The 53rd anniversary of martial law’s declaration arrives with bitter irony—as another Marcos presidency grapples with a mega-corruption scandal that follows the playbook pioneered by his father. Senate investigations reveal that up to 60% of flood control funds may be lost to corruption, sometimes even before construction even begins. The numbers are staggering, the methods not just disturbingly familiar, but now metastasized across different branches of government.
The Reparations Racket: Where It All Began
The roots of this plunder stretch back to the Republic’s founding, but the brazen systematization of corruption bears the unmistakable fingerprints of the first Marcos presidency. When Ferdinand Sr. appointed his war-time ally, fellow Ilocano, and guerrilla comrade Gen. Eulogio Balao, to head the Philippine Reparations Mission in Japan, he wasn’t just filling a diplomatic post—he was installing a trusted ally to act as his bagman.
From 1966 until his death in 1979, Balao orchestrated an audacious scheme at the president’s behest: extracting 10-15% commissions from Japanese companies seeking contracts from the $550-million reparations fund meant to repair damages to infrastructure and services caused by the Japanese occupation.
This was the 1960s and offshore banking wasn’t as sophisticated as it is now but this method was as effective—Balao personally carried “two or three” suitcases of cash under diplomatic seal to Hong Kong, where the stolen millions were deposited into a numbered Swiss account controlled by Marcos himself.
The transactions weren’t hidden from Marcos cronies. Assemblyman Andres Genito Jr., then working for a Japanese trading firm, recounted asking Balao directly about the massive payments: “This is a large sum of money that we are paying. Is this for you?”
The general’s response was chilling in its casualness: “Are you kidding? This goes to President Marcos.”
By 1975, the operation had evolved with more players. Public Works Secretary Baltazar Aquino, as he said in his 1986 affidavits, took charge of collecting 10-15% commissions from infrastructure projects, while Balao handled non-infrastructure schemes. Aquino testified that he would make periodic trips to Hong Kong to receive monies from representatives of Japanese firms. When Balao died in 1979, Genito seamlessly assumed control—the corruption had become institutionalized, self-perpetuating.
Political scientist Amado Mendoza documented how this system outlasted the reparations program, continuing till the end of the Marcos regime. When Japanese assistance shifted to the Overseas Economic Cooperation Fund (OECF), the 15% “commission” simply migrated with it. No Japanese firm could win a contract without paying tribute to the Marcos machine—a tribute that was brazenly included in the total contract price paid by the Philippine government using Japanese aid money.
The Flood Control Déjà Vu
Fast-forward to 2024, and the methods remain virtually unchanged, merely scaled up for a new century and a democratic government with a powerful legislature that demands a share of the spoils. Senate investigations reveal that up to 60% of flood control funds may be lost to corruption, with fees and off-the-books payments possibly reducing actual infrastructure budgets to less than 40%. The Marcos-era blueprint has been faithfully followed: Under the syndicated operation, it is the politician mastermind who looks for the funding and receives the largest share—in some cases, as much as 30% of the project cost.
The parallels are uncanny: where Balao once carried diplomatic pouches stuffed with cash, today’s flood-control contractors bring bags of cash to luxury hotels where the pay-offs are made. This week the Anti-Money Laundering Council froze 592 bank accounts, three insurance policies, 73 motor vehicles, and 18 real properties belonging to contractors of irregular flood control projects. “The sheer magnitude of assets involved reflects the alarming scope of corruption tied to these flood-control projects,” the AMLC director said.
What makes this scandal particularly damning is its demonstration that corruption in the Philippines isn’t episodic—it’s continuous and evolutionary. The fundamental architecture remains: public funds systematically diverted to bribes, commissions, and “SOPs” while critical infrastructure crumbles.
Protesters have descended on contractors’ offices and homes and the Batasang Pambansa, pelting them with rocks and bags of paint, their anger reflecting not just current suffering but decades of betrayed promises. They understand what officials pretend not to: this isn’t a new scandal—it’s the old scandal, a cancer that began in the 1960s, worsened during dictatorship, and spread deep into the marrow of democratically elected governments, thanks to corrupt bureaucrats and political families who have their snouts deep in the public trough.
Finding and punishing culprits matters. But a system that survives this many presidencies and this many regimes isn’t corrupted by bad actors; it’s purpose-built for them.
It’s one a climate-vulnerable nation can least afford.—PCIJ.org