In search of a Customs Chief

BIG CORRUPTION scandals are obstructing matuwid na daan.

PNoy wants to make matuwid na daan his legacy, and he is aware that time to complete his commitments is getting shorter.

With so little time and so many things to do, PNoy must likewise address the headline scandals. The alleged extortion attempt with respect to a supply contract for the Metro Rail Transit, the diversion of the Priority Development Assistance Fund of senators and congressmen, and the corruption at the Bureau of Customs (BoC) threaten to erode matuwid na daan.

His delivery of harsh words directed at the BoC in his state of the nation address is meant to warn public officials, especially his allies, to stop making lame excuses for not meeting goals and not taming corruption. The target therefore is not just BoC but the whole bureaucracy.

BoC head Ruffy Biazon complained that the agency is difficult to change because the malfeasants have high-level politicians as backers. This is tantamount to saying that he is helpless.

Commissioner Biazon speaks out and acts only when his job is on the line, only after being reprimanded by PNoy. The leader of a bureau that is a snake pit cannot be one who engages in self-justification. Moreover, Biazon’s innocence and his friendship with PNoy cannot undo his pusillanimity and incompetence.

It is disappointing that Commissioner Biazon forgot all about delicadeza. It was not enough to offer his resignation to PNoy. The most appropriate course of action, which he can still do, is to make his resignation irrevocable. This would have been a graceful and honorable exit. Integrity and courage — there are attributes that he could have learned from his father.

Nevertheless, to be fair to Ruffy Biazon, we acknowledge that reforming the BoC is very tough. The BoC leadership faces the thankless job of both increasing revenues substantially and reducing corruption.

An essay written by Noel de Dios and Li de Dios, which was published in BusinessWorld in April 2013, explains why the BoC is a tough nut to crack. The essay titled “BIR versus BoC” discusses distinct characteristics found in BoC that make reforms more difficult to put in place.

The couple offers three reasons why BoC reforms vis-à-vis those for the Bureau of Internal Revenue or BIR are more demanding.

The first reason is that unlike BIR transactions, which occur after the business operations for the period (e.g., filing of income tax), BoC transactions happen before the business or investment activity is completed.

In the case of BIR transactions, the businessman had already generated a profit upon filing a return. In the case of BoC transactions, the profit has yet to be realized. Further, the outcome is uncertain and is contingent on the decision of the BoC agent. Thus the threat of hold-up in dealing with the BoC is very real and damaging. The corrupt BoC people surely know how to exploit this situation. To quote the de Dios couple, “the ability to impose large potential losses… increases the bargaining power-and therefore corruptibility — of Customs’ officials, as well as the private sector’s willingness to accommodate them.”

The second reason is that BoC transactions are frequent and involve only a few accredited brokers and their BoC counterparts. This situation of having a club breeds familiarity among all the parties involved in the transactions. In turn, familiarity with one another and the frequency of transactions are conducive to cooperative corruption.

The third reason is the physical nature of BoC transactions. This again contributes to corruption. In BIR dealings (auditing, for example), physical contact can be avoided since the transactions do not involve physical goods.

The imported goods have to be physically examined. The goods also pass through different people, who can demand a slice of the rent. Thus as Noel and Li de Dios observe, even the position of BoC security guard is coveted by many.

The three reasons — ex ante transactions in the BoC, the frequency of transactions and the familiarity of faces, and the physical nature of the transactions — suggest that a reshuffling of personnel is not enough.

Of course, firing or reshuffling venal BoC officials can slow down the corruption in the short term and earn brownie points for the leadership.

But deeper institutional changes are complicated. On paper, some of the reforms look easy to do, but in reality, they have not been realized. For example, the computerization of the BoC should have been completed many years ago. Getting third-party information, including close coordination with the BIR, is not extensively promoted. Removing the monopoly of the few accredited customs brokers is not talked about.

The role of leadership is therefore most critical. Commissioner Biazon, despite his decency and innocence, has been given almost two years to reform BoC. But like his predecessor Angelito Alvarez (also said to be a good man), Biazon has failed to do so.

The de Dios couple wrote: “It is telling, perhaps, that while one can cite [a few] BIR heads who in the past cracked down on corruption and raised revenue effort, one is hard put to name a Customs commissioner who did both. Indeed what comes to mind are the many who did neither.”

To reiterate, Biazon’s graceful exit takes the form of making his resignation irrevocable. He must spare PNoy the trouble of explaining to the public Biazon’s retention even as he has been reprimanded for the BoC’s poor performance.

But the question is: Can someone out there really change the BoC?

Why not Kim Henares? She has courage and tenacity. And she does not avoid controversy; that’s why even civil society groups have criticisms against her. I have written elsewhere that Henares is not the public official who will favor friends or allies in the context of doing public service and serving the public good. The so-called political backers of corrupt BoC officials will shudder in the face of a Henares leadership.

Moreover, the reforms she has successfully instituted at the BIR can be applied to BoC. Of course, as the de Dios couple has pointed out, the BoC is a different animal, which cannot be tamed in an instance. Nevertheless, the work she is doing at BIR is very compatible with the challenges that BoC faces.

The question is: Is there a legal obstacle to Henares being the concurrent head of the BIR and BoC?

(Sta. Ana coordinates Action for Economic Reforms. The next column will deal with the question whether a legal obstacle prevents Henares for being the concurrent head of BIR and BoC.)

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