GMA urged to hire ‘turnaround specialists’ for bleeding GOCCs

A lawmaker called yesterday on President Arroyo to consider engaging the services of "professional turnaround specialists" who could help unprofitable government-owned and -controlled corporations (GOCCs) get back into the black.

Cebu Rep. Eduardo Gullas said the government has this option, and that "it does not matter if the specialists are local or foreign, as long as they can get the job done posthaste."

These specialists would "provide solutions that result in financially and functionally sound operations for distressed GOCCs," he said, citing reports that 14 agencies were in the red due to huge deficits.

Last week, Negros Oriental Rep. Herminio Teves, who also sits as senior vice-chairman of the House committee on ways and means, suggested that Congress undertake a "periodic audit" of GOCCs to determine if they still deserved to receive subsidies by the government.

"In light of the government’s severe financial difficulties, rigorous and repeated congressional scrutiny of the performance of each GOCC has become absolutely necessary," Teves said in a statement.

Nevertheless, Gullas suggested that even if it costs the government P1 billion to hire specialists who could help cut by half the P43 billion total deficit incurred by 14 GOCCs this year, "then this translates into P21.5 billion in cost savings... a whopping 2,150 percent return on the P1 billion investment."

He pointed out that in the United States, turnaround specialists are paid a fee only after they have accomplished their task of "bringing troubled firms to a new level of production and fiscal stability."

The government’s continued subsidy of these financially crippled agencies has taken its toll on the Philippine economy, Gullas said, which makes it imperative for the government to either "sell them now at a fair price to private investors" or "nurse them and sell them later at a premium."

"In any case, the government should eventually get out of businesses that are (best) left to the private sector, as far as we are concerned," he added.

Gullas said the income of the national treasury from dividends paid by profitable GOCCs and guarantee fees on public corporate loans "pales in comparison to the (amount of) taxpayers’ money being drained to prop up ailing state-run firms."

Teves said Congress, as the government body with the power of the purse, "is duty-bound" to command distressed GOCCs to shape up.

He added that his main goal in proposing the periodic review of the GOCCs’ performance is to "compel each GOCC to become financially independent and self-reliant within a given deadline."

"We must ensure that public funds used to sustain GOCCs are properly spent or invested, and not put to unreasonable waste or excesses," he said, reiterating that performance audits "help promote absolute transparency and cost efficiency in the corporate sector."

Teves said the reviews would determine the "efficient allocation and use of investment resources made available by the national treasury, their financial and social investment rates of return and productivity."

They would also do away with "needless duplication or overlapping of functions with other GOCCs, and their accomplishment of goals set by their respective charters," he said.

Figures from the Department of Finance show that the 14 GOCCs have incurred a total deficit of P90.7 billion in 2004 — P25.7 billion more than the P65 billion cumulative deficits they posted in 2003.

"This year, the 14 firms are projected to incur a combined deficit of P42.5 billion. These deficits are being covered by the national government," Teves said.

The 14 firms are the National Power Corp., National Electrification Administration, Local Water Utilities Administration, Metropolitan Waterworks and Sewerage System, Home Guarantee Corp., National Housing Authority, Light Rail Transit Authority, Philippine National Oil Co., National Irrigation Administration, National Development Co., Philippine Ports Authority, Philippine Economic Zone Authority, Philippine National Railways and the National Food Authority.

Earlier this month, Mrs. Arroyo was reported to have set her sights on officials of GOCCs and government financial institutions (GFIs), particularly members of the board of directors, found to have granted themselves excessive "perks and privileges."

She ordered Budget Secretary Emilia Boncodin to file appropriate charges against officials found to have violated the guidelines on austerity measures she set under Administrative Order No. 103.

AO 103 mandates government officials to shun profligacy or be dismissed from government service. Officials found guilty of reckless wastefulness and extravagance may face criminal charges as well.

The austerity program under this administrative order is in addition to ongoing lifestyle checks on government officials and employees believed to be living beyond their means.

However, Mrs. Arroyo said she would be careful in dealing with "professional managers" she had asked to leave high-paying jobs in private companies in order to work for the government.

"I’m very careful that I don’t reduce the compensation of professional managers, (such as the) president of a company, otherwise we lose (them) to the private sector," she said, citing the case of National Transmission Corp. president and chief executive officer Allan Ortiz. "They deserve the compensation because that is their career."

Members of a government-owned firm’s board of directors, on the other hand, won’t be as lucky.

"Members of the board, you know, things like that, they don’t have to (stay) — they’re replaceable," the President stressed.

Mrs. Arroyo said this was why she was strict with board members, especially since many of them tend to live lavishly while in position.

Boncodin welcomed the President’s order, citing the need to impress upon government officials that AO 103 was not merely an order on paper.

"The AO does not have teeth if we don’t start imposing sanctions. This will demonstrate that we are serious about our (campaign) against corruption," Boncodin said.

The President earlier warned government officials to stop wasting public funds on excessive perks and privileges, saying no one in her administration "is indispensable or untouchable."

She said her administration "will not tolerate corruption in any form" and that "no high officials are indispensable or untouchable on this score."

Mrs. Arroyo also encouraged the public, particularly witnesses to anomalies in government, to submit evidence of these anomalies to the Presidential Anti-Graft Commission.