Proposed Corporate Governance Act of 2010 endorsed

MANILA, Philippines – The Senate committee on finance has endorsed the proposed Corporate Governance Act of 2010 for approval, a measure intended to put an end to the reported abuses committed by officials of state-owned firms.

Committee on finance chairman Sen. Franklin Drilon endorsed for plenary approval Senate Bill 2566, or the Corporate Governance Act of 2010, which he said could put an end to abuses by officials of government-owned and controlled corporations (GOCCs).

“The days when the 157 boards can act independently of the national government (are) over once we have this bill passed into law. We are confident that we would be able to have this measure passed in the Senate,” Drilon said.

“We are confident that once the bill becomes a law, the abuses that we saw on the part of the GOCCs will no longer be possible,” he said.

Drilon said the Senate would ask President Aquino to certify the bill as urgent in order to facilitate its passage in Congress.

Though there is no counterpart bill in the House of Representatives, Drilon said Speaker Feliciano Belmonte Jr. would see the need to have this law in place.

The bill proposes the creation of a Governance Council for GOCCs (GCG), an advisory, monitoring, recommendatory and policy-enforcing body attached to the Office of the President (OP).

The GCG would be tasked to rationalize the pay structure of the GOCCs by developing a compensation and position classification system that would be approved by the President.

Drilon said Congress would delegate its power to reorganize the GOCCs to the President for a temporary period.

“They will exercise legislative authority limited to a period of time and only upon certain standards. In other words, under certain jurisprudence, Congress may delegate its authority to amend the GOCC charter to the President, as we have done in this particular case,” he said.

Drilon explained that amending the charters of the GOCCs, including their reorganization and the setting of pay scales, is a function of the legislature but this can be delegated to the President on certain reasonable set of standards and for a temporary period.

Drilon though noted the proposal would also require the reimbursement of all realized profits and benefits received by members of the board of the GOCC concerned, including the share in the profits and bonuses in excess of what was authorized by the GCG.

The stock options and dividends and any benefit received by members of the board of a corporation acting in behalf of the state-owned firm would be held in trust for the GOCC they represent, he said.

Drilon said this provision was included to address cases similar to the Social Security System where its directors were able to earn millions from the exercise of stock options made available to them as representatives of the trust fund in some private corporations.

Partly to blame

Congress is partly to blame for the huge and questionable perks and benefits granted to top executives of state-owned firms, according to an official of the Department of Budget and Management (DBM).

DBM director Mary Grace Chua said officials of state-owned firms could invoke their respective independent charters in managing their funds.

Chua told the congressional hearing presided over by Iloilo Rep. Jerry Treñas that GOCC officials have the sole discretion to manage their funds under the provisions charter granted to the state-owned firms by Congress.  -–Marvin Sy (The Philippine Star) with Paolo Romero