Corruption hurts business – consultancy group

THE Philippines has performed poorly in a variety of international standards designed to measure corruption, making it a substantial risk for companies, a

- egies and Assessments ( PAS), the country was ranked 118 out of 137 by the World Economic Forum’s Global Competitiveness Index which measure irregular payments and bribes.

focuses on political and security risk and crisis management, said high levels of corruption create substantial risks for companies subject to strict regulations like the United States’ Foreign Corrupt Practices Act (FCPA) and the United Kingdom’s Bribery Act, in addition to other regulatory regimes.

However, the PSA said the Philippines performed better than many of its neighbors, which have in some cases been cited for

It said two of the FCPA violations related to the Philippines involved allegations of local agents utilizing commission pay a practice widespread throughout much of Southeast Asia.

- sion of luxury hospitality packages for the 2008 Beijing Olympic Games number of countries, including the Philippines – some of whom were contract negotiations.

The second involved the alleged international freight transportation company that happened in the Philippines.

The company allegedly paid and the Philippine Economic Zone $244,000 (P12.6 million) in order to retain business and facilitate the violation of customs regulations, settle customs disputes, and reduce

The company also allegedly paid at state-owned airlines operating in the Philippines to improperly reserve space for shipments and to consolidate shipments.

The charges, according to PSA, resulted in $300,000 (P15.5 million) in civil penalties – a small sum in the context of FCPA violations.

“The violations above point to inadequate internal controls and compliance systems at the violating companies. However, they also point to widespread practices that pose substantial regulatory risk for foreign companies operating in the Philippines,” PSA said.

In due diligence cases based exclusively on public records searches, the group said most allegations involved labor issues, tax evasion and political connections.

Allegations of tax evasion are a concern within the context of compliance because it points to an unwillingness to implement reporting, it added.