sws surveys of enterprises on corruption 2000-2007

Transparent Accountable Governance:Transparent Accountable Governance:

The 2007 SWS Business The 2007 SWS Business Survey on CorruptionSurvey on Corruption

NCR Presentation, 29 June 2007,Dusit Hotel, Makati City

2

Copyright © 2007 by Social Weather Stations The 2007 SWS Survey of Enterprises on Corruption

The SWS Surveys of Enterprises on Corruption are sponsored by The Asia Foundation (TAF) with support from the United States Agency for International Development (USAID).

Opinions expressed here are those of the SWS research team and do not necessarily reflect the views of TAF or USAID.

DisclaimerDisclaimer

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Over 2000-2007, SWS has done 7 Surveys of Enterprises on Corruption, within the Transparent and Accountable Governance (TAG) project, in close partnership with the Makati Business Club.

These are surveys of Filipino managers -- unlike surveys of foreign consulting firms used to derive international corruption indexes, which use the views of expatriate managers of multinational firms.

Background of Survey of Enterprises (cf. TAG)Background of Survey of Enterprises (cf. TAG)

4


From NCR in the first 3 rounds, the TAG surveys of enterprises added Metro Cebu and Metro Davao starting 2004, and Cavite-Laguna-Batangas and Cagayan de Oro-Iligan starting 2005.

In every area, the TAG surveys worked with local business associations in obtaining the sampling frames, setting the agenda by focus groups, and disseminating the survey findings.


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OutlineOutline Survey Design

Survey Results1. The Scale of Corruption2. Government Sincerity in Fighting

Corruption3. Solicitations of Bribes4. Election Contributions5. Use of Honest Business Practices6. Participation in Fighting Corruption7. A“Transparency Information Bureau”

8. The Business Weather

Summary of Findings

OutlineOutline

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The TAG Project Surveys

a. Are Time Series 7 rounds (2000-07): National Capital Region 4 rounds (2004-07): Metro Cebu, Metro Davao 3 rounds (2005-07): Cavite-Laguna-Batangas,

Cagayan de Oro-Iligan.

b. Are Stratified by Size2/3 weight: Small & Medium Enterprises1/3 weight: Large Enterprises.


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TABLE: Technical Information about the SurveysTABLE: Technical Information about the Surveys

Fieldwork Total Small & ErrorDates Area Sample Large Medium Margin

SWS SURVEYS OF TOP/MIDDLE MANAGEMENT OF ENTERPRISES ON CORRUPTION, 2000-2007

Aug14-Oct26 2000 NCR 604 204 400 ± 4%

Sep4-Dec4 2001 NCR 505 200 305 ± 4½%

Oct25-Feb25 2002/03 NCR 500 214 286 ± 4½%

Nov13-Jan28 2003/04 NCR/C/D 701 285 416 ± 4%

Jan21-Mar15 2005 5 areas 701 232 469 ± 4%

Feb18-Apr27 2006 5 areas 700 231 469 ± 4%

Mar4-May11 2007 5 areas 705 233 470 ± 4%

NCR 354 117 237 ± 5%

CALABA=Cavite/Laguna/Batangas 76 24 52 ± 11%

C=Metro Cebu 100 33 67 ± 10%

D=Metro Davao 100 33 67 ± 10%

CDO-I=Cagayan de Oro/Iligan City 75 24 51 ± 11%

8


The panel survey design, or overlap of samples, enhances the validity of time-comparisons

FIVE AREAS 705 486 219

NCR 354 211 143

CALABA 76 58 18

Cavite 25 17 8

Laguna 26 18 8

Batangas 25 23 2

Metro Cebu 100 80 20

Metro Davao 100 79 21

CDO-I 75 58 17

Cagayan de Oro 50 36 14

Iligan city 25 22 3

Total Interviewed Newly inter-2007 in both 2006 viewed in

interviews & 2007 2007

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1. The Scale of Corruption3 of 5 managers see A LOT of corruption in the public sector.

1 of 2 say MOST/ALMOST ALL the firms in their line of business give bribes to win govt contracts; 1 of 5 say this on giving bribes to win private sector contracts.

However, in NCR at least, bribing for govt. contracts has declined.

Discouragement on the possibility of running government without corruption has grown; split opinion now prevails.

10


3 of 5 managers see “a lot” of corruption in the public sector

66 6761 63

77

60

6771

67 65

5 AREAS NCR0%

20%

40%

60%

80%

100%

2000 2001 2003 2004 2005 2006 2007THERE IS “A LOT” OF CORRUPTION IN THE PUBLIC SECTOR

11


1 of 12 managers see “a lot” of corruption in the private sector

10 9 814

913

10 118 7

0%

20%

40%

60%

80%

100%

2000 2001 2003 2004 2005 2006 2007

THERE IS “A LOT” OF CORRUPTION IN THE PRIVATE SECTOR

5 AREAS NCR

12


Bribing for govt. contracts: declining in NCR, not elsewhere; 20% is the median allowance

2000200120032004200520062007

5 AREAS NCR

54

46 48

55 56 57 57

52

4642

0%

10%

20%

30%

40%

50%

60%

70%“MOST/ALMOST ALL COMPANIES IN MY LINE OF BUSINESS GIVE BRIBES TO WIN PUBLIC SECTOR CONTRACTS.”

13


Bribing for private contracts: also declining slightly in NCR; 10% is the median allowance

2000

2001

2003

2004

2005

2006

2007

5 AREAS NCR

2622 22 24

28 2926

2318 18

0%

10%

20%

30%

40%

50%

60%

70%

80%

“MOST/ALMOST ALL COMPANIES IN MY LINE OF BUSINESS GIVE BRIBES TO WIN PRIVATE SECTOR CONTRACTS.”

14


Many managers have recent personal knowledge of a corrupt transaction with government

2004200520062007

5 AREAS NCR

44

38

44

51

46

39

48

0%

10%

20%

30%

40%

50%

60%PERSONALLY KNEW OF A CORRUPT TRANSACTION WITH GOVT. BY A COMPANY IN OWN SECTOR IN THE LAST 3 MONTHS

15


There is growing discouragement on whether government can be run without corruption.

The govt. can be run w/o corruption

Corruption ispart of the way the govt.works

0%

20%

40%

60%

80%

100%

60 5649

40 4450

‘05 ‘06 ‘07

55 57 56 60 56 5548

43 42 44 40 44 4452

‘00 ‘01 ‘03 ‘04 ‘05 ‘06 ‘07

5 AREAS NCR

16


2. Government Sincerity in Fighting Corruption

Of 29 agencies rated, 12 are positive and 17 are negative.

8 are Moderate, Good or Very Good, 9 are Mediocre (approximately zero), and 12 are Poor, Bad or Very Bad.

Compared to 2006, the ratings are either Better or Not As Bad; only PCGG is Worse.

Note: Filipino Business Assns rate Very Good.

20


Good Sincerity: Filipino Business Associations, DTI,SSS, Supreme Court, DOH

NET SINCERITY IN FIGHTING CORRUPTION

+66

Filipino Business

Associations

+54

DTI

+38

+52

SSS

+48+40

+45

Supreme Court

+40

+26+32

DOH0

+10+20+30+40+50+60+70+80

-10-20-30

2005

2006

2007

VERY GOOD GOOD

21


Moderate Sincerity: City Gov’t, COA, Sandiganbayan, GSIS

+5 +5

+20

COA

+19+13 +14

Sandiganbayan

+5+13

GSIS0

+10

+20

+30

+40

+50

+60

-10

-20

2005

2006

2007

+27+22

+26

City / Municipal Gov't


22


Mediocre Sincerity: DepEd, Trial Courts, Ombudsman, DBM, Office of the President, Senate, PAGC, DA and AFP

+11+3

+10

DepEd

+3 +5+10

Trial Courts

+22

+5+9

Ombudsman0

+10

+20

+30

+40

-10

-20

2005

2006

2007

+24

0+5

DBM


-13-17

-7

Senate

-7

-17-8

PAGC

-24

-8

DA

-38

-19

-9

AFP0

+10+20

+30+40

-10

-20

-30-40

2005

2006

2007

+10

-15

-3

Office of the Pres.

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Poor Sincerity: DOTC, DILG, DOJ, PCGG, DENR

-22-13

DOTC

-17

-32

-18

DILG

+13

-20 -19

DOJ

+5

-13-19

PCGG

-44-39

-23

DENR0

+10+20+30

-10-20-30-40-50-60

2005

2006

2007


24


Bad Sincerity: PNP, LTO, House of Reps, COMELEC, BIR

-45-38

-31

LTO

-28

-40-32

House of Reps.

-59

-36

COMELEC

-59 -58-49

BIR0

+10+20

-10-20-30-40-50-60-70

2005

2006

2007


-42-36

-23

PNP

25


Very Bad Sincerity: DPWH, BOC

-66 -66

-55

DPWH

-75 -74-68

Bureau of Customs

0+10+20+30

-10-20-30-40-50-60-70-80

2005

2006

2007


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Ratings of almost all agencies for sincerity in fighting corruption are up in 2007.

Of 28* agencies rated in both 2006 & 2007: 11 got better (a higher +),

16 are not as bad (a lower -), 1 got worse (a higher -).

*DTI and Filipino Business Associations were covered for the first time in 2007.

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BOTH MANAGERS AND THE GENERAL PUBLIC ARE OPTIMISTIC ABOUT GPRA: “… a law that provides for the standard rules in public bidding for government projects to guarantee that all contractors are given equal opportunity to join and win a government contract… is called the Government Procurement Reform Act [GPRA] or RA 9184. Have you heard or read something about GPRA? If yes: do you think this law will help reduce corruption in government contracts?”

Aware 54% 61% 36% 50% 51% 51 13%

Will definitely help 32 29 52 28 33 39 25Will probably help 51 53 37 56 51 50 51Will probably not help 10 11 11 12 6 8 14Will definitely not help 6 6 0 4 10 3 6

Not aware 46 39 64 50 49 49 86

GENERAL 2007 SURVEY OF ENTERPRISES PUBLIC:

Total NCR CALABA Cebu Davao CDO-I RP Nov06

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3. Solicitations of Bribes

For 3 surveys now, 3 of 5 managers were asked for a bribe the year before on at least one of 7 index transactions.

For every index transaction, more said they were asked for a bribe in the 2007 survey than in both the 2006 and 2005 surveys.

In NCR, which has the longest survey-series, many of the trends are poor.

Only 6% reported to authorities that they had been asked for a bribe.

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GRAPH: Solicitation of bribes, by transaction with governmentGRAPH: Solicitation of bribes, by transaction with government

2007: Enterprises asked last year by anyone in govt. for a bribe on the following transactions:

Getting Local govt. permits and licenses

Getting Natl. govt. permits and licenses

Paying income taxes

Complying with import regulations

Supplying govt. with goods/services

Collecting receivables from govt

Availing of govt. incentives

Any one of the listed bribes61

40

37

33

25

22

20

13

31


Bribes asked for Local gov’t permits/licenses:

3633

40

55 5450

46 4542

48

0%

20%

40%

60%

80%

100%

2000 2001 2003 2004 2005 2006 2007

ENTERPRISES ASKED FOR A BRIBE LAST YEAR

5 AREAS NCR

32


Bribes asked for National gov’t permits/licenses:

5 AREAS NCR

28 29

3742

3437

32 3336

43

0%

20%

40%

60%

80%

100%

2000 2001 2003 2004 2005 2006 2007


33


Bribes asked for Paying income taxes:

30 2933

52 50

43 4236

33 34

0%

20%

40%

60%

80%

100%

2000 2001 2003 2004 2005 2006 2007


5 AREAS NCR

34


Bribes asked for Complying with import regulations:

5 AREAS NCR

21 2225

17

10

1815

2528

31

0%

20%

40%

60%

80%

100%

2000 2001 2003 2004 2005 2006 2007


35


Bribes asked for Supplying gov’t with goods/services:

16 1822

15 1418

13 1518

22

0%

20%

40%

60%

80%

100%

2000 2001 2003 2004 2005 2006 2007


5 AREAS NCR

36


Bribes asked for Collecting receivables from govt:

18 1620

9 813

10

1815

19

0%

20%

40%

60%

80%

100%

2000 2001 2003 2004 2005 2006 2007


5 AREAS NCR

37


Bribes asked for Availing of govt incentives:

10 11 13

6 410

49 11 13

0%

20%

40%

60%

80%

100%

2000 2001 2003 2004 2005 2006 2007


5 AREAS NCR

38


Reporting of bribe-solicitation

Not asked for listed-bribe

Was asked;reported it

Was asked; didnot report it

Don’t Know/Refused

5

56

39

‘054

53

42

1

‘06

7

55

39

‘074

62

34

‘05

6

60

35

‘070%

20%

40%

60%

80%

100%

3

62

33

1

‘06

5 AREAS NCR

40


4. Election Contributions

Almost 1 of 4 (23%) said that a typical company in their sector would make a donation to the 2007 (current) election campaign.

(It was 45% in 2003/04, 48% in 2002/03)

Ave. estimated donation: P245,000

Large companies P387,000

SMEs P173,000

41


Donations made by a typical company for political campaigns

Nothing 42% 54% 76%

Less than P50,000 18 13 9

P50,000-99,000 worth 12 8 3

P100,000-499,000 worth 11 13 6

P500,000-999,000 worth 5 5 1

P1,000,000+ worth 8 5 2

Don’t know/Refused 4 2 1

Average donation P159,000 P309,000

P245,000

2002/03 2003/04 2007(NCR) (NCR/C/D) (5 areas)

42


5. Use of Honest Business Practices

Only 50% say that companies in their line of business always demand receipts.

Only 35% say they always issue receipts.

Only 24% say they only keep one set of books.

Only 18% say they pay taxes honestly.

Use of these practices is slightly growing in NCR, but is hardly changing in the country as a whole.

43


“How many companies in your line of business practice the following?”

Almost all

Most

Few

Hardly anyNone

Demand receipts

Issue receipts

Keep only one set of books

Pay taxes honestly

50

3524

18

36

44

39

38

1218

2835

1 26 62 2

0%

20%

40%

60%

80%

100%

44


Demanding receipts, upward in NCR:

TABLE: In your line of business, how many companies always demand and issue receipts, keep one set of accounts, and pay taxes honestly?TABLE: In your line of business, how many companies always demand and issue receipts, keep one set of accounts, and pay taxes honestly?

4851 50 49

5355

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

2005

2006

2007

MANAGERS SAYING “ALMOST ALL” COS. IN THEIR LINE OF BUSINESS ALWAYS DEMAND RECEIPTS

5 AREAS NCR

45


Issuing receipts: not much change


32

3735 35 36

33

4238

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

2003

2004

2005

2006

2007

MANAGERS SAYING “ALMOST ALL” COS. IN THEIR LINE OF BUSINESS ALWAYS ISSUE RECEIPTS

5 AREAS NCR

46


Keeping only 1 set of books: slightly up in NCR


2325 24

1821 22

2523

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

2003

2004

2005

2006

2007

MANAGERS SAYING “ALMOST ALL” COS. IN THEIR LINE OF BUSINESS KEEP ONLY ONE SET OF BOOKS

5 AREAS NCR

47


Paying taxes honestly: slightly up in NCR

TABLE: TABLE: In your line of business, how many companies always demand and issue receipts, keep one set of accounts, and pay taxes honestly?In your line of business, how many companies always demand and issue receipts, keep one set of accounts, and pay taxes honestly?

1820

18

1115

1719

17

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

2003

2004

2005

2006

2007

MANAGERS SAYING “ALMOST ALL” COS. IN THEIR LINE OF BUSINESS PAY TAXES HONESTLY

5 AREAS NCR

48


6. Participation in Fighting Corruption

Managers’ willingness to support an anti-corruption fund is 2% of Net Income (median) -- down from 5% in 2006.

In the last 2 years, 2 of 5 spent to fight fraud & corruption in their companies -- ave. P292,000. In the next 2 years, 1 of 2 will spend -- ave. P233,000.

In the last 2 years, 1 of 5 donated to a private anti-corruption fund -- ave. P136,000. In the next 2 years, 1 of 2 will donate -- ave. P100,000.

49


Managers expect more Net Income if govt. corruption is reduced to that of Singapore

Don’t Know/etc.

Net Incomewill rise

No change

Net Income will fall

0%

20%

40%

60%

80%

100%

57

27

5

11

'05

52

37

47

'07

56

30

5

9

'06

54

32

1

13

‘01

60

31

27

‘03

62

30

26

‘04

65

30

23

‘05

60

32

35

‘06

54

35

38

‘07

5 AREAS NCR

50


But business willingness to give to an Anti-Corruption Fund met a setback:

5 5

2

1

2 2

2.5

3 3

1

0%

1%

2%

3%

4%

5%

6%

2000

2001

2003

2004

2005

2006

2007

MEDIAN PORTION OF NET INCOME THE ENTERPRISE CAN PAY TO FUND A PROGRAM TO HALVE PUBLIC SECTOR CORRUPTION IN 10 YEARS

5 AREAS NCR

51


Nothing < P10,000 P10,000-99,000

P100,000-199,000

P200,000-499,000

P500,000-999,000

> P1 Million

61

9 106 4 3

6

48

1612

84 3

6

0%5%

10%15%20%25%30%35%40%45%50%55%60%65%70%75%80%85%

Last 2 years, AverageP292,000

Next 2 years, Average P233,000

Spending to combat fraud and corruption in own company: last 2 years and plans for next 2 years

52


80

6 52 1 0 1

50

25

12

4 2 1 2

Nothing < P10,000 P10,000-99,000

P100,000-199,000

P200,000-499,000

P500,000-999,000

> P1 Million0%5%

10%15%20%25%30%35%40%45%50%55%60%65%70%75%80%85%

Last 2 years,AverageP136,000

Next 2 years,AverageP100,000

Contribution to a private anti-corruption program: last 2 years and plans for next 2 years

53


Test Statement: “A person like me cannot do anything to reduce corruption in the government”

Agree Disagree Net*“A person like me cannot do anything to reduce corruption in the government” 29% 67% -38

* Net agreement = % Agree minus % Disagree correctly rounded. Don’t Know and Refused responses are not shown.

“Compared to about 5 years ago, it is now easier for anyone who wants to bid on a government contract to get information about the bidding.” 54% 23% +31

“Assuming it takes away only one day from his/her usual activities,a citizen should always accept aninvitation to observe a bidding for a government contract.” 74% 15% +58

Most managers are predisposed to cooperate in fighting corruption

54


7. A Transparency Information Bureau (TIB):

Managers are enthusiastic about a proposal to establish a TRANSPARENCY INFORMATION BUREAU (TIB) -- “… like a Credit Information Bureau, except that, instead of Credit Ratings, it will make Transparency Ratings on the reputation of individuals, companies, and agencies regarding honesty and ethics in business.”

55


“How useful would the services of a Transparency Information Bureau be for your

company?” -- 76% REPLY POSITIVELY

Very useful 41% 37% 39% 46% 37% 55%Somewhat useful 35 38 34 29 37 28A little useful 16 14 22 14 20 13Not at all useful 8 9 4 11 5 4No answer/Don’t know/Ref 1 2 0 0 1 0

Total NCR CALABA Cebu Davao CDO-I

56


“How valuable would it be for your company to get a good Transparency Rating?” --

82% REPLY POSITIVELY

Very valuable 54% 53% 46% 61% 54% 60%Somewhat valuable 28 29 39 17 28 28A little valuable 12 12 12 14 11 9Not at all valuable 5 5 3 8 6 3


57


“If asked by a TIB, how willing would your company be to give information about other people or companies regarding honesty and

ethics in business?” -- 82% ARE WILLING

Definitely willing 35% 30% 43% 46% 40% 35%Probably willing 47 51 38 40 40 57Probably not willing 11 13 11 10 10 5Definitely not willing 6 6 5 4 7 3


58


“How valuable would it be for your industry to get a good Transparency Rating?” --

87% REPLY POSITIVELY

Very valuable 57% 55% 62% 61% 54% 63%Somewhat valuable 30 32 28 22 34 33A little valuable 8 8 8 12 8 3Not at all valuable 4 4 3 5 3 1


59


8. The Business Weather

61% have good or excellent expectations - up from 46% in the last two years.53% are satisfied with National Government performance in promoting a good business climate.64% are satisfied with Local Government performance in promoting a good business climate.

60


Business expectations in the next 2 years

1 1 3 3 6 5 916

30 26 25

40 41

5236

4442 40

40 40

32

34

2123 21

11 10513

3 6 6 3 3 2

2000NCR

2001NCR

2003NCR

2004NCR/C/D

2005 2006 20070%

20%

40%

60%

80%

100%

Excellent

Good

Fair

PoorVery Poor

5 AREAS

61


Satisfaction with the National Government for promoting a good climate for business

7 6 5 9 104

46 4351

50 4652

2019

21 21 2521

1822

17 1113

15

9 10 5 9 5 8

5 areas NCR CALABA Cebu Davao CDO-I0%

20%

40%

60%

80%

100%

Very Satisfied

Somewhat Satisfied

Undecided

Somewhat Dissatisfied

Very Dissatisfied

62


Satisfaction with own city/municipality for promoting a good climate for business

12 9 11 11

27

9

5250 42

60

53

63

1618

20

15

10

12

1517 25

109

12

4 6 3 4 1 4

5 areas NCR CALABA Cebu Davao CDO-I0%

20%

40%

60%

80%

100%

Very Satisfied

Somewhat Satisfied

Undecided

Somewhat Dissatisfied

Very Dissatisfied

63


FINDINGS OF THE 2005 SURVEY OF ENTERPRISES (1)FINDINGS OF THE 2005 SURVEY OF ENTERPRISES (1)

The 2007 SWS Business Survey: Summary1. The scale of corruption remains high. Yet, in NCR, bribing for govt. contracts has declined. Discouragement on whether govt. can be run without corruption is up.

2. 17 of 29 government agencies have negative ratings on sincerity in fighting corruption. But the ratings are nearly all ‘Better’ or ‘Not as Bad’ as in 2006.

3. 3 of 5 managers were asked for a bribe during 2006 on at least 1 index transaction. On each index transaction, bribe-solicitation was higher than in 2006 or 2005.

64



The 2007 SWS Business Survey: Summary

4. 1/4 said a typical company in their sector would donate to the 2007 election campaign. Average donation: P245,000.

5. Only a minority of companies follow the basic honest business practices of demanding receipts, issuing receipts, keeping only 1 set of books, and paying taxes honestly. However, in NCR at least, these practices have grown slightly.

65




6. Managers’ stated capacity to pay into an anti-corruption fund is 2% of Net Income (median) -- down from 5% in 2006. Yet, in the last 2 years, 2/5 spent an average of P292,000 to fight fraud/corruption in their own firms and 1/5 donated an average of P136,000 to an anti-corruption fund. 1/2 say they will spend and donate for these purposes in the next 2 years.

66




7. Managers are keen on a Transparency Information Bureau -- on using it, on providing it with information, and on the value of having a good TIB rating for themselves.

8. 61% see good or excellent business weather over the next 2 years -- up from 46% in 2006 and 2005. 1/2 are satisfied with the National Government, and 2/3 are satisfied with the Local Government, on their promotion of a good business climate.

Surveys of Enterprises on Corruption 2007 PROJECT STAFF

Project Director Linda Luz B. Guerrero

Survey Consultant Mahar Mangahas

Project Manager Cherrie Torres

Field Manager Germelita Caron

Data Processing Manager Gerardo Sandoval

Data Processing Assistant Malou Laxamana

Lhuz Borja

Publication Editor Leo Rando Laroza

Project Assistant Mear Vicuña

www.sws.org.pwww.sws.org.phh

www.sws.org.pwww.sws.org.phh

#52 Malingap Street, Sikatuna Village, Quezon City

Tels: 926-4308, 924-4456, 924-4458, 924-4465

E-mail: [email protected]

sws surveys of enterprises on corruption 2000-2007

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