Hooray for the meddlers!

I still recall the days during the Marcos Martial Law years when the controlled media published stinging editorials against the World Bank and the International Monetary Fund, denouncing them as meddlers for closely monitoring how the martial law regime was spending our money. I silently egged the meddlers on, feeling a little unpatriotic to cheer them rather than the home team.

Of course the World Bank and the IMF were not always right about their prescriptions. But first things first. These are the only institutions with enough clout to moderate the greed of the dictatorial regime. They were doing the Filipino people a big favor if only because their constant nagging somehow succeeded in putting the brakes on a regime that was out to plunder.

Now it seems that history does repeat itself. We are back to that situation when we have to look at the World Bank to check our current regime. That is the significance of the World Bank report on corruption and collusion among contractors in the conduct of our public works programs. We can’t do it ourselves. We have an Ombudsman and a legal system that cannot be depended upon to stop the rampant corruption in government.

The Arroyo administration is probably determined to outshine the Marcos regime in this regard. I am glad that the World Bank now has a strong anti corruption program and they are using it to call attention to the mess we are wallowing in. The lawyers may quibble about how the World Bank conducted its investigation but the important thing is that we now have some proof of what we have long suspected but felt helpless to do anything about.

Despite what the politicians in the House say, the investigation conducted by the World Bank seems pretty exhaustive. It involved more than 10 investigators, lawyers, experts and technical staff who conducted field work in six countries over a period of more than three years conducting more than 60 interviews with witnesses, reviewed documents including bids and contracts and made a forensic analysis of all bids submitted over three rounds of bidding for the tenders in question.

The World Bank said its investigation uncovered evidence of a major cartel involving local and international companies bidding on the NRIMP 1 contracts. The World Bank also emphasized that “the bank’s project team identified further collusion indicators that led the bank to reject the award of the contracts. As a result of this swift action, no bank funds were disbursed to the now-sanctioned companies,” the bank said. Good for the bank but made no difference for us because tax money was used for the rejected projects instead.

According to former NEDA Chief Winnie Monsod, the most convincing piece of evidence was an email message to the investigator from one of the contractors. In that message, he predicted not only who the winners of the bids to be opened later that day would be, but also how much above the agency estimates their winning bids would be, and how much above the agency estimates the losing bids would be. When the bids were opened, the results were exactly as predicted.

The Bank rejected claims that the contractors were not given a chance to defend themselves. The bank said they received a Notice of Sanctions Proceedings in May 2008, “containing all alleged wrongdoing, and each was given 90 days to submit a response in their defense and contest the allegations against them.”

The World Bank added all these companies were also offered the opportunity to request a hearing before the bank’s Sanctions Board. The Sanctions Board — which is comprised of eminent external legal experts and senior bank officials — took all of the companies’ submissions into account when it made its decision. And yes, Philippine officials were given copies of findings and basis for such findings so action can be taken according to our laws.

It is said where there’s smoke, there’s fire. What we have here is already a conflagration and our established system to deal with it is not working. If ever we amend the Constitution, some thought must be made to prevent the Ombudsman from being made a captive of the appointing power. The present system does not work.

Hooray for the meddlers! They have kept the worst of our governments from totally abusing our national treasury. Maybe we should also ask the US government to tell us what they know about the fertilizer scam. I am sure they had their own investigation because some amount of American tax money was also reportedly misused in that scandal. I understand there are also anomalies in the awarding of highway projects funded by the Japanese government. JICA should investigate.

Shaming the scoundrels internationally may be our only recourse.

Literary movers and shakers

We got this reaction to last Friday’s column from A. Reyes, a Pinoy expat working in the New York financial sector.

Former Goldman Sachs CEO Henry Paulson was an English major. Former Lehman Brothers CEO Richard Fuld was a fighter pilot. Former Bear Stearns CEO James Cayne did not finish college. Former Merrill Lynch CEO John Thain majored in Electrical Engineering, while his predecessor Stan O’ Neal majored in business. Former Citigroup CEO Chuck Prince was a lawyer. Chris Cox, who chaired the US SEC for three years before the Bernard Madoff scandal erupted, was also a lawyer.

None of these people apparently had formal training in graduate-level economics or financial engineering, published dissertations or obtained a finance charter and yet they were entrusted to oversee billions of dollars in financial transactions involving complex products and services such as derivatives and hedge fund management. Look at the financial mess that they have left behind.

GE CEO Jeff Immelt did not study traditional engineering and yet he was promoted to lead an industrial concern. Is it surprising that financial services has become GE’s largest source of revenues and a major drag in the company’s stock price under the present credit crisis?

Why are they now making up excuses such as “We couldn’t have foreseen these problems!”?

The lesson to be learned from the above is that people should not be hired into jobs that go beyond what their minds can handle. Someone who has never designed a motor has no business becoming a CEO of an engine company. In a similar token, someone who has no technical understanding of credit, economics and financial engineering has no business becoming CEO of a company that underwrites loan-backed securities.

The Philippine SEC should have appointed a trained actuary and risk manager to oversee pre-need companies. The more complex the business, the more imperative it is for its senior executives to have minute technical knowledge of the concern they are overseeing. Any non-objective reference to the “human side” of things when considering their hiring or promotion would only do more damage to the business.

Gift certificates

We also got this e-mail from Perry Alcudia, a pre-martial law Radyo Patrol reporter who is now an HR executive in Los Angeles.

Hey, Boo!

In California it is illegal to impose a deadline or expiration date on a gift certificate that was PAID FOR by the purchaser. It is proof that an item, a product or a service was purchased and paid with money. Until those things are delivered, the purchase contract is still in place and therefore, should not subject to expiration dates.

Some terms to describe these gimmicks are theft, fraud, robbery and trickery and should be punished severely. If a company, however, “issue” a certificate as part of their promotion to have the public try their product, a specified deadline can be imposed.

If there isn’t a law to mandate this yet, there should be.

Difference

Here’s something from Lal Chatlani.

The Boss to a lady aspirant to the post of a Secretary: “What is the difference between a paper clip and a screw?”

Lady: “I have no idea; I have never been paperclipped.”

Boo Chanco’s e-mail address is [email protected]