Sunny days in customs

March 11, 2014 at 8:07am

Something big is happening at the Bureau of Customs. With the full support of President Benigno Aquino III and the strategic guidance of Finance Secretary Cesar Purisima, a group of courageous leaders have taken over this critical government agency, letting the sunshine in the dark corridors of its offices, with a radical reform process that just might permanently change its culture.

Point man in this herculean effort to reform Customs is newly appointed Customs Commissioner John Philip Sevilla, “Sunny” to his friends and to us at the Ateneo School of Government where he once taught. He comes to this position from the Department of Finance where he was undersecretary in charge, among others, of privatization. I have known Commissioner Sevilla for more than five years now and I consider him the epitome of the effective and ethical servant-leader. He has a formidable work ethic and strength of character, and his simplicity and thriftiness are legendary; he is definitely incorruptible. 

Additionally, Commissioner Sevilla knows exactly what he and his leadership team in Customs is up against—and that what is required is system change in the most fundamental way. In fact, as he pointed out to me a couple of weeks ago, there is really no working system in the bureau, which in my view is the condition that makes it possible for corruption to thrive in the bureau.

Commissioner Sevilla is not alone in this reform effort as the President in fact appointed a completely new leadership team in the bureau; the only time something like this has happened was in the aftermath of the 1986 Edsa revolution.

This is not the first time however that reforms have been tried in the Bureau of Customs. Indeed, in its 112 years of existence, the bureau has undergone several reorganizations. Since its inception as a formal organization in 1902, around 42 Customs Commissioners have been appointed. Very few stay for more than a few years—an indicator of the difficulty of the job.

Some say that syndicates within the bureau have become so well entrenched that they make customs commissioners look incompetent, resulting in their being booted out or forced to resign out of frustration and exasperation. Resigned Deputy Customs Commissioner Danilo Lim was reported to have said that his job was more difficult compared to staging a coup. This might as well be since after so many reorganizations, a number of revisions of the customs laws and a seemingly never-ending stream of customs officials, the bureau remains a hotbed of corruption. This perennial bane is attributed by many to a number of factors including outdated collection and other customs processes, porous borders, lack of facilities and trained personnel to man and monitor them, well-entrenched syndicates inside the Bureau, unscrupulous prosecutors and the so-called hoodlums in robes who are only too eager to issue temporary restraining orders or allow smugglers to fly the coop and go unpunished, and the propensity of importers and exporters to bribe to be able to take short-cuts.

For the record, I do not believe that everyone that has worked and is working in the Bureau of Customs is corrupt. What is clear though is that they system has gotten worse through the years. Ironically, it appears that corruption has reached its peak in the first three years of this Aquino administration. Certainly the loss in revenue to the government from smuggling has been staggering—over 65 billion pesos a year according to a February 2014 report by US-based Global Financial Integrity.

The example of rice smuggling is illustrative of this challenge. By some estimates, around 1 trillion pesos have been lost to the government by way of taxes in a decade of unabated rice smuggling.  The government however, through the Bureau of Customs, has begun to fight back. Lately, a number of smuggled rice shipments has been intercepted and seized. While some courts have issued temporary restraining orders against these actions of the Bureau, the government has not just stood back and has filed the necessary legal actions in the Supreme Court. The latter in turn has acted fast and has already issued an injunction against a Davao City court that had issued a TRO against the bureau.

An important development in the Bureau of Customs is the policy of transparency now being implemented by Commissioner Sevilla. Accordingly, the bureau will now upload all formal transactions online on its website. Sevilla reasoned: “The transparency initiative is extremely important xxx because we want the public to understand that we are not trying to hide anything.”

As to systems, Commissioner Sevilla is pushing for clear, simple, and electronically-based workflows and procedures which will allow the bureau leadership and the public to know and monitor what’s going on, particularly in areas where customs officials have discretion. These have to be electronically based because it’s the only way that the thousands of daily customs transactions can be tracked, monitored, recorded and analyzed.

The bureau has also intensified its campaign against smugglers by regularly filing cases against them. It has also made serious efforts to plug revenue leakages because of undervaluation and misclassification of imported goods. That the reform program of the President is slowly paying off is seen in the improved tax collections. In November to January, the bureau has increased collection by 19 percent as compared to the previous year.

The fight against corruption in Customs remains fraught with difficult challenges. But the bureau’s leadership is committed to closing up all these gaps in the system to make it harder for our people to do the bad thing, and easier for them to do the good thing. Hopefully, with customs reforms in place and even more initiatives now in the pipeline, and a good leadership team on top of these, we can expect more sunny days ahead at the Bureau of Customs.