Senate: GOCCs liable for paying fat bonuses to execs

ABS-CBN News

Posted at Aug 31 2010 02:02 PM | Updated as of Sep 01 2010 05:28 AM

MANILA, Philippines - The Senate Committee on Finance said government-owned and -controlled corporations (GOCCs) violated several laws in their allocation of excessive bonuses to their officials.

At the third hearing on Tuesday of the Senate's probe on the fat salaries and bonuses of employees and board members of GOCCs, it was the Metropolitan Waterworks and Sewerage System's (MWSS) and the Local Water Utilities Administration's (LWUA) turn to be grilled.

Finance Committee Chair Frank Drilon said revelations at the hearing showed a classic case of conflict of interest.

What is striking, he said, is that board members decided among themselves the amount of their compensation package.

Moreover, their excessive salaries, allowances and bonuses are in clear violation of Memorandum Order 20 of former President Gloria Arroyo that states that wages of GOCC executives should not be more than twice higher than those of Cabinet secretaries.

MWSS officer-in-charge Macra Cruz said that the agency's board directors received at least 25 kinds of bonuses totaling P5.4 million in 2009 and P3.5 million in 2008.

These include mid-year bonus, year-end performance, clothing allowance, GOCC incentive, privatization bonus, efficiency bonus, scholarship, educational and Christmas package, among others.

MWSS board members also received P14,000 per diem per board meeting, a discretionary fund of P50,000, and other extraordinary miscellaneous allowances.

"All these while the MWSS was operating at a loss of P3.5 billion in 2008," said Drilon.

Senator Ralph Recto said the MWSS has only remitted P483 million out of the P741 million dividends from 1998 to 2009, and owes the state at least P258.6 million in remittances.

He said the fact remains that outstanding liabilities (such as claims of retirees) were smaller compared to the bonuses that board members had been receiving.

LWUA, on the other hand, has P263 million in unremitted dividends due to the government in 2008, while receiving a government subsidy of P1.9 billion.

Drilon said the chairman of LWUA received last year P2.5 million in miscellaneous expenses which was simply liquidated by issuing a certification that such amount was disbursed and accounted for.

LWUA Acting Administrator Daniel Landingin said that the agency's chairman in 2009 got a total compensation of P3.3 million. These included additional benefits, representation allowances, birthday cash gift, incentive bonus, hospitalization and other medical benefits.

The LWUA also last year acquired First Express Bank for P80 million with no approval from the Office of the President and the Bangko Sentral ng Pilipinas.

"It is not within LWUA's charter to buy a bank," said Drilon.

Landingin said the LWUA board also asked Malacañang to exempt the agency from remitting half of the P368.4 million in earnings to the government in 2008.

GOCCs are required to remit to the national government 50% of their annual net incomes.

"The law is clear that there can be no exemptions granted," said Drilon.