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CORRUPTION PERCEPTION WORSENS AMONG BUSINESS LEADERS

21 February 2010

The Social Weather Stations (SWS) said that business leaders and managers have little confidence in eradicating corruption in many of the spheres of national government bodies, while have slightly higher hopes for cleaner business dealings with local government.

"Managers consider public sector corruption to be high and stagnant. The farther from the local level, the more that corruption happens," SWS President Mahar K. Mangahas told a briefing which presented the research institute's Surveys of Enterprises on Corruption.

Conducted last Nov. 3-Dec. 5, 2009, the SWS survey said 64% of the respondents declared that there was a lot of corruption in the public sector, unchanged from a year earlier and up from the 61% recorded in 2007.

Most of the corruption was said to happen at the national government level, with 94% of respondents from Metro Manila, 89% in the Cavite-Laguna-Batangas area, 91% each for Cebu and Davao, and 97% in Cagayan de Oro and Iligan City saying so.

About 48% said most or almost all companies in their line of business gave bribes to win public sector contracts, up from 45% in 2008 and the same as in 2007.

The annual renewal of local business permits and licenses is easier now compared to three years ago, according to 70% of enterprise managers in Metro Davao, 67% in Cagayan de Oro/Iligan City (CDO-I), 61% in Metro Cebu, 48% in CALABA, and 47% in Metro Manila, based on the 2009 SWS Surveys of Enterprises on Corruption, conducted from November 3 - December 5, 2009 [Chart 1].

This is reported in a new section on Transparency of Local Government Procedures in the 2009 SWS Surveys of Enterprises on Corruption.

In another special section of the survey, dealing with the 2010 elections, 31% of managers expect companies to donate to political campaigns.

Highlights of the 2009 SWS Surveys of Enterprises on Corruption, presented today by SWS President Mahar Mangahas at the "Forum on the SWS 2009 Surveys of Enterprises on Corruption and Anti-Corruption Strategies" organized by The Asia Foundation, Social Weather Stations, and the Hills Program on Governance- Asian Institute of Management at the AIM Conference Center in Makati City, include:

1. Managers consider public sector corruption to be high and stagnant. The farther from the local level, the more that corruption happens.

2. Sincerity in fighting corruption varies across agencies. It was notably up in trial courts, Armed Forces of the Philippines (AFP), Department of Justice (DOJ), Government Service Insurance System (GSIS), Commission on Elections (Comelec), and Presidential Commission on Good Government (PCGG). On the other hand, it was notably down in Commission on Audit (COA), Department of Finance (DOF), Department of Budget and Management (DBM), Department of Transportation and Communication (DOTC), Presidential Anti-Graft and Corruption (PAGC), Department of Environment and Natural Resources (DENR), and Office of the President.

3. On government efforts to fight corruption, half of managers see improvement in transparency in bidding for a government contract.

4. The proportion of enterprises solicited for a bribe was below the 2008 peak, but still a high 60%.

5. Majority of managers find transparency in local government procedures. At least two-thirds do not use intermediaries in local business permit renewals.

6. Two-fifths of managers sense improvement in public access to information; three-fourths support passage of a strong law on right to information.

7. Managers consider private sector corruption to be less than public corruption. However, the trend is flat.

8. Willingness of enterprises to fund an anti-corruption program is back to 5% of net income, similar to 2005 and 2006 after a slump in 2007.

9. Managers reporting honest business practices in their sector remain few.

10. In voting for President, "fighting corruption" and "creating jobs" are first and second priorities of both managers and the public. Third priority is "promoting a good business environment" for managers, but "eradicating poverty" for the public.

11. Managers consider the business climate to be better than 2008.

The forum also featured Prof. Michael Johnston, who presented his ideas on key strategies in fighting corruption in the country. (Prof. Johnston's recent book, Syndromes of Corruption: Wealth, Power, and Democracy, won the 2009 Grawemeyer Award for Ideas Improving World Order. He was also cited as one of the '100 Most Influential People in Business Ethics 2008'.)

Donations to election campaigns

Compared to 2004, donations from companies to the 2010 election campaigns are expected to come from fewer contributors, to be smaller in size, and to be more voluntary.

In 2009, 31% of managers expect that enterprises will donate to political campaigns, consisting of 17% saying companies will donate to more than one candidate for a single position and 14% saying they will donate to only one candidate for a single position [Chart 2].

In 2004, 45% of managers expected companies to donate to political campaigns, consisting of 33% saying they will donate to more than one candidate for a single position and 12% saying they will donate to only one candidate for a single position.

In 2009, 44% of managers estimated the amount of company donations to political campaigns to be less than Php50,000, 15% estimated it at Php50,000-99,000, 19% at Php100,000-499,000, 6% at Php500,000-999,000, and 12% at Php1 million and above [Chart 3].

In 2004, 41% estimated it to be less than Php50,000, 15% estimated it at Php50,000-99,000, 25% at Php100,000-499,000, 6% at Php500,000-999,000, and 9% at Php1 million and above.

In 2009, 24% of managers say the company donations to political campaigns are voluntary, 64% say they are partly voluntary and partly solicited, and 12% say they are all solicited [Chart 4].

In 2004, only 11% say these donations are voluntary, 75% say they are partly voluntary and partly solicited, and 14% say they are all solicited.

Managers reported that the two most important reasons for companies to donate to political campaigns are "the company believes in a candidates' platform" (68%) and "the company might need help from a candidate in some future problems" (50%).

Survey Background

The 2009 SWS Surveys of Enterprises on Corruption were conducted from November 3 -December 5, 2009 using face-to-face interviews of 550 top and middle-level enterprise managers (error margin of ±4%), 366 of whom from randomly drawn Small and Medium Enterprises, and 184 from randomly drawn Large Corporations.
The sample enterprises were drawn from five study areas: 200 in Metro Manila, 100 each from Metro Cebu and Metro Davao, and 75 each from Cavite-Laguna-Batangas (CALABA) and Cagayan de Oro/Iligan City.

The ratings of agencies' sincerity in fighting corruption were grade into Very Good (net +50 and above), Good (+30 to +49), Moderate (+10 to +29), Neutral (-9 to +9), Poor (-10 to -29), Bad (-30 to -49), and Very Bad (-50 and below). Changes were considered "notable" when the rating moved in a different grade.

SWS is a member of the Transparency and Accountable Governance (www.tag.org.ph) research and advocacy project, sponsored by The Asia Foundation.

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Chart 1