December 15, 2000, The Philippine Star, Editorial, Guarding against dirty money,

December 15, 2000, The Philippine Star, Editorial, Guarding against dirty money,

In the unfolding drama at the Senate, there's another institution on trial -- the country's banking system. Proving charges of bribery and corruption against President Estrada could hinge on documents and testimony from several banks. This week there were fears that the banks would stonewall, invoking bank secrecy laws, consequently aiding the President's defense.

There's a price for stonewalling, however. Equitable-PCIBank, whose owner is known to be a presidential friend, is scrambling to preserve its credibility after its apparent initial reluctance to comply with a subpoena from the Senate which is sitting as an impeachment court. After incurring the ire of the court's presiding officer, Chief Justice Hilario Davide, the bank finally complied with the subpoena Tuesday night, turning over documents at the end of the day's proceedings.

In subsequent advertisements, Equitable-PCIBank explained that bank secrecy laws hampered its compliance with the court's order. It said that if government officials wanted to change bank secrecy regulations, Congress should amend the law. Until yesterday, no one was sure if disclosing the contents of the documents turned over by Equitable-PCIBank would violate bank secrecy laws.

Equitable nevertheless vowed it was committed to transparency and would assist in learning the truth in the impeachment trial. The public can only hope all Philippine banks have this commitment. Sound banking practices allowed the country to survive the 1997 financial crisis with less damage than its neighbors. There is room for further reforms, however, without compromising investor confidence. The Bank Secrecy Act protects bank clients from harassment, but other measures can be implemented to discourage the use of Philippine banks for money laundering.

A few months ago, the Philippines was tagged as one of several countries used as a haven for money laundering. While the basis for this tag was questioned by some quarters, the Philippine banking system can only get stronger if it can institute safeguards against dirty money.