Neri, SSS execs received P127-M perks over 3 yrs

Former Social Security System (SSS) president Romulo Neri, along with some top executives of the agency allegedly appropriated for themselves bonuses and other incentives totaling more than P127 million over three years based on data provided the Senate in relation to its current probe into excessive compensations given to officials of government-owned and -controlled corporations (GOCCs).

Of the amount, one SSS executive, outgoing chairman Thelmo Cunanan got an estimated P85 million in bonuses and allowances during the same period, Sen. Franklin Drilon said yesterday.

Senate probers cited the likelihood that these officials will face criminal liability for the apparent abuse they committed in managing the workers’ trust funds.

It was the turn of SSS officials to be grilled by the finance committee chaired by Drilon as the panel resumed its inquiry on the reported fat salaries and excessive perks of executives in some GOCCs.

The bulk of the amount came as compensation for sitting in the board of Philex Mining Corp., representing the state fund which has investments in the mining firm.

Neri, who appeared in the hearing was found to have received almost P12 million for exercising stock options in Philex while he sat in the board of the firm from 2007 to March this year. Neri insisted, however, that he and the other SSS officials in Philex are entitled to the compensation adding that there is no law that required them to remit it to the agency “and is declared as our personal (income).”

“It is very obvious that there was abuse on the part of the commissioners of the SSS when they took it upon themselves to be entitled to these gargantuan sums,” Drilon said in briefing the reporters after the three-hour hearing, adding that the large sums of money should have been surrendered to the agency they represented.

In sitting in the Philex board, Neri, Cunanan and SSS commissioner Sergio Ortiz-Luis Jr. were entitled to stock options and records culled by Drilon showed that in their respective transactions to sell the shares of stocks granted them, they gained income in tens of millions of pesos.

“It would appear that you made, for a period from May 28, 2009 up to March 5, 2010,a total of P11.8 million. Now, the first question is, will you turn this over to the SSS?” asked Drilon.

“It’s part of my compensation as a board member. Part of my incentive as a board member,” Neri replied.

Neri, it was gathered, was entitled to 495,000 shares of stocks of Philex in May and Sept. last year, with an additional 123,000 shares in November and 619,000, supposedly in March this year or a total stock option of 1.7 million shares.

This is on top of the per diems and other allowances, which in some cases amount to P8,000 to as much as P40,000 per committee meeting.

“They’re declared as personal income of the commissioners and it’s supposed to be declared for BIR (Bureau of Internal Revenue) purposes,” said Neri.

“It is quite unfortunate that Mr. Cunanan is not here to explain but on the basis also of the records of the Philex where he sits, let it state and spread into the records, and I’ll ask him to explain, when he can explain this that on Aug. 14, 2007 had a stock option of 495,000 and he exercised this option at P3.08 per share, he sold it P5.60 or a gain of 1.247 million. He was also granted a stock option on Nov. 12, 2009 and it called for, an exercise option of 3.140 million shares, the exercise price was at P1.90. The market price was P19.50.

“Mr. Cunanan made an income for a single transaction, sitting in the board of Philex as a nominee of the SSS to the tune of P55.2 million by exercising his stock option privilege on Nov. 12, 2009.”

“On March 12, 2010, he was given stock option for 930,000 at an exercise price of P1.90/share, the market at that time was P12.79. He made in this transaction P10.13 million …for the three transactions, as a member of the board of Philex dominated/representing SSS pension fund, Mr. Cunanan made P66.6 million,” Drilon said.

“This was not turned over to the SSS on the theory as Mr. Neri is saying, that this is part of their compensation. I do not know how much taxes was paid here but this stock option plan is apart from the director’s fees, bonuses and other benefits that Mr. Cunanan got from Philex. I repeat that this is just on the stock option, that P66.6 million in three transactions dated back in 2007, 2009 and 2010.

“Mr. Cunanan also made, over the same period – 2009, 2010 and 2007 – a gross amount from Philex Mining Corp. of P19M…and therefore from Philex Mining alone, Mr. Cunanan made approximately P85 million in three years. These are all on record and these are never turned over to the SSS,” Drilon said during the hearing.

For his part, Ortiz-Luis had a stock option from 2009 to the present, that also amounted to approximately gain of P4.6 million.

“Again this was not turned over to the social security commission. More specifically, he was granted stock option in Jan. 2010 of 495,000 or a gain of P4.5 million, apart of course from what he made as a director, director’s compensation in Philex Mining which indicates P2.45 million,” he said.

“I want to demonstrate the magnitude of the compensation here that we’re talking here,” said Drilon.

Sen. Sergio Osmena III, committee member, said these outgoing officials should be made to reimburse what he described as excessive bonuses and remit these to the trust funds.

“They should be made to refund,” Osmena said, citing the case of Neri who, he said, admitted earning over P11 million “for 12 hours a month” just attending board meetings at Philex.

Drilon emphasized the need to craft a law to stop these abuses, especially as there are possible criminal liabilities incurred by those manning pension funds.

Drilon said there seemed to be an SSS “mafia” insofar as cornering all the “juicy seats” as government representatives in money-making corporations during the Arroyo administration.

“It seems it is only this small group who are favored to get into the juicy boards,” Drilon said.

The possible criminal liability of these officials, Drilon said, would arise from the failure of Cunanan, Neri and others “to exercise the extra-ordinary diligence required of a manager of a trust fund, which is the SSS pension fund. –Angie M. Rosales, Daily Tribune