Damaged reputation

Serious and alarming.

That, in polite language, best describes the World Bank report on the handling of the $21.9-million loan it extended to the Supreme Court to help make the country’s judicial system more effective and accessible to the public.

Dubbed the Judicial Reform Support Project, the program was started in 2003 and will end on June 30 this year.

The report stated that the project is “high risk and unsatisfactory on project management, project procurement and financial management dimensions,” and that the tribunal’s “project statements can no longer be relied upon.”

The fiduciary failures were reported to have begun in 2010 and accelerated in 2011, or when Chief Justice Renato Corona was at the helm of the tribunal.

If these findings were made by the Commission on Audit, another government agency, or a private auditing firm, it would be easy to brand the report as biased or politically motivated considering the acrimonious relationship between President Aquino and Corona.

No, it was the World Bank, an international development institution composed of 187 member countries, that issued the critical statements.

Since its creation in 1944, it has been providing low-interest loans and financial grants to developing countries to help improve their living conditions.

Precautions

Since the funds of the WB are sourced from the contributions of its member countries (or in effect, from the taxes paid by their citizens), its management seriously takes to heart its fiduciary responsibilities over this money.

Reports of some of the proceeds of the loans or grants finding their way to the pockets of corrupt government officials or in Swiss bank accounts has compelled the WB to impose stringent measures and procedures in the disbursement and accounting of funds.

I had the opportunity to participate some time ago in the negotiation of a WB loan to a private company, with the Development Bank of the Philippines acting as conduit for the release of the funds and repayment of the loan.

After an extensive discussion of the rules on documentation and loan drawdowns, a member of the WB panel handed to our group a three-inch thick manual containing the “rules of ethics” that the loan beneficiary has to comply with before, during and after the release of the funds.

It outlined, among others, the procedures to be followed in awarding the project to be financed, the contents of the progress reports that should be submitted every quarter, and the audit report of an independent project manager.

I recall a provision that states that the WB can conduct a spot audit on the project upon 24 hours’ prior notice and that the company is obliged, under pain of holding further loan releases, to make available all the documents that may be asked by the auditors.

Presumption

From the way the manual was worded, I got the impression that the WB worked on the principle that “borrowers are presumed to be crooks unless proven otherwise.”

Considering its sad experience in the past about fund diversions, it cannot be blamed for adopting a guarded approach in dealing with developing countries (the politically correct term for so-called Third World countries).

After the project subject of the loan was completed, the WB submitted a report to the contracting parties on its comments or observations on their compliance with the terms and conditions of the loan.

The report was professionally written. It pointed out the flaws in the bidding process, inefficiencies in project implementation and gave suggestions on how to reduce the costs for similar projects in the future.

Although some parts of the report were too blunt for comfort, there was no reason to doubt the good intentions behind its submission.

After all, outside of the interest payable on the loan (which was concessional and therefore low by market standards), the WB had nothing to gain from making unjustified criticisms or pandering to the ego of the parties through fulsome praises.

Reputation

The acts of impropriety and violation of disbursement rules imputed to the tribunal threaten the credibility of its earlier decisions in cases involving misappropriation of public funds.

The tribunal always invokes the mantra “public office is a public trust” whenever it affirms the conviction of public officials accused of helping themselves to the taxpayers’ money.

Lowly court officials found guilty of pocketing court funds or failing to account for payments received from litigants are penalized with dismissal and forfeiture of retirement benefits.

The tribunal will have to walk the talk on its “sermons” on good governance and integrity in the public service.

It has to come up with a credible explanation about the willful disregard of the rules on the application of the proceeds of the loan, including the mismanagement and delay in the implementation of vital project components.

With its reputation already battered on account of the adverse publicity that has accompanied the impeachment trial of Corona, the tribunal should refrain from claiming that the WB report is a demolition job or a disguised assault on the integrity of the judiciary.

If mistakes were committed, there is no dishonor in admitting them; if heads have to roll, even if they belong to fair-haired boys, to prove the sincerity in making such admission, so be it.

At present, the country’s rating in the Global Competitive Index leaves much to be desired. Part of the reason for the poor standing is the perception that our laws are not equitably enforced or applied.

The WB report on the tribunal could further pull down that rating.

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