Lifestyle Check

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<p>LIFESTYLE CHECK A HANDBOOK FOR CIVIL SOCIETY</p> <p>Transparency and Accountability Network (TAN) August 2007</p> <p>DISCLAIMER</p> <p>The views expressed in this report are strictly those of the authors and do not necessarily reflect those of the United States Agency for International Development (USAID) and the Ateneo de Manila University.</p> <p>NETWORTH (in millions of pesos)</p> <p>15 12.5 10 7.5 3 2.75 2.5 2.25 2 1.75 1.5 1.25 1 0</p> <p>L i f E s t YL E C h c kE1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006</p> <p>YEAR</p> <p>A Handbook for Civil Society Organizations</p> <p>A Transparency and Accountablity Network Publication Copyright 2006</p> <p>With funding support from: Rule of Law Effectiveness U.S. Agency for International Development</p> <p>Message from TANPublic officials shall lead modest lives. This is a principle that is stated in Article XI, Section 1 of the 1987 Philippine Constitution and reiterated in Section 4(h) of Republic Act 6713, also known as Code of Conduct and Ethical Standards for Public Officials and Employees. Yet it has been accepted by the general public that public servants lead, and in fact many times flaunt, ostentatious lifestyles. A quick scan of the parking lot of the House of Representatives in Quezon City will show many of the latest multi-million peso model sports utility vehicles or imported German luxury cars bearing the number 8 license plate of congressmen. (The question arises, are they congressmen because they are rich, or are they rich because the are congressmen? Neither case is good.) Not only is such display illegal, it is an indicator of possible corruption. It is with this presumption that the government undertook the Lifestyle Check Program to check into possible corrupt officials. Lifestyle checks get a further boost by Republic Act 1379, commonly known as the Ill Gotten Wealth Law. RA 1379 basically says that if a public official is observed to live a lifestyle or has acquired assets (wealth) beyond his or her visible means of income, the wealth is presumed to be ill gotten. The law is innovative in that the burden of proof lies with the public official. He or she has the burden to prove that the assets were legally obtained. Unfortunately, the government agencies that have undertaken the lifestyle check program, the Department of Finance, the Ombudsman and the Presidential Anti-Graft Commission, are admittedly undermanned and lack the necessary tools and equipment to conduct comprehensive lifestyle checks on a bureaucracy of 1.5 million. While a vast majority of our public servants serve honestly and humbly, there are still a large number, though in the minority, that are not ashamed to show off some of the wealth they have acquired while in government service. Luxury cars, homes in tony subdivisions, exclusive schools for their children, frequent trips abroad, meals in expensive restaurants, memberships in exclusive country clubs and the like are all evidence of an ostentatious lifestyle.</p> <p>It is because of the governments lack of resources and manpower to fully conduct lifestyle checks on public officials, that assistance from the public is badly needed. Almost every citizen now has the power to contribute tothe fight against corruption by gathering information on the lifestyles of public servants and forwarding the same to the appropriate authorities. It is with this type of citizen vigilance in mind that the Transparency and Accountability Network decided to embark on the creation of a Lifestyle Check Manual for citizens, civil society organizations, community organizations and non-governmental organizations. With this manual, such individuals and groups can obtain and submit information that can be useful to the Lifestyle Check Program of government.</p> <p>Even as we can now all become informants, we must also realize that every tip or piece of information that we submit must find its way through to the proper place if it is to lead to a case build up and the filing of a case against a suspected corrupt government official. The information we submit may or may not snowball into a case that can lead to conviction. But even if it does not, the public should remain undaunted, because once all oof us can be potential informants on the lifestyles of public officials it becomes a deterrent to at least the display of wealth. We all need help in the fight against corruption. Armed with this manual and determination, any individual or organized group can contribute to the lifestyle check program to keep our government officials honest and leading modest lives. The Transparency and Accountability Network would like to thank the Rule of Law Effectiveness, with funding support from USAID, for the financial assistance extended to TAN to make this manual possible. Good luck to us all and may God bless the Philippines.</p> <p>VINCENT T. LAZATIN Executive Director</p> <p>TABLE OF CONTENTSTitle Introduction Chapter 1: What is Lifestyle Check1a: Legal Framework of Lifestyle Check 1b: Basics of Lifestyle Check 1c: How did Lifestyle Check in the Philippines Begin?</p> <p>Page 1 23 4 4</p> <p>Chapter 2: The Investigators</p> <p>2a: Office of the Ombudsman 2b: Presidential Anti Graft Commission 2c: Department of FinanceRevenue Integrity Protection Service</p> <p>66 7 7</p> <p>Chapter 3: Processing Lifestyle Check Cases3a: Criminal Case 3b: Administrative Case</p> <p>9 10</p> <p>8</p> <p>Chapter 4: The Need for CSOs and the Publics Role4a: Just Mere Observation To Dos 4b: With Documents To Dos (with Closer Look at Documents)</p> <p>1213-15 16-28</p> <p>Chapter 5: More Tips on CSOs Involvement in Lifestyle Check Annexes1: Salary Grade Table as oof 2001 2: Salary Grade Chart 3: Where are the SALNs? 4: SEC Regional Offices Directory 5: LTO Offices Directory 6: Where to Submit Reports?</p> <p>28</p> <p>IntroductionA 6- year old child was asked about what she would like to become when she grows up. The child said, I want to be the President because I want to have my own airplane, lots of mansions, luxury cars and plenty of money to buy everything I</p> <p>The story above illustrates a common notion not just among children but also among public servants in the Philippines. Many of them think that the way to becoming rich is to get into government. Even if the pay is relatively low, they still try to be employed in a government office because they see that there are plenty of opportunities beyond their official duties to enrich themselves. These opportunities are also called corruption. Corruption is defined as the abuse of public office for private gain (World Bank). It happens when there is monopoly and discretion enjoyed by a public official/s and he does/they dont mind of any accountability. It is done in the dark; somewhere hidden from the public which makes it difficult to detect. But its fruits are observable. Oftentimes, corruption is manifested in the enrichment of a public official. Former President Ferdinand Marcos is one such person known to have enriched himself and his family while he was in public office. According to the Presidential Commission for Good Government (PCGG), Marcos plundered $10 billion from the public coffers (see Box 1). The Philippine governments loss to corruption is large enough to account for the foreign debt of the country. According to a World Bank study, the Philippines lost $40.6 billion to corruption from 1980 to 2000. In 2000, Philippine debt was estimated at $48 billion. The obscenity of corruption and the flagrant display of its fruits in the lifestyles of erring public officials make LIFESTYLE CHECK a very important tool for ordinary citizens to be able to exact greater accountability from public officials. While there are government investigators conducting lifestyle check, there is still a need for civil society organizations (CSOs) to help strengthen the program. And while there are existing lifestyle check tools by the government, there is a need to translate these tools into terms more applicable to CSOs. This manual is an initiative of the Transparency and Accountability Network (TAN) with support from the Rule of Law Effectiveness (ROLE), a project of the U.S. Agency for International Development (USAID). It aims to educate the general public and civil society organizations (CSOs) by providing a lifestyle check tool which they can use to detect corruption observable in the lifestyle of public officials. With greater public participation, the limited reach of governments anti corruption programs is hoped to be narrowed down as these citizens become the arm of the government in its lifestyle check effort.</p> <p>1</p> <p>Box 1Marcos Wealth May Now be Worth US$100B23-Feb-06 Posted at: all&amp;address=102x2126573 MANILA (AFP) - State funds and other assets looted by the late Philippine president Ferdinand Marcos and his cronies may now be worth 100 billion dollars but less than two billion dollars has been recovered, an official said Wednesday. The total value was originally estimated to be up to 10 billion dollars and this sum should be corrected at least by a multiple of 10 due to appreciation of their value after two decades, said Nicasio Conti of the Presidential Commission on Good Government (PCGG) which is tracking down the wealth. As Manila this week marked the anniversary of Marcoss 1986 ousting, officials said eight billion dollars worth of assets has so far been firmly identified after a 20-year hunt. But only 1.63 billion dollars has been recovered. They could not say how long it would take to recover the balance, most of which is the subject of lawsuits in Philippine courts. Marcos died in exile in Hawaii in 1989, three years after a bloodless, military-backed popular revolt ended his 20-year rule marked in its latter stages by massive corruption and cronyism.</p> <p>CHAPTER 1</p> <p>To fully understand what lifestyle check is, it will help to first define lifestyle. LIFESTYLE according to Answers.Com is an individual pattern of living as reflected by interests, opinions, spending habits, and activities ( Lifestyle is a very important concept in Philippine governance because there are standards set by law that public servants must subscribe to. Article XI, Section 1 of the 1987 Philippine Constitution states that: Public office is a public trust. Public officers and employees must at all times be accountable to the people, serve them with utmost responsibility, integrity, loyalty and efficiency, act with patriotism and justice, and lead modest lives. Not known to many, public officials must keep modest lives. They areto live within ones means, and if ones means are generous, not to flaunt them in conspicuous display (Fr. Joaquin Bernas, the 1987 Constitution of the Republic of the Philippines: A Commentary, 1996 ed.). This standard is reiterated in Republic Act (RA) 6713, otherwise known as the Code of Conduct and Ethical Standards for Public Officials and Employees. Section 4 (h) of RA 6713 provides: Section 4. Norms of Conduct of Public Officials and Employees - (A) Every public official and employee shall observe the following as standards of personal conduct in the discharge and execution of official duties: (h) Simple Living- Public officials and employees and their families shall lead their modest lives appropriate to their positions and income. They shall not indulge in extravagant or ostentatious display of wealth in any form. 2</p> <p>What is Lifestyle Check?</p> <p>Lifestyle Check is a fact finding investigation conducted by government agencies to determine whether or not there is sufficient evidence to file a graft and corruption case against an official who has acquired his wealth through corruption such as plunder or malversation of funds. Lifestyle check specifically deals with the question Is the public officials displayed lifestyle disproportionate with his/her declared income?</p> <p>Box 2</p> <p>Can Estrada Explain His Wealth?</p> <p>by Yvonne Chua, Sheila Coronel and Vinia Datinguinoo of the Philippine Center for Investigative Journalism (PCIJ)</p> <p>Republic Act 1379 or the Act Declaring Forfeiture in Favor of the State Any Property Found to Have Been Unlawfully Acquired by Any Public Officer or Employee and Providing for the Proceedings Therefore sets the circumstances when the wealth of public officials will be presumed to be unlawfully acquired. Section 2 of RA 1379 provides: Whenever any public officer or employee has acquired during his incumbency an amount of property which is manifestly out of proportion to his salary as such public officer or employee and to his other lawful income and the income from legitimately acquired property, said property shall be presumed prima facie to have been unlawfully acquired. XXX RA 1379 shifts the burden showing that the properties were acquired legally to the public official.</p> <p>1A: Legal Framework of Lifestyle Check</p> <p>In the course of several months, we obtained and examined 66 corporate records in which Estrada, his wives and his children are listed as incorporators or board members. Altogether, these companies31 of which were set up during Estradas vice-presidential term and 11 since he assumed the presidencyhad an authorized capital of P893.4 million when they were registered. The President and his family members had shares of P121.5 million and paid up P58.6 million of these when the companies were formed. It is difficult to estimate how much these businesses are now worth because of incomplete data at the Securities and Exchange Commission (SEC). But based on available 1998 and 1999 financial statements, 14 of the 66 companies alone have assets of over P600 million. This becomes an urgent issue because of the lavish lifestyles of the Presidents various households. Two of Estradas women companionsLaarni Enriquez and Joy Melendrezlive in posh quarters in WackWack, Mandaluyong City and Green Meadows, Quezon City. According to land records, none of these residences are registered in their names or the Presidents. Estradas wives and children have also been seen riding a fleet of imported expensive vehicles, including a Jaguar, a Range Rover and several Mercedes Benzeseach of which costs millions of pesos. But neither the Presidents statement of assets nor his most recent income tax declaration can explain where he got the wherewithal to support the extravagance of his loved ones. In 1999, Estrada declared in his statement of assets a net worth of P35.8 million and in his income tax return, a net income of P2.3 million.</p> <p>If in accordance with the provisions of Republic Act Numbered One thousand three hundred seventy-nine, a public official has been found to have acquired during his incumbency, whether in his name or in the name of other persons, an amount of property and/or money manifestly out of proportion to his salary and to his other lawful income, that...</p>