Press Release
September 8, 2010


DRILON: It is quite refreshing that once in a while, the head of a GOCC will admit that the salary structure in the GOCC concerned is scandalous and that is the case of [MECO] Chairman Amadeo Perez. I must commend him for being candid. He is new to the corporation and therefore he could give it a new look and a fresh look. The other refreshing information that we got today is that the Phil. Deposit Insurance Corp. has a Code of Ethics--which I think is a good model. We will look at it and see how we can incorporate a feature of that Code of Ethics in the proposed law that we will make.

But going back to MECO, the way these GOCCs are operating is really scandalous. Firstly, they collect public funds and they receive public funds coming from passport fees, visa fees, notarial fees of the employment contracts of the OFWs. And yet these public funds are not audited by the CoA. It is audited by a foreign auditor: KPMG. That is the auditor based in Taiwan who would audit public funds belonging to the Philippine government. They are operating in violation of the Constitution and all the laws of the land. They are not subject to CoA audit, they do not remit their funds to the national coffers, notwithstanding the fact that they are a wholly [government]-owned and controlled corporation. This has been the practice for the last 20-30 years that it has been in existence and to put it bluntly, nagiging gatasan itong MECO of whoever is in power. And of course naging gatasan din ng mga nakaupo ron, because the retirement benefits are the most scandalous. After two years of serving in the board of MECO, you can retire and be paid P600,000 for every year of service. If you do not know that scandalous, I don't know what is scandalous.

The records will show that they have remitted to Manila Office for the last two years a total of $3.4 million. This is from MECO-Taipei to MECO-Manila. Nobody knows what happened to the $3.4 million. These are public funds. They have not remitted it to the National Treasury, so somebody must be held responsible for this. If we are going to adhere to the 'Landas ng Pagbabago', this is where we should start, because talagang mali itong ginagawa ng MECO. Again, this is an example of how the GOCCs are operating. MECO has been operating as a government of its own. Their office would collect public funds; their board of directors would appropriate those funds by preparing an annual budget; and they would disburse this public fund without the scrutiny of Congress or anyone. This must be stopped. I am glad that the new chairman--former Cong. Amadeo Perez--has agreed that their funds must now be audited by the CoA, and not the foreign auditor in Taipei or a private entity which is really in violation of all laws.

Now we will conduct our last hearing... actually we have gathered all the data necessary insofar as the compensation and the benefits of the GOCC executives are concerned. By next week, we should be able to already discuss the proposed legislation. On Monday, we will be inviting some resource persons to help us and comment on the draft piece of legislation that we will propose to be adopted by Congress. Secretary Abad has mentioned a proposed Executive Order which will rationalize the compensation and position classification system in the GOCCs. Let me emphasize that this proposed EO cannot cover the GOCCs which are exempt from the SSL because for at least 27 GOCCs, their compensation is being fixed. The compensation of the employees is being fixed and decided by the Board of Directors by virtue of their charters enacted by Congress. These are specific charters where the power to fix the salary is in the Board of Directors. The proposed EO cannot deprive the Board of Directors of the power to decide on the compensation scheme of the GOCC. So we have to enact legislation where this kind of salary structure of salary-exempt personnel in the GOCCs can be brought into the review process, which will be done by the Executive branch.

In the law that we will craft, we will also make a distinction between the salary scale and compensation framework of the executives--the rank and file on the one hand, and the Board of Directors on the other. They are not similarly situated, meaning those appearing in the regular payroll and would report regularly to their offices should be treated differently from the Board of Directors in terms of compensation. We can have more leeway insofar as the salary structure of executives and the rank and file are concerned, in order that we can really be competitive with the private sector. The Board of Directors and the Trustees are usually granted per diems and representation and transportation allowance and they should be limited to that; not where we see today that in the MWSS, they have 25 bonuses to the Board of Directors, or to the GSIS where they are granted P6 million as financial entitlement to the Board of Directors. These abuses must be stopped.

Also, we are looking into the possibility of including penal provisions, meaning compensation packages which are beyond what is approved by the President can be considered as a violation of the Ethical Standards Law or even the Anti-Graft Law. We will be looking into that in order to put teeth in the rationalization of this compensation so that abuses can be stopped. You can only stop it if there are penalties in the law. Otherwise it will be ignored.

Q: In MECO, you said that somebody must be held liable for the scandalous salary structure. How high would the liability be?

DRILON: Whoever is the approving authority... I do not know yet.

Q: Up to Malacanang?

DRILON: I do not know the participation of Malacanang.


DRILON: They are not under DFA.

Q: (inaudible)

DRILON: The chairman is Mr. Tomas Alcantara, who was also the presidential adviser of Gloria. he was holding office in Malacanang as far as I know. He is the chairman of the board.

Q: So the liability could go up to the level of Alcantara?

DRILON: I do not want to make a conclusion because I have not examined the approval processes. But certainly, when you cannot trace anymore what happened to the $3.4 million in the last two years... what happened to this? How was this disbursed? A total of $3.4 million. I am looking at their audited financial statement. Here, the 'Notes to Financial Statement':

Cash transfers to MECO-Manila in US dollars: Total of $3,395,000--from February 5, 2008 to November 9, 2009.

Q: Can you give us a ballpark figure... sabi mo since they started operating...

DRILON: I cannot give you a figure because it varies from year to year. But very substantial sums... nobody knows what happened because this was never remitted to the national coffers. Their records have never been audited by CoA. They are audited by KPMG. So we don't know.

Q: (inaudible)

DRILON: They have full control of the board. They have full access to the documents. Malacanang can give directives and orders to the MECO board. They have all the powers to the MECO board.

Q: What can President Aquino do para itigil ito?

DRILON: First, the funds must be audited by CoA. Number 2, there should be a directive that all the earnings of MECO should be remitted directly to the Bureau of Treasury.

Q: Can the President order CoA to a backward [audit]?

DRILON: Certainly. The President has all the powers to do that.

Q: (inaudible)

DRILON: Because the board resolution also passed by the Board of Directors... They have no charter, they have Articles of Incorporation. They were formed under the Philippine Corporation Code as a non-stock, non-profit entity... That is why the Board of Directors exercised unlimited powers because nobody was supervising them. In fact, the opening statement of the chair is that this is a private corporation. That indicated the thinking of the MECO bureaucracy. In fairness, Chairman Amadeo Perez must be commended for having an open mind on this and immediately accepting that something is wrong and must be corrected. He agreed to a CoA audit and that these are public funds. There is no law authorizing the Board of Directors to disburse public funds. Only Congress can do that and only those with special charters authorized by Congress through their charters can disburse funds. That is why those corporations are even required to have their budgets approved by the President. Eh dito wala na eh, sige sige na lang.

Q: Senator Recto said that there was a presentation by the DoF where the GOCCs still have not remitted P13 billion. Will your committee also look into this?

DRILON: We will include this in the proposed legislation that we will have. We will look into this certainly. On Monday, we will ask representatives of the DoF to explain to the committee why this is so. From the reports that I received from them, for 2008 the total dividend was only about P13 billion. Obviously from the reports that they submitted to the House of Representatives, it's much more than that.

Q: In the case of National Home Mortgage, the chairman has 'scandalous' discretionary funds.

DRILON: That's the other thing. Here, we noticed that the representation expenses were 6 times larger than the basic salary. This is not reported as income because this is drawn against receipts. This is something that should be corrected. There's something wrong with it. There's something that is sinister about it to convert a compensation package consisting of 70% of representation expense and only 30% basic pay.

Q: It showed that it's also the same with the PDIC executives although they have their Code of Ethics. Is there a need for PDIC President Jose Nograles to face the Senate?

DRILON: I think we have enough data. I don't have to require Mr. Nograles to come around.

Q: Regarding the creation of the oversight committee on public enterprises in the Senate which you introduced. When will it come in?

DRILON: We just activated that. It was already in the past Congress. We just activated that by filing a resolution. That will be one of the functions of the committee.

Q: Will it cover broader areas on GOCCs?

DRILON: Certainly, it will exercise oversight functions over the issues that we have unearthed today and in the past several hearings that we had and in compliance with the proposed legislation.

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