My two cents on the Trillion Peso March against corruption

TAXWISE OR OTHERWISE

- MAC KERWIN VISDA

While guiding clients through their Bureau of Internal Revenue audits, I’ve been struck by an unsettling truth: congressional investigations into flood control corruption could erode taxpayers’ willingness to do their duty in funding vital public services.

Allegations of collusion between contractors and officials to siphon off as much as 70% of project costs appears to turn every compliance initiative into an exercise in futility. When the very architecture designed to deter fraud instead abets it, even the most robust technical defenses can feel hollow.

While I wasn’t able to join the Trillion Peso March on Sept. 21, I was there in spirit. Driven by both technical curiosity and growing unease, I flipped through the audited financial statements of some of these government contractors that are publicly available on the Securities and Exchange Commission’s website (for a fee). Allegedly, up to 70% of a flood control project’s awarded cost is funneled into the pockets of various government officials and other co-conspirators. I wonder how they presented these government transactions in their financial reports.

For instance, if a contractor is awarded a P100-million contract, and it only uses 30% for the actual project, the net profit should theoretically approximate 70% unless the total revenue of P100 million was not recorded, or the 70% kickback was concealed or claimed as deductions by filing ghost expenses. As expected, one of these contractors’ net income accounts for only 5%-8% of service revenue. While such schemes can cover up bribed, understating the revenue would be more challenging due to publicly available information such as the DPWH’s awarded projects database and Sumbong sa Pangulo websites, which enable us to perform reasonableness checks on their total revenue.