Black hole

The upper chamber of the nation’s biggest and most successful Laundromat continued its probe yesterday into reports that $81 million stolen by hackers from the Bank of Bangladesh account in the US Federal Reserve had vanished after being funneled through the Philippines.

Congress ran out of time to pass the Bangsamoro Basic Law and the Freedom of Information Act, but senators have now found time to conduct yet another probe – and be assured of media exposure in the crucial weeks before May 9. Admittedly, the details being unearthed are interesting, although the probe can also be conducted in public by government prosecutors. But then they’re not running for elective office.

We’re in the global limelight again, for the wrong reason. Foreign media reports describe the Philippines as a “weak point” in the global financial system.

Only threats of a blacklist by the Financial Action Task Force, which could make doing business (even more) difficult in the Philippines, forced our lawmakers to pass the Anti-Money Laundering Act in 2001. And even then, you could smell self-preservation a mile away in the predicate crimes exempted by Congress from AMLA coverage, such as bribery, malversation and tax evasion. It took more warnings from the FATF before bribery and malversation were included; tax evasion remains excluded.

While the international community tightened the screws on money laundering to fight terrorism, we didn’t have a law defining the offense so it was excluded from AMLA for many years.

And while jueteng and masiao were specifically mentioned among the crimes covered, casinos were exempted, thanks to the efforts of lawmakers particularly from provinces where there are government-supported gaming facilities. Their excuse, which even daang matuwid is buying, is that the exemption is needed to encourage more investments in state-regulated gambling.

Under AMLA, Congress set the threshold amount for suspicious transactions that must be automatically reported to the anti-money laundering police at P4 million – reasonable for taipans and major foreign investors, but also a comfortable threshold for plunderers. Lawmakers have also consistently resisted any proposal to ease bank secrecy laws.

It didn’t take long for launderers to see the loopholes in the AMLA and exploit them. And so here we are, at the center of an embarrassing financial scandal, with casinos and our banking system under international scrutiny.

Unable to trace the $81 million coursed through a bank and three casinos in Manila, a senator described the gaming centers as a “black hole.”

And who created the black hole?

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There’s another black hole that no senator or congressman is about to subject to scrutiny by the anti-money laundering police: campaign finance.

Like proposals to curb dynasty-building, proposals to regulate campaign finance have never stood a chance in Congress.

While Filipinos have long suspected that dirty money – from jueteng, smuggling, carjacking, kidnapping, bank and armored van robberies, and the misuse of public funds – finance political campaigns, the truth has not been established because there has never been any serious scrutiny of campaign expenditures. Politicians have perfected the art of leaving no paper trail in accepting, spending or stashing away campaign donations.

Recent Supreme Court rulings on campaign advertising and related activities have been a boon to anything-goes campaign fund raising and spending.

Many anomalous sweetheart deals have their roots in opaque campaign financing. Daang sarado is surely aware of this, but it has shown little interest in campaign finance reform.

There are only a handful of individuals who are major financial supporters of political campaigns in this country. There’s no such thing as a free lunch; they are expected to demand payback for their substantial investments in a campaign. They influence all three branches of government, wielding clout in lawmaking, regulatory bodies, executive policy making and even judicial decisions all the way to the highest court. Our rules, structures and institutions are designed to feed their needs and those of the politicians who benefit from their calculated generosity. This state of affairs is one of the causes of social injustice, and among the reasons why inclusive growth remains elusive.

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Some time after the 1986 people power revolt, the Catholic Church was criticized for accepting substantial donations for charity from one of the top cronies (and rumored dummy) of dictator Ferdinand Marcos. Jaime Cardinal Sin, at the time the archbishop of Manila, stirred controversy when he explained that it didn’t matter where the money came from as long as it was used for good.

Critics pointed out that the only situation where this Machiavellian explanation is OK is when dirty money is seized by the state and used for the greater good while its source is punished for illegally amassing the funds.

If dirty money is raised, say through jueteng or technical smuggling, for example, and donated to the Church to win brownie points with the bishops or to burnish one’s public image, it’s called money laundering and must be penalized.

Politicians think campaigns are like charity: it doesn’t matter where the money comes from, as long as it contributes to victory. Any candidate who denies thinking like this is a hypocrite and liar.

Our system is designed to protect the interests of the political class, particularly those entrusted to craft laws. It’s like our agrarian reform program; it was designed to fail by our landowning lawmakers.

In this election season, a disgraced but favored official of daang sarado is said to be running jueteng operations nationwide, with some of the massive proceeds believed funneled to certain campaign kitties.

Black hole? Campaign finance is the biggest of them all.