How would business handle the pork scandal?

5 May 2014
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MANILA, Philippines – Like many, I have followed closely and with great interest the ever-evolving PDAF “pork barrel” scandal enveloping a large portion of elected officials in what may be the largest “cleanup” in Philippine history.

One conclusion I can make with certainty?

Those elected officials who allocated their PDAF funds to any of the bogus projects should be very happy they don’t work in a business context. Because they would have been gone long ago. Fired. Terminated. Unemployed.

Yes, we live in a society of “presumption of innocence.” But this is purely in a criminal context. Business is not a judicial system; it is a “survival of the fittest” world where only the strong survive. It’s not about justice or judging guilt, it is about the bottom line. And leaders take full responsibility for the outcome on their business.

All of the efforts to diffuse the mess and redirect blame are unfortunately working. It is clouding the whole matter. Again this is where business approaches are so clean, sharp and incisive. You see, the simple fact is, these officials were entrusted with public monies, to allocate them properly to worthy projects. They are responsible for these funds. They decide where it goes — to whom, for what project.

Now, in a business context, when you spend huge sums of shareholder money (like in PDAF, let’s consider the Filipino taxpayer as a “shareholder”), you owe it to the shareholder that you will properly account for the money. You don’t just hand it over to someone or some agency. You check them out. You regularly visit the site of the project and see how things are going. You watch. You monitor. You audit. You keep your eye on things. Because you made the decision where the money goes!

It’s called common sense. Taking responsibility. Doing your damn job. Not just signing documents and then heading off to lunch.

Every one of these elected officials involved dropped the ball. They allocated taxpayer money to complete scams. The taxpayers lost their money!  They have to take responsibility for this. They made the decision. Nobody else did.

There are two, and only two, explanations for this “dropping of the ball.” And neither is acceptable.

Fraud – This is, of course, where all the focus is, and where all the ass-covering and debates are. Were these elected officials involved? Did they commit plunder? Did they enrich themselves on the backs of the taxpayers? These are good questions and they should absolutely be answered. But from a purely business context, well, business doesn’t give a damn. Because the business lost the billions of pesos, the money is gone, disappeared. And the projects did not happen as planned. And someone has to pay the price for this screw-up.

Incompetence – When you entrust someone with this kind of money, you assume they have the capability and skills to safeguard the money well. If we assume every one of these elected officials is honest, well, then, the only other conclusion is they are not capable of doing their job. Anyone with a lick of skills would feel responsible enough to check and monitor the projects. They would put systems in place for regular updates. They would keep their eye on things.

What makes me laugh is when I see officials clamoring to blame a staff member! You see, after the Enron debacle over a decade ago, most countries passed heavy regulation on public companies such as the US Sarbanes-Oxley Act. This law forces CEOs (and a senator is CEO of his office) to take personal accountability for everything going on in their operation. All financial statements are signed off. There is no acceptance for the excuse, “I didn’t know,” or “My people did this without my consent.” No, the CEO takes full responsibility.

I have signed off — with full confidence due to adequate systems and controls — on organizations with over 6,000 employees. Of course, I did not personally monitor 6,000 people. But checks and balances were in place to ensure I had command of the ship.

I have been in many offices of public officials. What I see is an operation the size of a very small business: a dozen employees, maybe in some cases, two dozen. For the largest of all legislators, what, three or four dozen?

Let’s call it 50 people. Keeping track of 50 people — and putting systems in place to ensure good governance over 50 people — is easy. It’s a joke. Thousands of us in the business world handle far more complexity than this. And we don’t blame people when things go wrong.

The conclusion then is, if not for ethics, it is a problem of competency. If a person can’t run a 50-person office and keep things under control, well, sorry to say, but they have no place in trying to run a nation. They are in a job that’s above their capability.

So there you have it. Business has no room to dally around and allow for the issues to be obfuscated. There are only two possible explanations for the PDAF scandal. One is a question of ethics. The second is a question of competence. There is no third or fourth or fifth explanation. And both explanations are real issues. Neither is acceptable. Both mean a person has to step down from the job.

In business, every single official who placed his PDAF funds into this scandal would be gone. Benched. Sidelined for good. Out of a job. Because neither explanation can be tolerated.

Perhaps this is one of those times where government can and should take a page from the business world.

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