Financial trails of corruption

One of the strongest lobby groups that have emerged of late in the Philippines is of the banking sector, specifically involving the proposed relaxation of the country’s antiquated Bank Secrecy Law.

Such are the unseen hands behind the continued refusal by Congress, specifically of key members of the House of Representatives, to amend what is currently regarded as one of the few banking laws in the world that adheres to such strict rulings.

As has been reported many times, the Philippines, Switzerland, and Lebanon are the only three countries left today in the whole world that prohibit concerned government agencies to bypass bank secrecy laws when pursuing tax evasion probates.

And in recent news, Switzerland has reportedly pursued the process of amending the protectionist stance their banks adopt when it comes to tax evasion cases. In fact, Swiss banks have been seen to be more open in cooperating, especially in cases involving dictatorships.

In the Philippines, banks want to protect their big account holders, even with suspiciously dubious transactions that could involve crimes punishable by law – from tax evasion, gambling, smuggling, drug trafficking, illicit gaming, and even plunder.

The Bureau of Internal Revenue, under the feisty commissioner Kim Henares, may find it difficult to wage a campaign against these banks. Even the powerful Anti-Money Laundering Council, which goes after illegal transfer of funds, is hard-pressed to pursue their cases.

Compelling reasons

Banks may feel they need to protect their clients, but they must also show a sense of nationalism especially in situations where there are weaknesses in laws that allow questionable financial transactions which ultimately damage the country’s economy.

Someone should do a study that would quantify the harm that is wreaked by the current Bank Secrecy Law so that any lawmaker who gives a howl of protest over the need to amend it could be charged with sabotaging the economy and the country’s future.

It also is utter nonsense to spout that a more relaxed Bank Secrecy Law would discourage investments in the Philippines. This has not been the case, after all, for all of those countries that have relaxed their banking secrecy regulations.

And the most compelling reason to support the revision of the current Bank Secrecy Law is the simple logic that any individual or entity that is not involved in anomalous dealings should fear nothing. It would be difficult to prosecute a fabricated crime if there is nothing wrong with your bank transactions.

Missing puzzle pieces

Nothing could be more frustrating than to be unable to complete a jigsaw puzzle because a missing piece is being tightly kept under lock and key in a repository box.

Examples of such cases are those involving former Supreme Court Chief Justice Renato Corona and former Armed Forces comptroller Major General Carlos Garcia. Failure to successfully prosecute the accused was reportedly due to the current Foreign Currency Deposit Act (FCDA) and the Bank Secrecy Law.

Chief Justice Corona’s case involves the refusal of the Philippine Savings Bank (PSBank) to bare the alleged foreign currency deposits of the accused. The Supreme Court had ruled in favor of the bank by issuing a temporary restraining order (TRO).

The Chief Justice was impeached by Congress in December 2011, but crucial evidence – such as the existence of alleged foreign currency deposits with PSBank – could not be brought out in the open so that substantial action against the accused is pursued.

The FCDA badly needs to be revamped, having been signed into law by former President Ferdinand Marcos in 1974. This had reportedly been integral in the massive dollar salting of Marcos cohorts and even by the deposed president himself during the dictatorship years.

The case of Major General Garcia involved the Land Bank of the Philippines (LandBank) where a court order to freeze the accused’s five dollar accounts could not be carried out. The FCDA makes the revelation of foreign currency details unlawful, except upon a written permission of the depositor.

Of course, if I were a guilty Garcia, I wouldn’t give a written permission.

More transparency needed

All over the world, banking transparency is already an accepted practice, one which has proven to be a big help in curbing corruption, and not the other way around as some of our lawmaker-politicians warn.

If our politicians were walking the correct and moral path, they would have nothing to fear. It is, therefore, equally absurd for a politician, albeit belonging to an opposing party or interest, to invoke that a more transparent bank law could be used as leverage to pursue political harassment or vendetta.

Bank secrecy is a thing of the past in today’s world where transparent government and anti-corruption are clarion calls. It is time to change laws that go against the interest of people’s welfare and that do not promote good governance.

Certainly, 9/11 – which happened in 2001 in the United States – has shown us that banks could unwittingly become accessories to mass murder after the Islamic terrorist group Al-Qaeda managed to amass huge sums of money to support its ideological offensive against the free world.

The relaxation of bank secrecy laws in almost all of the countries in the world since then has helped minimize the damage these left-wing ideologues espouse.

By not cooperating with the rest of the world to have a more transparent banking law, our local banks, in effect, are impeding the global effort to stop terrorism and even encourages the Philippines to become a repository and channel for illegal funds.

There is no time left for the Aquino government to pursue this proposed law, given that the coming elections is set to paralyze the whole bureaucracy in a few months time.

Perhaps, there may be some stopgap measures that can be put in place which would not need Congress’ stamp. Although the bigger problem may not be solved, it may help discourage corruption in future cases.

Ideas and suggestions from readers are welcome.

Facebook and Twitter

We are actively using two social networking websites to reach out more often and even interact with and engage our readers, friends and colleagues in the various areas of interest that I tackle in my column. Please like us at www.facebook.com and follow us at www.twitter.com/ReyGamboa.

Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.