
words their opposition to my testifying and their worry that
this would put the safety of the entire family, particularly
my grandchildren, at risk. We were
worried maybe not so much of what the president himself
might do, with his vast powers, but we were thinking more of
the dangers that can come from his coterie of dubious
friends. But eventually they realized that this was
something I had to do and all of them came around and gave
me their full support.
The
subsequent events and finally the booting out of power of
the corrupt leadership somehow rekindled in me some hope
that our country still has a chance at attaining good
governance and sustained long term economic growth. But
having gone through those difficult and sobering experiences
under the previous government, I was much wiser and knew
that profound change would take much more than just a change
in leadership. It will take a constant, consistent effort on
the part of each one of us, citizens and other stakeholders
of this country, to be more vigilant, to be more aware of
our responsibilities to society and to our country and to
make our individual actions consistent with the common good.
TOP
About
Resource Book 3.0