Full disclosure in GOCCs urged

To whip state firms into efficiency, a legislator has proposed that government-owned and -controlled corporations (GOCCs) and financial institutions to periodically give to the public what is equivalent to the requirement of the bourse on listed firms, which is adequate disclosure of their financial conditions.

GOCCs should routinely report their operating and financial performance directly to the public, to Filipino taxpayers, not just to the Department of Finance (DoF), Cavite Rep. Elpidio Barzaga Jr. said.

“Taxpayers are the ultimate shareholders of all GOCCs. Thus, GOCCs should disclose their quarterly and annual results to the public, through management conducting a news conference, where their performance can be openly scrutinized by the media,” Barzaga said.

GoCCs should also post detailed quarterly and annual reports on their web sites, in a format to be aproved by the DoF, for all to see, Barzaga said.

GoCCs are under fire for being perennial drains to the government coffers while appointed officials in these firms shower themselves with fabulous salaries and perks.

President Aquino recently signed Executive Order 7 suspending the perks of GOCC officials but this has been challenged in the Supreme Court (SC) which is expected to come out with a ruling soon on the EO’s validity.

Aquino had said he is hopeful that the high tribunal will see through the wisdom of his EO 7 and its legitimate purpose to correct the warped system existing in the GOCCs and GFIs to the detriment of the people’s welfare.

EO 7 issued last Sept. 8 nullified the immunity being enjoyed by government agencies which are not covered by Republic Act (RA) 6758 that which prescribes the revised compensation and position classification system in the government and for other purposes.

Barzaga said GOCC’s proposed reports should include the entity’s net profit or loss in the period under review, subsidy received, dividends remitted to the National Treasury, and the emoluments of board members and senior executives.

To discourage self-dealing, Barzaga said the reports should also include all “related party transactions” by board members and senior executives.

“This will promote absolute transparency and full accountability in the operations of every GOCC,” he added.

Barzaga said many GOCCs still lack transparency.

“If you go to the web site of the National Power Corp., for instance, the latest publicly available annual report you can download is for 2008,” he pointed out.

The DoF earlier ordered 158 GOCCs to submit all necessary information to the department a month before their board meetings, as part of new reporting rules meant to rein in abuses, including excessive rewards that many boards have been giving themselves.

Barzaga has been pushing for a mandatory cap on the remuneration of board members and senior executives at GOCCs, including Cabinet members who, by virtue of their positions, concurrently serve on the boards of multiple state-run firms.

He cited the case of the Power Sector Assets and Liabilities Management Corp., where the heads of the DoF, Department of Energy (DOE), Department of Budget and Management (DBM), National Economic Development Authority (Neda), Department of Justice (DoJ), and Department of Trade and Industry (DTI) serve as board members.

At the Philippine Health Insurance Corp., the heads of the Department of Health (DoH), Department of Labor and Employment (DoLE), Department of the Interior and Local Government (DILG), and Department of Social Welfare and Development (DSWD) serve as board members.

At the Home Development Mutual Fund (Pag-IBIG Fund), the heads of the DoF, DBM, DTI, DoLE and Housing and Urban Development Coordinating Council serve as board members. At the National Development Co., the heads of the DTI, DoF, DBM, DoE, and Department of Environment and Natural Resources (DENR) serve as board members.

At the Land Bank of the Philippines, the heads of the DoF, D0LE, Department of Agriculture, and Department of Agrarian Reform serve as board members. At the National Transmission Corp., the heads of the DoF, DoE, and DENR serve as board members.

Sen. Franklin Drilon had filed a bill requiring members of the governing boards of state enterprises to refund to the state agency they represent the excessive compensation and bonuses they received from private corporations.

Drilon filed Senate Bill 2566 that aims to impose a limit on per diems, allowances and bonuses the directors and trustees receive.

The directors and trustees are entitled to bonuses equivalent to not more than two months salary of the chief executive officer of the government-owned and controlled corporation (GOCC).

Profit shares, stock options, stock dividends and other similar offers or grants from corporations where the GOCC that they represent as an investor should be held in trust in favor of the state firm.

Drilon added that a third of the government expenses for salary, maintenance and other operating expenses (MOOE) and capital outlays is appropriated to 14 government-owned and -controlled corporations (GOCCs).

Drilon said P532.25 billion is being spent by the government to 14 GOCCs in 2010, as against total new appropriations less the automatic appropriations of P909.28 billion.

“One-third of the total expenditure in the entire government would go to the GOCCs, and yet they have gone on their merry way, they have been their own Congress, they have been their own BIR and Finance and they have been their own department,” Drilon told a budget hearing.

“It’s about time that we take a serious look on such a huge portion of our national expenditure program which is not monitored. Nobody is looking into these GOCCs with much detail,” he said.

The 14 monitored GOCCs include the National Food Authority, National Irrigation Administration, National Electrification Administration, power companies National Power Corp., Power Sector Assets and Liabilities Management Corp. and National Transmission Corp. (counted as one), Philippine National Oil Co., National Housing Authority, Local Water Utilities Administration, Metropolitan Waterworks and Sewerage System, National Development Corp., Light Rail Transit Authority, Philippine Economic Zone Authority, Philippine National Railways, Philippine Ports Authority and Home Guaranty Corp.

On the basis of these findings, Drilon said his committee will craft a remedial law called Public Enterprise Governance Act of 2010, which will also establish a council that will monitor and review the operations of 157 state-owned firms, as a result of the hearings on the unwarranted and obscene bonuses and allowances being enjoyed by the governing boards of state-run enterprises.

The proposed Government Corporate Monitoring and Coordinating Council, which came into existence in 1984 but was dissolved in 2001, would have the authority to merge or abolish various GOCCs, impose standards of performance for the appointment of the board of directors, and come up with a review of the salary structure of GOCCs. -Ayen Infante, Daily Tribune