The Case of the World Bank Loan and Corona

There are many nuances in celebrating the “more fun in the Philippines” meme.  There is the obvious tourism-friendly advertising and there’s the comedic but darker side to the reality of the Philippines, most especially in its societal and political landscape.

Sometimes  i am saddened, if not at times disappointed, at the lack of initiative Filipinos seem to have on acquiring objective information.  People here are glued to the political news. Most times, they are mere sound bites that cater towards a national conversation.  But the Filipino has always been an emotional viewer and listener.  And it takes a great deal of education, resourcefulness and self-control to restrain oneself from getting swayed hook, line and sinker by the local media.  People perhaps do not have the time to research as much, that they rely on journalists and politicians to present trustworthy news.  Alas, this dependence has also made the ordinary Filipino gullible to manipulations of information, gullible to his own emotional inclinations, making his views blatantly one-sided and biased.

An example of this is a recent story in a series of headlines by major news outlets in the lead up to the impeachment trial of Supreme Court Chief Justice Renato Corona:   the alleged misuse of the World Bank Loan by the Philippine Supreme Court.  However, most Filipinos fail to grasp the history of the WB loan and when it was initially approved.  Filipinos also fail to know the scope and standing of the  WB audit report, and that the loan covered the tenure of three other former Supreme Court Chief Justices: Hilario Davide, Artemio Panganiban and Reynato Puno.  

A Background on the World Bank Loan

The Philippine Judicial Reform Support Project (JRSP) was a developmental initiative funded, in part, through the World Bank in the form of a loan.  The project was formally approved in 19 August 2003 during the time of then SC Justice Hilario Davide.   From the project description stated in the WB operations portal, the objectives were as follows:

The development objective of the Judicial Reform Support Project is to support an accessible judicial system, that would foster public trust, and confidence.

Within this context, the project components will:

1) improve case adjudication and access to justice, through the implementation of modern case management techniques, planning and tools, and the upgrading of information and communication systems. Case management reform will include electronically integrating court processes, enabling analysis of cases, and case management performance of the courts;

2) enhance institutional integrity, by a) strengthening the Code of Ethics for justices, judges, lawyers and court personnel; (b) strengthening the monitoring of the conduct, operations and performance of judges, lawyers and court personnel; (c) implementing the computerized Judicial Performance Management System, within the pilot model courts, and higher courts of the judiciary; and, (d) implementing a gender-sensitive Human Resources and Development Master Plan for non-judicial personnel, strengthening the overall capacities of the Philippine Judicial Academy as well;

3) strengthen institutional capacity through the implementation of a decentralized administration model for the judiciary; installing comprehensive computer-based financial, and administrative systems; developing model integrated court facilities; and strengthening policy, research, and development capabilities, including the establishment of an electronic judicial library; and, 4) assist in strengthening support for the reform process, ensuring that judges, and other stakeholders are able to participate in the development, and implementation of key reform activities.

What Triggered The Review?

According to the Philippine Daily Inquirer, in a story filed Sunday 15 January 2012, a financial review and audit was conducted from 24 Oct to 11 Nov 2011 by the World Bank.  According to PDI, such a review was triggered due to applications for increased disbursements in the latter part of 2011.  Now, this may seem to PDI readers that the disbursements were already done and approved.  Thus, triggering the audit.   However as standard disbursement applications processes go, a request or an application must be first submitted.  It then becomes pending for approval and release until the review has been done.  When you read the PDI article, it seems that the disbursements were already done and approved, and then it triggered a review, which simply goes against lending practices and protocols of the WB or even any corporate lending and disbursement process.  

Plus, when you read the cover letter of the aide-memoire nowhere in it does it state the triggering circumstances for the review.  Such that one cannot find the words “triggered by several withdrawal applications” as indicated in the PDI report. 

Citing an aide memoire allegedly published by the World Bank, the review findings were said to be “unsatisfactory” or “at high risk.”  Now let’s hold our horses for a moment and review certain terminology and standard practices. 

The PDI article, as well as the articles on other news agencies in the country, may be a bit misleading.  Standard to any audit, the scope of the review in terms of time coverage must be seriously considered.  But it was not even mentioned in the papers.  Was the fiduciary review covering all financial disbursements and expenditures  from 2003 onwards?  Or was it only specific to a period in time of the loan?  Somehow, it is quite unlikely that the review is narrowed only to a specific time considering the magnitude of the sub-projects involved and its dependencies on each other.  

What is an aide-memoire?  

In the parlance of international trade and negotiations, an aide-memoire is usually a non-binding proposal.  It is presented as an unofficial message.  Why is it not official?  Normally aide-memoires are not official because they pose no standing to the negotiations such that the party that wrote the document does not impose a commitment to the recipients. The defining word here is the word proposed.  

Also the alleged WB cover letter already gives reference to why such documents are still deemed unofficial (emphasis mine):

Given the deliberative nature of information, some of which is still to be confirmed, the attached Aide Memoire is classified as Official Use Only for the purpose of project monitoring and management, and will not be disclosed to the public

Basically the aide-memoire is a pro-forma at best, and a still unsubstantiated document at worst.  So, the question is:  if the alleged document truly came from the World Bank, then one does have to question why it was leaked and subsequently peddled as verified information by the media.

Another matter that needs to be said is the listing of issues in the cover letter.  Normally, in reviews of great import, and in general good business correspondence, the order by which the issues are highlighted are jotted from most important to the least important.  Upon reading the cover letter of the aide-memoire, issues with regard to ineligible expenditures are ranked number 4 out of the 8 numbered points in the letter.  In reading the covering letter, one gets the impression that the actions suggested for closure is not so much of a major non-compliance but more as an observation.

Refunding of Ineligible Expenditures

Also, the refunding of ineligible expenditures seems a matter of course and process.  As a simple example  in the corporate world, we are prone to the same process mistakes. Such that Finance would tell the Operations Department not to post the expenditures under the Executive budget but post it against one’s departmental jurisdiction.  It does not automatically connote malice on the part of the Operations Department to use funds against someone else’s domain.  Sometimes, if not often, it is not malice or corruption that triggers the mistake, but the lack of understanding of what expenditure items are considered eligible and ineligible.  The refunding request as stated in number 5 of the aide memoire cover letter optimistically mentions that the refunding is already an ongoing activity initiated by the Project Management Office (PMO).

The World Bank Makes An Official Statement

Despite the media frenzy over the WB loan and the Senate investigation it has triggered, the World Bank has (finally) officially made a statement disowning the JRSP review and aide-memoire.  However,  at the time this blog is being written, only Manila Bulletin has covered the story and no other newspaper or TV news agency has featured World Bank’s reaction.

The World Bank even stated in its interview with Manila Bulletin this:

Erika Leann Lacson-Esguerra, World Bank program assistant for external relations, said Monday the bank did not release to the media a supposed memo regarding the “unsatisfactory” progress of the high court’s loan.

“This email message did not come from the World Bank. Any official statement from the World Bank will be posted online (www.worldbank.org.ph),” Lacson-Esguerra said.

Manila Bulletin also revealed the following:

Data from the World Bank’s website revealed that the pace of implementation has picked up under Corona’s leadership, saying more than $1.3 million was disbursed in the first half of 2011 alone.

The bank attributed the delays to implementation and coordination issues in the Supreme Court, lengthy procurement processes as well as changes in the judiciary leadership.

The World Bank also cited the severe Typhoon “Ondoy” in 2009 as a setback because of the damage it brought to courts and records.

Alas, the Filipino is duped into a misinformation rollercoaster once more.  Forces are out there capitalizing on his inability to research and think for himself.  And the politically-charged media and personalities continually are pandering to his very weakness.

Yes, the first rule is still to know.

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