WIDESPREAD CORRUPTION CITED

RP retained on US drugs, dirty money watchlist

Widespread corruption and the lack of judicial and investigative capability against drug trafficking keep the country in the US government’s list of the world’s major transit points for illegal substances, a US State Deparment report recently submitted to the US Congress indicated.

The two-part “2012 International Narcotics Control Strategy Report” listed the country in the US watchlist on drug and chemical control concerns and money laundering and financial crimes jurisdictions.

On the report related to the country as a major illegal drugs transit point, stated that last year, while law enforcement agencies enhanced intelligence and operational cooperation despite limited resources, the Philippine Drug Enforcement Agency (PDEA), the main anti-drug agency, should be adequately funded and staffed.

Law enforcement and military task forces should also formalize their support system to the PDEA, it added.

The report added that the Philippines should develop additional investigative and judicial tools such as judicially authorized interception of criminal communications, plea bargaining, improved police-prosecutor coordination, and an efficient drug asset forfeiture process.

It said such improved government efforts would strengthen investigations and prosecutions and allow the government to combat the transnational drug trafficking organizations present in the Philippines as well as assist in combating corruption.

The report was submitted to the US Congress last March 1 and describes “efforts to attack all aspects of the international drug trade, chemical control, money laundering and financial crimes.”

The Philippines continues to experience an increase in foreign organized criminal activity from China, Hong Kong, and Taiwan, and insurgency groups operating in the Philippines partially fund their activities through local crime, kidnapping for ransom and the trafficking of narcotics and arms, and engage in money laundering through ties to organized crime, according to the report.

It stated the proceeds of corruption are also a source of laundered funds. “Smuggling, including bulk cash smuggling, continues to be a major problem,” it added.

The Philippines has a large expatriate community, and remittances are also channels for money laundering, it said.

Moreover, it noted that there are free trade zones and four offshore banking units (OBUs). The Bangko Sentral ng Pilipinas (BSP) exercises regulatory supervision over OBUs and requires them to meet reporting provisions and other banking rules and regulations.

The report noted that the country had so far a total of one conviction related to money laundering offenses out of 50 prosecutions as of Aug. 31 last year.

Corruption remained widespread and a problem for government administration, including drug law enforcement, it said.

As a matter of government policy, the Philippines does not encourage or facilitate illegal activity associated with drug trafficking, and no senior Philippine government official is known to engage in such activity but media and law enforcement officials alleged some local politicians received support from drug traffickers. It noted, however, that no cases were filed.

“One member of the Philippine Congress was convicted for possession of cocaine in Hong Kong. The independent Office of the Ombudsman examined charges of public abuse and impropriety including against the top ranks of the former administration. The lack of investigative and judicial tools such as wire tap authority and plea bargaining continued to impede case development,” the report added.

It listed methamphetamine and marijuana as the main drug threats in the Philippines. It cited the 2011 United Nations World Drug Report that identified the Philippines as having the highest methamphetamine abuse rate in East Asia at 2.1 percent of the adult population ages 16 to 64.

“In 2011, the issue of Philippine citizens being used as drug couriers by transnational drug trafficking organizations (DTOs) gained national attention when two Philippine citizens were executed in China for drug trafficking,” it said.

Philippine citizens have also been arrested in other countries while attempting to smuggle cocaine from South America to Asia as well as methamphetamine within Southeast Asia, it added.

The scale of the trafficking abuse problem in the Philippines continues to pose a major to challenge in prosecution: the Supreme Court Office of the Court Administrator reported that in the National Capital Region, as of December 2010, almost 30 percent of pending regional trial court cases were drug-related.

“Funding for drug law enforcement agencies, however, remained limited. The PDEA, the lead anti-drug law enforcement agency, had to request support from other law enforcement and military drug units to carry out missions. Many of those units, such as the Philippine National Police (PNP’s) Anti-Illegal Drugs Special Operations Task Force (AIDSOTF), were task forces and therefore lacked dedicated budgets or permanent status,” the report added.

It said the Philippines also continued to face the daunting task of tackling transnational drug trafficking organizations without strong legal tools such as provision for judicially authorized interception of criminal communications, plea bargaining, and an efficient drug asset forfeiture process.

“Without these important tools, enforcement’s ability to gather evidence against high-level drug traffickers remained limited,” according to the report.

The Philippine Congress continued to deliberate on an act establishing the Office of the Special Prosecutor for Dangerous Drugs (OSPDD).

“The OSPDD, if created, would be an independent and autonomous agency attached to the Office of the President focused on prosecuting major drug traffickers as well as any public servant or senior government, elected, senior police, or military official linked to the drug trade,” according to the report.

Ethnic Chinese organized crime groups continued to be the primary organizers and financers of methamphetamine trafficking in the Philippines, it said.

Law enforcement agencies noted the new trend of African-produced methamphetamine being smuggled into the Philippines through the airport for onward distribution throughout Southeast Asia.

“PDEA and the National Bureau of Investigation (NBI) conducted investigations that led to the identification and arrests of several African DTO members in Malaysia,” it said.

The report related to anti-money laundering efforts of the country stated investigations by the financial intelligence unit (FIU) continue to be constrained by limited authority to access bank information.

“Except in instances of serious offenses such as kidnapping for ransom, drugs and terrorism-related activities, the FIU is required to secure a court order to examine bank deposit accounts related to unlawful activities enumerated in the Anti-Money Laundering Act,” it said.

In addition, a Supreme Court ruling prevents ex parte inquiry into bank accounts. The FIU can, however, seek an ex parte freeze order from the Court of Appeals before seeking authorization to inquire into bank deposits, the report said.

The FIU also must obtain a court order to freeze assets, including those of terrorists and terrorist organizations placed on the UN 1267 Sanctions Committee’s consolidated list and the lists of foreign governments.

This requirement is inconsistent with the international standard, which calls for the preventative freezing of terrorist assets “without delay” from the time of designation.

The Philippine government should enhance the FIU’s access to financial records, and ensure it can rapidly freeze terrorist assets, it said.

Terrorist financing is not a stand-alone offense under Philippine law and therefore not a predicate crime under the Anti-Money Laundering Act, it said.

“A person who finances the commission of terrorism may be prosecuted as a terrorist either as a principal by inducement pursuant to Article 17 of the Revised Penal Code or as an accomplice pursuant to Section 5 of the Human Security Act. However, this approach requires a terrorist act to have occurred and does not encompass general financial support to terrorist entities for other purposes (recruiting, training, social welfare projects, etc.),” the report added.

It said limited human and financial resources also constrain tighter monitoring and enforcement. The GOP should criminalize terrorist financing as a stand-alone offense.