Congress approves bill to reform state firms

Published by rudy Date posted on May 12, 2011

The congressional bicameral conference committee yesterday approved a bill creating a body that would oversee the operations of government-owned and controlled corporations (GOCCs).

The move, aimed at curbing the alleged excesses of some officials of the GOCCs, will look over the 157 GOCCs under the present Aquino administration.

Sen. Franklin Drilon said the approval of the bill will institute wide-ranging reforms in government corporations.

“This law will create a Governance Commission for GOCCs (GCG) which will review the performance of these GOCCs. The abusive practices of the board — as we have seen in the MWSS (Metropolitan Waterworks and Sewerage System) — of granting 36-month pay for 12 months of work, or in GSIS (Government Service Insurance System) where the directors would earn half a million pesos for attending one board meeting,” he told a press conference yesterday.

He said the body would also put an end to the practice of some GOCC board members who sit in investee corporations and take advantage of stock option plans and bonuses.

Drilon explained that the GOCC Governance Act will also professionalize the membership of the board and the various CEOs and presidents.

During the previous administration, Drilon said, there were instances where a manicurist was appointed to a trust fund. But with the measure’s approval, only qualified individuals will be appointed “because we have imposed that only those qualified to a fit proper rule can be appointed and there should be nominations from the GCG on who should sit as members of the board.”

Also, the GCG is authorized to review the operations of the GOCCs so that they can determine whether these GOCCs should be abolished, merged or privatized subject to the approval of the President.

Drilon, however, said that both chambers of Congress — the Senate and the House of Representatives, could still reorganize a GOCC despite the establishment of the GCG.

Cavite Rep. Joseph Abaya, a member of the House contingent to the bicameral committee, said the body, which will be headed by a secretary or a chairman of Cabinet rank, would rectify what has been done by the GOCCs under the previous administrations. It would also effectively dismiss 157 chief executives and around 1,750 board directors.

Abaya explained that the GCG would have five members headed by a chairman, two commissioners and another two ex-officio members – the secretary of Budget and Management and secretary of Finance.

“There will be five members, to be headed by a chairman, two other commissioners —all three are going to be appointed by the President, and two will be ex-officio members— the DBM and Finance secretaries,” Abaya said.

Drilon said funding for the operations of the body would initially come from the President’s contingent fund and subsequently from the General Appropriations Act.

Abaya said the bill when enacted into law would abolish all existing charters of the GOCCs and create a uniform system for the payment of salaries, bonuses and other GOCC perks.

The Cavite lawmaker explained that government stands to earn more revenues from the establishment of the GCG by way of cutting excessive perks and putting these into the coffers of the government.

Drilon said there are some GFIs with billions of pesos in retained earnings which are being given out to employees in the form of bonuses.

“Once this becomes law, they cannot do that and they cannot declare these bonuses unless they first comply with the law which requires 50 percent of the net earnings must be remitted as dividends. They must justify why they are not declaring dividends out of those billions in retained earnings. In that sense, we can increase the coffers of the National Treasury,” he added. –Gerry Baldo, Daily Tribune

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