Multi-million earnings of SSS officials bared

by Ryan Chua, ABS-CBN News

Posted at Aug 25 2010 01:07 AM | Updated as of Aug 25 2010 09:07 AM

MANILA, Philippines - Saying they may be criminally liable, senators on Tuesday grilled officials of the Social Security System (SSS) for failing to turn over to the state pension fund’s coffers the bonuses they got from private corporations where they have investments.

Senate finance committee chair Franklin Drilon slammed some SSS officials for their alleged failure to exercise “extraordinary diligence required of a manager of a trust fund” during the inquiry into the alleged excessive salaries and benefits of executives of government-owned and –controlled corporations (GOCCs).

From 2007 to this year, for instance, four SSS executives earned more than P127 million from exercising their stock options as board directors of Philex Mining Corporation, Drilon said. The amount includes their per diems for attending board meetings and other perks.

Citing company documents, Drilon said former SSS chairman Romulo Neri got P17.3 million, outgoing SSS chairman Thelmo Cunanan P83.1 million, former chairwoman Corazon dela Paz-Bernardo P20.7 million, and SSS commissioner Sergio Ortiz-Luis Jr. P6.3 million as total compensation from Philex.

“It is very obvious that there was abuse on the part of the commissioners of the SSS when they took it upon themselves to be entitled to these gargantuan sums,” Drilon said.

“And this is just one company,” the senator added.

Aside from Philex, SSS also has shares in PLDT, Union Bank, Security Bank. Metro Bank, First Philippine Holdings, Globe Telecom, Alliance Global, and Ayala Corp., among others, Neri said during the hearing.

This means certain SSS officials sit as members of the board of directors in each company, receiving sums for attending board meetings and able to buy or sell stocks. From 2009 to 2010, Neri earned P11.9 million from exercising his stock option at Philex, Cunanan P66.6 million, Bernardo P9.7 million, and Luis P4.6 million.

“They are declared as personal income of the commissioners,” Neri told senators.

Cunanan was unable to attend the hearing as he is currently confined due to a respiratory problem.

Drilon said that according to the by-laws of Philex, its directors may claim as bonus 1 and ½ percent of its profit—but not if a director is from the government. Because these “bonuses” were earned through the investments of SSS, the money must be turned over to the pension fund, Drilon said.

“Are you not there for public service? Are you not there to protect SSS funds?” Drilon told reporters in a briefing.

Drilon said the officials may face criminal sanctions, citing a provision in the Revised Penal Code that says a trustee who fails to turn over money to a trust fund is committing malversation. However, he admitted the law has no clear provisions governing GOCC officials’ bonuses.

Neri insisted that nothing mandates them to remit the bonuses to SSS funds.

“There’s no law,” he said in an interview after the hearing.

Because its funds come from employers’ and workers’ contributions, SSS is not covered by Republic Act 7656, which requires GOCCs to remit 50 percent of their dividends to the national government.

“It’s all legal. I have consulted a lot of lawyers,” Neri said.

Drilon said, however, that he will craft a law that will penalize GOCC officials who receive excessive compensations and fail to turn it over to their respective agencies.