Press Release
November 8, 2010

Opening Statement of Senator Franklin M. Drilon
Committee Hearing, Senate Bill No. 2566

In the course of this Committee's inquiry pursuant to PSR No. 66 on the compensation in Government-Owned and Controlled Corporations (GOCC's), we confirmed that members of the Board of Directors of certain GOCC's have allocated for their benefit bonuses that went as high as the equivalent of twenty-six (26) months, notwithstanding the poor financial condition of these enterprises.

It was also shown during the hearings that COA-independent GOCC's such as the Manila Economic and Cultural Office (MECO) established excessively generous retirement schemes that granted P600, 000 for every year in service to Directors who have served at least two (2) years. Additionally, Trustees of Pension Fund agencies have, throughout the years, impudently received from investee corporations hundreds of millions worth of stock option plans and profit share denominated as Directors' Fees, in clear violation of their fiduciary duty as trustees of the pension fund.

This Committee was also informed by the Department of Budget and Management (DBM) that most of the corporate operating budgets (COB's) of GOCC's which incidentally account for one-third (1/3) of the national expenditures for salaries and maintenance and other operating expenses, have not been dutifully submitted to DBM for review. In addition, we lamented the discovery that GOCC subsidiaries, which further drain public funds, have been rashly created and local banks audaciously purchased despite the absence of requisite approvals from monitoring government agencies.

Finally, there are the other issues that are tangent to the subject at hand: (1) the often ridiculed and politicized appointment of less than qualified individuals to policy-making posts in GOCC's; (2) the clamor for the abolition of non-performing and obsolete public enterprises; (3) poor corporate governance environment and (4) weak oversight system. On the basis of the data gathered in the course of our hearings conducted by this Committee in aid of legislation, pursuant to PSR No. 66, we have filed Senate Bill No. 2566, or the proposed GOCC Governance Act, which seeks to address these concerns by introducing reforms in this sector of governance.

Among the purposes of the bill is the improvement of corporate governance in GOCC's by (a) setting a just and equitable compensation system at reasonable levels that takes into account the results of operations of GOCC's and offers enough incentives to attract the best talents to manage these enterprises; (b) introducing a transparent process for the selection of board members that ensures qualifications and expertise; (c) creating a more effective oversight mechanism through the GOCC Council for Governance (GCG); (d) introducing a performance evaluation system to help assess and evaluate the effectiveness and efficiency of GOCC's, enabling the GCG to make recommendations, when necessary, for their reorganization, streamlining, merger, abolition or privatization. These recommendations will be submitted to the President, who shall be vested with the delegated authority based on a set of reasonable standards, to undertake the reorganization of the GOCC's.

The welfare of the employees in GOCC's will be protected and even advanced as the bill ensures that no diminution of their salaries will be allowed. Through this measure, it is our hope that the GOCC's will become a significant tool for economic development, instead of a burden upon the government's resources.

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