Good Governance / Bad Governance

GOOD GOVERNANCE / BAD GOVERNANCE

When I took my oath of office in 16 November 2004, the former finance secretary told me to approve the request for connectivity relative to the proposed Third Party custodianship proposal under BSP Circulars 392 and 428 as it would spell good governance. Perturbed about what that meant, I thought I’d ask her later. How can I approve something without my having seen, read, evaluated what I was to approve?

I have heard the word "governance" and "good governance" used loosely. That day I heard the word was no exception. I believe, though, that bad governance is the root cause of all evils in our society.

1.Evolution of Cir 392

The process of decision-making and the process by which decisions are implemented (or not implemented) is governance. Good Governance passes the following test of the following: it is participatory, consensus oriented, accountable, transparent, responsive, effective and efficient, equitable and inclusive and follows the rule of law.

There were several actors in the ‘birthing” of Circular 392. Foremost is the Bangko Sentral, the BAP and, possibly, informal advisors. The latter may have influenced or subverted the decision-making process. Such informal decision-making is often the result of corrupt practices or leads to corrupt practices or its perpetuation.

The most important actor affected by Circular 392 was never consulted. It is the Bureau of the Treasury.

Circular 392 was issued in July 2, 2003. It did not have the mechanism to allow the regulated entities room for compliance but provided for monetary sanctions to penalize non-compliance. Who participated in the exercise? Where the banks consulted (consensus-oriented)? Who was to provide the mechanism to allow compliance? Was BAP involved? Did BAP propose this (accountable)? Surely the minutes of the meetings of the BAP Board would reflect this. Who prepared this at the Bangko Sentral (accountable)? How was this explained to the Monetary Board members and what was supposed to be the structure to support it?

2. Evolution of PDTC

Against this backdrop, the PCD , set up in 1995, reorganized itself (see Articles of Incorporation) after suffering losses. Its capital was folded in a new company. The new shareholders became the BAP, with the single biggest holdings because of its equity holdings in PCD, and several others with less than 20% equity stake in the company.

A company organized this way does not to pass muster the criteria on good governance. With just the BAP whose representative , the BAP president, sits for only a year or two , all the rest of the associations are similarly situated. With a fluid board membership, chances are the Chief Executive Officer will be the strongest and principal actor in the company blurring accountability, broad participation and transparency, at the least.


Inequity and exclusivity
It appeared not all PDS members feel that they have a stake in it . In fact, not just one stakeholder opposed circulars 392 and 428 that are meant to benefit it. Organizations must be accountable to the public and to their institutional stakeholders.

3. Circular 428

Months after Circular 392 was issued, Circular 428 was drafted. Who prepared the pertinent rules and implementing regulations? Did the BAP’s minutes of its meetings reflect the process/es involved in crafting the regulation? Who at the the Bangko Sentral evaluated and prepared the paper for the Monetary Board’s considierations? How transparent were the processes and were there extensive consultations with all stakeholdedrs, particularly the Bureau of the Treasury?

Now that the proponents are in “murderous haste”, to borrow the phrase of a journalist, to implement the circulars that took them years to generate, the one principal stakeholder that they have not consulted is badgered into implementing it.

GOOD GOVERNANCE? BAD GOVERNANCE?