Press Release
August 31, 2010


DRILON: ... statement particularly because Mr. Thelmo Cunanan has come to the press and sent me a letter also... and released this letter to the press explaining about the exercise of the stock option in Philex Mining. In his letter, Mr. Cunanan made two points: that he used his own funds in order to exercise the option, and number 2, that he did not sell everything. Unfortunately, for the information of Mr. Cunanan, under the 2009 Audited Financial Statement of Philex, it provided that "stock option exercises of the company's non-management directors, consisting of the difference between the market and exercise prices at the time of option exercise, are considered as director's fees." Therefore, under the Audited Financial Statement of Philex, Philex itself considers the difference between the stock price or the option price at the time the option was exercised and the market price as director's fees and therefore all that we did was to compute the exercise price--which is P1.9 at certain instances--and compare this with the stock market price, the difference we arrived at was P63 million. Mr. Cunanan says he did not sell everything, and therefore it should only be P15 million. Insofar as Philex is concerned, it is P63 million.

Number 2, the fact that he used his own funds is beside the point. The point is he should have given this option to the SSS so that the SSS should be given the option to exercise the stock option granted to the representative of the SSS in the Philex board. This is called for given the fact that Mr. Cunanan was only a trustee of the pension fund. Moreover, apart from the amounts that were realized as compensation by virtue of Mr. Cunanan sitting in the board of Philex, he also realized close to P6 million from 2008-2010 for his board seat in the First Philippine Holdings Corp., and also for sitting in the board of Unionbank, he realized P10,731,640 as director's share for the profit of Unionbank. In 2008, he made P7,923,427.97 and in 2009, Mr. Cunanan made P15,431,036.51. By the way, if you compute the bonuses and profit share of the board of directors in Unionbank--3 of whom were trustees of SSS namely Atty. Sergio Apostol who in 2009 made P15,431,036.51; Mr. Romulo Neri received the same amount and Mr. Cunanan received the same amount. The 3 of them, in 2009 from the Unionbank board, made P46,293,000 just from Unionbank alone. And the dividend of the SSS from Unionbank during the same period is approximately P100 million. While the SSS made dividends of about P100.4 million, just to be more precise, Messrs. Cunanan, Neri and Apostol made P46,293,000 in directors' bonuses from Unionbank.

Q: (inaudible)

DRILON: In other words, the pension fund earned P100 million and the 3 directors earned P46 million. That's total, for 2009.

Q: On findings during the hearing

DRILON: What we have discovered is that notwithstanding the fact that LWUA and MWSS are losing money in certain years, that did not prevent the board from declaring 'bonuses galore'. Twenty-five months of bonus in 2009 plus their 12 months basic salary is really obscene, by any language. We have even discovered that yung ultimong drayber ng MWSS mayroon siyang car loan at car plan. And yet income taxes are not properly paid. And yet in the case of LWUA, for the past one year, there is due the national government of P263 million in the form of dividends. They have refused to remit it and yet they have declared bonuses, under-compensation of the chairman in 2008 amounted to P3.3 million. MWSS, the same thing--P258 million was due from 1997-2009 in terms if dividends. They have not remitted this but they have declared gargantuan bonuses of 25 months. Worse, in the case of LWUA, it even received subsidies from the national government amounting to P1.9 billion in 2009. LWUA does not remit dividends, they receive subsidies and they have fantastic bonuses. In the case of MWSS, they have not remitted dividends but they have declared 25 months bonus plus 12 months basic salary--that's 37 months pay in one year. This is the kind of abuse that we see today.

Also, I am looking very closely at this payment of extraordinary and miscellaneous expenses. In the case of Benny Ricafort of the CDC, he liquidated P10 million by mere certification, not even receipts. This is a practice that must be stopped. We cannot liquidate public funds by simply saying that we have spent it. We will continue with the hearings on Sept. 6 at 9:30 am. In the case of the board of directors of MWSS, they admitted that they met 47 times in one year. Out of 52 weeks, they met 47 times. There were certain days that they met twice, and therefore entitled to 2 per diems of P14,000 each. If this is not an abuse, I do not know what it is. As submitted by MWSS chairman Oscar Garcia, in at least 2 occasions, they met twice in one day. It may be a significant amount but this indicates to you the kind of abuse that is being done, the kind of indecent practice that is being done in these agencies. So it's good that we are surfacing all of this to the public's attention so that we can start this administration of President Aquino on the right track, insofar as the finances are concerned. And these practices which are grossly prejudicial to the public interest, these immoral and indecent practices will be stopped by exposing this to media and we will also be crafting a law. It will not be an easy piece of legislation but we will try our best to cover all of these practices and come up with a rule that will prevent a repetition of these indecent practices in GOCCs.

Q: Inclined din po ba ang committee to recommend charges to the Ombudsman?

DRILON: I'm not prepared to say that. The Ombudsman, I assume, is listening. Hopefully they can take notes of all the statements made here so that we can correct these malpractices in the past.

Q: (inaudible)

DRILON: Certainly, it is clear that all of this were beyond the limit set in MO 20. Approvals of President Gloria Macapagal-Arroyo were not secured and they just were doing this on their own. The board of directors was approving this. Conflict of interest was very clear--they declared bonuses for themselves. They negotiated with the unions for the benefits of the rank and file and included themselves in these approvals. So these are classic cases of conflicts of interest.

Q: (inaudible)

DRILON: CoA said they have disallowed it, but of course MWSS appealed this adverse finding of CoA.

Q: They should return the amount?

DRILON: Once the disallowance becomes final, then they will be compelled to return.

Q: (inaudible)

DRILON: There is nothing in CoA about these earnings from private corporations where SSS invested. In fact, this has not appeared in the CoA reports because these are funds coming from the private sector.

Q: (inaudible)

DRILON: In MWSS, the chairman in 2009 made P5,401,391. In 2008, Mr. Garcia made P3,538,000 in bonuses. Insofar as the board of directors is concerned, a substantial portion of what they receive is a bonus because they have no basic salary. Insofar as the members of the board are concerned, the 25 months is approximately P5,401,391 in 2009 and P3,538,000 insofar as Mr. Garcia is concerned. I failed to ask how much Ms. Macra Cruz received in 2009. That should be also on record but I don't have it.

Q: (inaudible)

DRILON: For Macra Cruz, in addition to the 25 months bonus, she also has a basic salary of approximately P98,000/month.

Q: What covers their fiduciary duty...?

DRILON: The Civil Code and the Revised Penal Code.

Q: Should Gen. Cunanan return the money in exercising the stock option?

DRILON: Yes, he should. He could not have exercised that option without the SSS having invested in Philex and therefore it should have been the SSS who should have been given the opportunity to exercise that option, and therefore increase the interest of SSS in Philex.

Q: (inaudible)

DRILON: We also intend to call back other agencies like Mr. Benny Ricafort, so it's difficult for me to say that that's the last hearing.

Q: (inaudible)

DRILON: What is clear to me is that we must have a law... how the law will look like, at this point I do not have an idea. I will be consulting experts here and this is about time that we impose certain rules in view of these bonuses that we see. There is a clear need for a law.

I call on the President to immediately issue an Executive Order which will suspend all of these payments, because until he does so, these people will continue to get these benefits which are really uncalled for, excessive and even obscene.

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