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Reboot the Customs bureau, pronto!

Of late, Mayor Rody Duterte, asked Congress to be allowed to right-size the bureaucracy. Some, he said, have overlapping functions, others have redundant justifications, and, still, many others are simply top heavy for their mandates. Indeed, many agencies are inappropriately sized—some oversized, some undersized, and a sizeable number needs to be re-sized. Rightsizing perforce comes very appealing.

The Chief Executive sounded this call apparently because his war on corruption seems to be getting nowhere. The President’s chagrin is easily understandable—he campaigned on a platform of drug-free, crime-free, and graft-free Federal Philippines.

To the latter he seemingly has thrown in the towel—Federalism is still the key, but it will not happen during his term, he seemed to have said. But we set that subject aside for the moment.

The drug-free mission is on target, and he is still hot on it; but, whatever gains his administration is getting from its war on drugs seemed being sabotaged by the tentacles of graft and corruption. Corruption has been eroding the gains of this administration, and the President is getting exasperated midway in his term.

As a matter of fact, taking a lift from Pogo The Thinker, Duterte told the nation that “he met the enemy face to face—Us!”

With what happened lately: the botched 75M “tax-tortion” involving BIR agents, the 50M Solaire Bribery of the top dogs in the Immigration bureau early on, the STL brouhaha that caused the Presdiential order to close all numbers games, and very recently, Senator Lacson’s PhilWealth exposé against the Duques—these are just some additions to what have become a regular fare in the bureaucracy.

Back to the war on drugs, the President is unrelenting, and as he promised, until the last day of his term. But the drug menace has to be addressed not just on the demand side—the users and drug addicts; but on the supply side, as well—the pushers and the filthy rich.

Like other countries, the Philippines is not just destination of illicit drugs, we are transit point and origin as well. But unlike other countries, ingress and egress to and fro our territory are possible only through air and water, we have no land access—unless we’re talking of the ecozones that are, by law, regarded as separate customs territories.

More to the point, the Chief Executive’s frustration is not baseless, such that during his 4th State of the Nation Address (SONA), he lauded customs for the spike in collections, but he did not lose time to stress that it would have been more were corruption is effectively addressed by the port-based agency. And, his frustrations apparently is made more grounded because his administration is failing in both of his drug-free and graft-free campaign platforms.

Yes, the 2000 missing containers, the 6.4B Shabu-in-Cylinders, the 11B Meth-in-Magnetic Lifters, the 1B Shabu-in-Tapioca, and the missing 641 containers in between the Port of Manila and the Port of Subic, can make up Exhibits A to AAA up to Ad nauseam, if you will. And many say, corruption in the customs is endemic.

True, and it is not just in Philippine customs—its worldwide that even the Secretary General of the World Customs Organization, James W. Shaver, in his Paper titled “Defeating Corruption in the International Trade Environment: A Global Vision”admitted that “[t]here are few public agencies in which the classic pre-conditions for institutional corruption are so conveniently presented as in a Customs administration.”

And Shaver suggested the reasons why, he said: “The potent mixture of administrative monopoly coupled with the exercise of wide discretion, particularly in a work environment that may lack proper systems of control and accountability, can easily lead to corruption.” But, if you entertained the thought that Shaver must be referring to the Philippines customs bureau, you are forgiven for how can the earlier litany of illegal drug trade happening through our ports happen without corruption?

Dear Robert Kliitgard of the Rand Graduate School in Sta. Monica, California had a formulaic expression of why corruption exists, he said: “corruption equals monopoly of authority, plus wide latitude of discretion, minus accountability.”  Put differently, Kliitgard suggests: C=M+D-A. Kliitgard then validate and strengthens Shaver’s.

While corruption is not an exclusive domain of the customs administrations worldwide, it is the customs bureau where the DNA of corruption is very much evident.

And President Duterte’s frustration is not without reasons—all the three (3) military-minded customs chief he commissioned to cleanse the agency have clearly failed—and continues to fail, so much so that he summoned some 64 customs executives to Malacanang for the Presidential rebuke (although knowledgeable port watchers said the President was given a bum steer because the listed men and women were not really holding executive level positions, while still others claim the list submitted to Malacanang was clearly sanitized). It was perhaps very disappointing to the President because he had high hopes for retired military men heading problematic offices to succeed.

Methinks, though, it is unfair to blame the customs leadership alone; the agency’s operating systems, including its enabling law when ranged against the country’s international commitment to facilitate trade and commerce will make its border control mechanism vulnerable and inadequate to respond to systems risks, especially against illegal financial flow via mis-invoicing.

This makes Customs a tough nut to crack—unless we reboot its operating system, retrofit its structure, and retool its people, the Presidential chagrin will linger till the last day of his term. This is what is meant by James Shaver’s description of all customs administrations worldwide, and why they are so, as figured out by Kliitgard.

So, some things gotta give—and it must be the bureau’s operating systems. Today, the Customs Commissioner (CusCom) is everything in the port, he makes the rules, implement them all, or suspend some of them, and interpret their meaning. Even the regular courts are proscribed from interfering on certain matters over which the customs collectors have exclusive jurisdiction. As if it is not enough, no customs enforcement by other law enforcement agencies can be done unless they are rightfully deputized by the CusCom. And, it does not end there—no action can be maintained in the courts of justice without the written authorization of the CusCom. If you don’t call that monopoly of authority, how else in the world should it be called. And we don’t need to be Kliitgards to be able to decipher the centralized authority in the hands of the CusCom.

Even compromises can only be done by the top honcho of the agency, and you don’t penalize the CusCom even for mistakes in his decisions.

So, what should be done?  How?

Offhand, let us decouple the assessment and collection concerns of the bureau from its enforcement functions. In short, we realign the assessment and collection functions of the BOC to a new Customs and Excise Service in the BIR; while we strengthen Customs Intelligence Enforcement and Prosecution Service operating in a rightsized structure—temporarily under the Office of the President (OP), were it could even become the core of a unified customs-immigration-quarantine-security (CIQS) border control and management office.”

In that way the BOC ceases from being a conflicted agency. And you don’t even need a military-at-the-helm (MATH)—an evidence-based decision maker, in the mold of Parayno, will do. But, mistake me not, I have nothing against MATH—a great number of them were good administrators, i.e., Colonel Ramon Farolan of BOC, Colonel Mariano Santiago of BLT, General Alex Aguirre of the OP-ES, and, many more—but the space is uncooperative for us to be able to present an honor roll.

So, let’s not be unfair to CusComs past and present. It’s simply the bureau’s operating systems that are the culprit. But isn’t the CMTA a very new law?

Yes, it is! But, it did not really address the Kliitgard formulation. The CusCom is still singularly powerful that he can even maintain the same top heavy structure of the old 7-deputy of the TCCP, when the CMTA has pegged the maximum at 6 and the minimum at 4–in fact, even 6 at the max and 4 at the min is still top heavy; and, we still have an Intelligence Group (IG) that does enforcement functions and an Enforcement Group (EG) that does intelligence tasks–yet this much elaborate set up failed to address the causes of the Chief Executive’s frustrations of late. And this has nothing to do with the person of the CusCom; it surely has something to do with the operating systems of the customs.

Indeed, not necessarily a case of bad people than it is of bad system—and probably made worse when this bad system is left in the hands of bad people.

The Customs, perforce, must be rebooted.

Abolished? No, way; re-align its functions, rightsize its organization, and resort to a rule-based operation should be pursued to the hilt. It should resort to and continuously update its technological architecture, except its PINDOT technology—deliberate hanging of the computer system, if you got what I mean. Come on, guys, cut it out!

Privatized? Well, who says graft and corruption is alien to private sector operation?

Let’s listen to Lynda Chalker, a former British minister of state and has long joined the Transparency International (TI)—a global leader in anti-corruption interventions, she said: “Corruption is a fact of life in all corners of the globe,” and we got “no magic wand at our disposal,” this, she said, as she addressed a thousand delegates from more than 90 countries attending an international forum in Lima, Peru.

If you think, privatization will address smuggling and corruption, think again: for who misdeclare, who mis-invoice, who resort to “benchmarking,” who undervalue imported potato for fries, who undervalue imported liquor?

The key I guess is to do away with the clashing mandates of the agency, and empower it to shift tactics as the situation develops—it should proact, not react.

Split the agency in two separate offices: assessment and collections under a different boss, and enforcement and prosecution in the hands of another. We debunked monopolized authority, delimit area of discretion, and we should start demanding accountability by coming up with a whole of nation approach to compliance monitoring—akin to HongKong’s Independent Commission Against Corruption (ICAC) Oversight Committee.

I rest my case.

About Atty. Ramon Cuyco

Ramon G. Cuyco, Esq., CESO (inactive), former Regional Director, LTO; former DOTC Spokesperson; former Customs Director, former Head, Competitive Planning and Management Staff of the Bureau of Immigration. Currently, a Project-based Consultant at the Development Academy of the Philippines.

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