Abstract:
In an effort to weed out corruption in the government, President Ferdinand Marcos of the Philippines fired 2,000 government officials suspected of corruption, among them the commissioner of revenue, in the fall of 1975. That September, Marcos named Justice Efren Plana as the new commissioner of revenue to head the Philippine Bureau of Internal Revenue. Part A of this case deals with Plana's efforts to assess conditions in the BIR, where he found many types of both internal and external corruption, including the payment of lagay (speed money), various types of extortion and bribery, embezzlement, and personnel scams. In Part B, Plana tries to clean up the BIR by implementing a new performance evaluation system, revamping the Internal Security Division, punishing the most corrupt BIR officials, and instituting other internal restructuring measures. This case illustrates problems found in most tax systems around the world. While Plana's actions--improving the selection of agents, manipulating rewards and penalties, installing an internal intelligence system, raising the moral costs of corruption, and restructuring the tax collector-taxpayer relationship--did not wholly solve these problems, they did lead to gains in the battle against corruption in the BIR.
Learning Objective:
Plana's story illuminates the obstacles managers may face in their efforts to curb corruption in agencies entrusted with handling public funds.
