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Why Do Philippine Bank Accounts Have to be So Secret?

he Impeachment hearings these past couple of days revolved around Chief Justice Renato Corona’s bank accountsFerdinand Marcos in his 'televised special" of September 21, 1972 where he declared a state of Martial Law throughout the archipelago and whether the Senate Impeachment Court could even look at them. One of the banks subpoenaed for documents, PS Bank even requested and was subsequently granted a Temporary Restraining Order (TRO) by the Supreme Court stopping the impeachment court from ordering the bank to turn over Corona’s foreign currency denominated bank documents.

All this high courtroom drama raises the question as to why banking secrecy is so stringent in the Philippines in the first place. In fact foreign currency bank accounts are virtually untouchable under almost any circumstance. The law behind the ironclad secrecy of foreign currency accounts is Republic Act No. 6426, also known as the "Foreign Currency Deposit Act of the Philippines." It was signed into law two days after April Fools Day in 1974 by then President Ferdinand Marcos, during that dark period of Philippine history we now call the Martial Law years. Section 6 of the law even made the interest or other income earned by foreign currency accounts tax exempt.

The mere fact that this law was promulgated by Marcos and his minions during the early years of Martial Law should make it immediately suspect. Was the law simply a way for that corrupt government to hide all its ill-gotten wealth?

Even assuming that there was indeed a legitimate argument at the time for its enactment which was to purportedly raise the country’s foreign currency reserves by attracting foreign depositors with confidentiality and the lure of tax-free interest income, that argument has long since lost its validity. With the number of overseas Filipinos remitting foreign funds into the country, the Banko Sentral is now awash in foreign currency and the country no longer needs to resort to questionable incentives to bolster its foreign reserves.

This bank secrecy law seems to have remained in place for one reason and only one reason: to protect the corrupt by shielding their bank accounts from the law. And it must be noted here that Republic Act No. 6426 goes far beyond even the Swiss banking secrecy laws when it states in its Section 8 that any information about the Pascual Garcia 3rd, president of Phil. Savings Bank, prepares to testify before the Senate impeachment court on CJ Corona's bank accounts with the bankaccount can only be divulged “upon the written permission of the depositor.” Swiss banks on the other hand can be compelled via a subpoena from a Swiss judge to provide information about even their numbered private accounts.

And Swiss bank secrecy laws continue to be diluted and made less stringent: In 2009 under pressure from the G20 and the OEDC (Organisation for Economic Co-operation and Development) Swiss banks revised their secrecy rules making it more difficult for their depositors to evade their tax liabilities; and in 2010 the Swiss government under pressure from the United States reluctantly gave one of its banks (UBS) the authority to transmit information regarding its American depositors to the US government. There have also been numerous other developments over the years that have chipped away at the Swiss bank secrecy laws making it ever more difficult for money launderers and tax cheats to use Swiss banks to hide their ill-gotten wealth.

Given the level of transparency and accountability that we expect of this government, shouldn’t Filipinos also expect that same level of forthrightness from everyone else? Our guess is the vast majority of Filipino bank depositors would have no problem if Republic Act No. 6426 was repealed. Only those who are hiding questionable funds have anything to worry about. The argument that a repeal of RA 6426 will cause bank runs or in any way undermine the country’s banking industry is pure nonsense. The United States as well as most other developed countries have no such secrecy laws yet their banking institutions remain strong and their banking industry vibrant.

The Foreign Currency Deposit Act of 1974 was created primarily to shield the plunder of Marcos and his cronies from the law. And the law has served them well, as it has all the plunderers and money launderers that have come after them. Honest and law-abiding Filipinos have no need for this law. It has been around for too long and it is high time it is repealed and tossed in the trash bin of history along with all the other illegal rulings of the Marcos Dictatorship. Published 2/10/2012

Join our Poll: Should the Foreign Currency Deposit Act be amended or repealed?

 


Philippine NewsLink reserves the right to select and edit comments for publication.

Comments from Our  Readers
Previous Editorial

Name: Sven
City/State/Country: EU
IP Address: 57.124.221.39

Comments

Your editorial says Midas Marquez painted himself into a corner. That is very true. And there was no reason for him to do that. Had he stayed neutral, he would have probably had a long and illustrious career with the Court. Maybe ending up as a Justice some day. But now his tenure with the Court may be cut short---very short!


Name: Manny
City/State/Country: Meycauayan
IP Address: 180.194.249.230

Comments

Righteously speaking I would say that Midas action is uncalled for. First of all public servants should render service first to the country before someone else. But he must have a valid reason and that is his right. Are we sure that he is turning his back to the country? Are we sure that Impeaching Corona is righteous? SURELY Corona would have been spared of this trial if only he submitted himself to the wishes of PNOY. 188 house members would not be in a hurry spending millions of people's money due to the marching order. Their action is NOT genuine for the people. It's for themselves and we call this HYPOCRISY? If this succees, a RUBBER STAMPPED Supreme Court is in the making. PNOY won a popular vote but this does not mean he GETS what he wants.


Name: Antonio Ramirez
City/State/Country: London ,UK
IP Address: 194.176.105.141

Comments

You are judging Midas Marquez because he is loyal to CJ Corona. that is absolutely ridiculous opinion! instead, we must admire his faithfulness as he adhere believing his principles in life. I know Aquino's Govt. want to remove all the Supreme Court Justices linked to Arroyo's Govt. from their offices so that Noynoy will have a full control of the SC, as he will appoint his own CJ to continue corrupting the humble poor Filipino people.


Philippine NewsLink reserves the right to select and edit comments for publication.

Did Supreme Court Spokesperson Midas Marquez Paint Himself into a Corner?

The Supreme Court Administrator Jose Midas Marquez may have made a fatal career mistake when he threw all his eggs into the Corona basket. Blind loyalty to one’s superior in certain instances can be admirable, but unfortunately in most cases, it is unprofessional and counterproductive. Published 2/4/2012


Enter the Dragon-lady Senator-Judge Miriam Defensor Santiago

The Filipino people have just about had enough of Miriam Defensor-Santiago. She is loud, arrogant, and intolerant of anyone but herself. In her Ilongo-accented diatribes Santiago bullies anyone and everyone she dislikes or who happens not to share her views. It is somewhat disheartening because Santiago is reasonably smart and adequately educated—but the minute she opens her mouth, those pluses just fly out the window.
Published 1/29/2012

Andres Narvasa Should be Held Accountable for His 1992 Resolution A.M. No. 92-9-851-RTC

The ongoing impeachment trial of Chief Justice Renato Corona has brought to light what appears to be a faulty, if not patently unconstitutional 1992 En Banc resolution of the Philippine Supreme Court that effectively ended any public disclosure of the Statements of Assets, Liabilities and Net Worth (SALN) of any Justice or Judge. Chief Justice Andres Narvasa’s court in their ruling—A.M. No. 92-9-851-RTC, dated September 22, 1992—resolved that henceforth all “All requests for copies of statements of assets and liabilities of any Justice or Judge shall be filed with the Clerk of Court of the Supreme Court or with the Court Administrator, as the case may be, and shall state the purpose of the request.” Published 1/24/2012



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