TRANSCRIPT OF KAPIHAN SA SENADO WITH SEN. FRANK DRILON

DRILON: Apart from the issue of the reasonableness of the allowances, per diems and bonuses of the directors of the GOCCs, we will also look into the dividends that the GOCCs remit to the natinoal government, relating it to the 2010 budget. The projected deficit for 2010 is P325 billion. This can be reduced depending on how much dividends would be remiited to the NG. It has an impact on the budget.

Under RA 7656 entitled An Act Requiring Government-owned and Cotrolled Corporations to Declare Dividends to the National Government under certain conditions, the GOCCs are required to remit 50% of their annual net earnings. Fifty percent of the net earnings is supposed to be remitted. One of the issues that we will look at on Tuesday is whether or not the GOCCs are complying with this, because we have the annual audit report of the Commission on Audit, for example, the BSP. THe COA, in its audit annual report ending 2007, as of December 31, 2007, indicated that there is an under remittance from the BSP to the tune of P7,070,519,000. So we want to find out whether or not this has been remitted to the National Government. I repeat, under the COA findings, there is a non-remittance by the BSP of P7.07 billion as of December 31, 2007. BSP alone. I must make it clear what is the status of this. As of November 8, 2008, Chairman Reynaldo Villar of COA indicated that up to 2006, this has gone up to P16,452,000,000 in under remittance of dividends from the BSP. In fairness, I have no information as to exactly what are the amounts due to the NG from the BSP in terms of unremitted dividends.

The last communication here signed by Chairman Reynaldo Villar is in November 2008. What has transpired in 2009 up to today, I have no information and we will ask the BSP to tell us exactly how much of this unremitted dividends has been remitted. Especially considering that the Board of Governors of the BSP were among those the COA cited as having allowances which are quite substantial.

In 2009 for example, the total allowances and salaries of the BSP, per our computations, amounted to P101.987 million in terms of salaries and bonuses of the governor, deputy governor and members of the Monetary Board of the BSP. Given these substantial allowances that they have received from the BSP, it is fair for us to ask whether or not they have remitted the dividends due to the NG under the pertinent laws today.

Q: Invited ang BSP?

DRILON: We will invite them.

Q: Is the BSP chairman also sits as a member of the Monetary Board, or is it the Secretary of Finance?

DRILON: If I recall correctly, it is the Governor of the Central Bank.

Q: If I'm not mistaken, former Press Secretary (of GMA) Toting Bunye is a member of the Board.

DRILON: That's right. Net earnings shall mean income derived from any source. Net of deductions allowed under Section 29 of the Internal Revenue Code, and income and other taxes paid thereon. But in no case shall any reserve for whatever purpose shall be allowed as a deduction from net earnings. In other words, the law sets what is the basis of the dividend. No reserve shall be allowed--reserve for losses, reserve for building, reserve for capital expenditure--that is not allowed. The net earnings is gross income derived from all sources, less taxes, equals net earnings. Fifty percent of that must be remitted to the National Government as a source of revenue to reduce the deficit.

Q: Itong mga excessive allowances and perks mostly the decision of the board of the GOCC itself?

DRILON: That is correct. That is a decision of the board of the GOCC itself. Various laws, the last of which is the Joint Resolution of Congress in 2009, authorize the President to set limits but it has never been done. Therefore their allowances hit the ceiling. The existing regulation does not include income derived by members of the board of GOCCs who sit in private corporations where the GOCCs have investments.

Q: Halimbawa yung sinabi nyo na member of the GOCC sitting in the SMC Board. Yung per diem and allowances kanya ba yon?

DRILON: Hindi dapat because the director in that example, the trustee of the GSIS who sat in the board of PLDT, sits there not in his personal capacity but as representative of the GSIS and the fund in the GSIS are not government funds. These are funds of the members, these are trust funds. The same with the Social Security System, it is a trust fund. This cannot be spent by the government. This cannot be appropriated by Congress because these are funds of the workers in the private sector. Therefore, when SSS would invest these funds in PLDT and the investment is of such magnitude that they will be entitled to sit in the board member in PLDT, the SSS would designate a representative to the PLDT board. The bonuses that the director of the GOCC receives in the board of PLDT should pertain to the SSS, not to the director because he has no investment.

Q: Yung dividends?

DRILON: Yung dividends, I assume, are being remitted to the SSS or GSIS as the case may be. It's the bonuses that are being appropriated by the directors.

Q: Yung per diem na lang siguro, medyo maliit naman yon.

DRILON: Yung per diem siguro you can justify, but not the bonuses of the GOCC director who sits in the board of private corporations where the seat is by reason of the investment of the GOCC represented by that particular director.

Q: Isn't that a practice of the government, the executive, because you plucked somebody from a high-paying job in the private sector, convince him to join the government, sit in the Cabinet, but you also give him such incentives and just sit in the board�

Q: You look at the composition of all the boards. Find out if they were recruited more because of political patronage, or because of their competence. They may be competent but certainly there are 101 competent executives to sit there. But these are people who are there because the President knew them. Look at the Monetary Board, what is a common denomination? They are all known to the past administration.

Q: For example, Secretary of Tourism, I'm sure Bertie Lim is getting...

DRILON: I'm not talking here of department secretary. We are talking here about a board member of a GOCC. That is the issue that we are talking about here, not the department secretaries. I agree with you, maybe we should pay more the department secretaries, but a board member whose spends two hours per month in a board meeting is not supposed to get P3 million a year. Remember these board members, they only spend a minimum time in these GOCCs.

Q: Well there goes Jessie Santos of the GSIS. I'm just asking kasi may practice na Cabinet members are given board seats to sort of augment what they have lost in their private income.

DRILON: But the solution is not to place them in the board. In fact if you look at the composition of the board of various GOCCs, if they are there it's because ex-officio by law, not by appointment of the President, because they are prohibited by holding dual positions, except what's provided by law.

Q: Yung bonuses na nare-receive ng board of directors, let's say GSIS, na umuupo sa private corporations should go to the trust fund?

DRILON: It should go to the GSIS fund. Why? Because the investment comes from GSIS. You cannot sit in the board unless you have investments in the company because when you invest, you buy shares and the investment is of such magnitude that there are enough seats to vote for one person in the board. When you are voted therefore in the board, it is because of the investment of GSIS. Therefore the bonuses that would accrue to the director sitting in the board rightfully belongs to the GSIS funds.

Q: Just a clarification, yung P16 billion under remittance, 2006 tama po ba?

DRILON: 2008. In a letter dated November 2008, Chairman Villar claimed that as of 2006, the unremitted dividends amounted to P16,452,000,000. I will repeat, I am not in possession of information as to whether or not there were subsequent remittances and what exactly the amount is as we speak here today.

Q: Who was the governor then?

DRILON: I think 2006 it was already Tetangco. As of the end of 2005. From 2003-2005, it is claimed by the COA that there was an under remittance of P7,070,519,000. If you will include 2006, it will amount to P16,452,000,000 including the P7 billion. I will repeat, I have no information as to whether or not this was reduced subsequently in 2007, 2008, 2009... if it was increased, I do not know.

Q: Yung P101 million in terms of salaries and allowances.

DRILON: That's P101.9 million. Let's round it off, P102 million in 2009.

Q: Bakit hindi ito nasilip dati?

DRILON: Hindi ko alam, I was not here in the Senate in the last 3 years. I do not want to speculate.

Q: What can be done to the GOCCs that are remitting not enough money to the NG?

DRILON: Maybe the DBM can withhold releases of certain amounts... offset it against what is due to the GOCCs. That can be done. I'm just talking in general.

Q: Will you also summon appointees... Kasi it's obvious na yung appointments na ganyan political accommodation. For example (former DTI Secretary) Peter Favila went to Monetary Board.

DRILON: The inquiry is in aid of legislation. I do not want to be personal about any member. The reason why I'm giving this information is that this is what appears in the COA report and the purpose of the inquiry is to find out how we can augment the income of the national government by these dividends and how we can reduce the expenses by looking at these allowances.

Q: Mas maganda ba mag focus ang administration sa under remittance at sa bonuses ng boards instead of going for tax on toll?

DRILON: This is the fund of the government. We should augment the income through non-tax measures. That's what the President's pledge is. This is in aid of the policy of raising revenues without new taxes being imposed.

Q: As we speak, tuloy ang ligaya ng mga board. What can be done?

DRILON: Very good. As we speak, tuloy ang ligaya. The President should immediately order the suspension of these excessive allowances until we can properly come up with correct policies.

* Press Release by Public Relations and Information Bureau (PRIB)