Senator bares P101-million salaries, perks for Monetary Board execs

MANILA, Philippines – Senate finance committee chairman Sen. Franklin Drilon revealed yesterday that executives and employees of the Bangko Sentral ng Pilipinas (BSP) Monetary Board have received P101.9 million in salaries and bonuses last year.

Drilon said the Commission on Audit also reported that the BSP itself has “under remittances” to the national government worth P7.07 billion from 2003 to 2005.   

Citing records presented by COA chief Reynaldo Villar, Drilon said the BSP had not remitted to the government revenues that ballooned to P16.45 billion by 2007. The money included revenues supposedly earned by the BSP from dividends.

The COA chief had last written BSP officials in November 2008 asking them to turn over their remittances to the national government, Drilon said in a weekly forum at the Senate.

The senator admitted that he has no update whether the amount was reduced or increased from 2007 to present.

Drilon cited Republic Act 7656, also known as “An Act Requiring government-owned and controlled corporations (GOCCs) to declare dividends” under certain conditions to the national government.

He said the state firms are mandated to remit 50 percent of their annual net earnings to the national government.

Drilon said it was obvious that the provisions of the law are not followed today amid reports that top executives of GOCCs are enjoying fat salaries and bonuses even if their respective GOCCs are losing in revenues.  

The COA had disclosed during last Tuesday’s Senate hearing that Subic Bay Metropolitan Authority (SBMA) administrator Armand Arreza, who received P26.865 million in compensation, and Clark Development Corp. president and CEO Benigno Ricafort, who got P14.506 million were on the top earners among GOCC executives even though their respective companies are loss-making.

Drilon had invited the top executives of GOCCs to verify if they are complying with the provisions of RA 7656 for the committee’s second public hearing next Tuesday.

Political patronage

Drilon said that some of those appointed to the Monetary Board and the GOCCs were due to their closeness to former President Gloria Macapagal-Arroyo, and apparently not for their competence. 

“You look at the compensation 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 these people are there because the President knew them,” Drilon said, without naming names.

The current Monetary Board is led by BSP governor Amando M. Tetangco Jr., with Finance Secretary Cesar V. Purisima, Juanita D. Amatong, Nelly Favis-Villafuerte, Alfredo C. Antonio, former press secretary Ignacio R. Bunye and ex-Trade secretary Peter B. Favila as members.

“In 2009 for example the total allowances and salaries of the BSP, per our computation, amounted to P102 million for the governor, deputy governor, and the members of the monetary board, so given this substantial allowances that they have received from the BSP, it is fair for us to ask whether they have remitted this due to the national government under the pertinent laws today,” Drilon said.

Drilon said his committee would summon the BSP officials along with other executives of GOCCs next week to ask them to explain the huge benefits that they are receiving. He also wanted an explanation why “bonuses” supposedly from profit sharing ventures are not turned over to the national government, and instead pocketed by some erring GOCC executives.

Drilon has expressed disappointment that board members get higher compensation than department secretaries when they (board members) spend minimum time in the GOCCs during a weekly Senate forum yesterday.

“We are not talking about the department secretaries. We are talking about the board member of a GOCC. That is the issue we are talking here maybe we should pay more the department secretaries. But the board members who spend a minimum of two hours/month in a board meeting are not supposed to get P3 million a year,” he pointed out.

Drilon has sought a deeper investigation into how much revenues from dividends of GOCC have not been remitted to the national government.

“Apart from the issue of the reasonableness of the allowances and pier diems and bonuses of directors of GOCCs, we will also as part of the inquiry look into the dividends that the GOCCs remit to the national government,” Drilon said.

“If you recall in relation to 2010 budget, the projected deficit for 2010 is P325 billion, this can be reduced depending on how much dividends would be remitted to the national government, it has an impact on the budget,” he said.

Drilon said the Senate is looking for ways to determine how to augment the income of the national government and reduce the expenses by looking into these GOCC allowances.

The Senate finance committee is conducting an inquiry in aid of legislation into the fat bonuses and compensation of GOCCs as well as government financial institutions (GFIs) in a bid to find ways to address the country’s projected P325-billion deficit.

Drilon, a party mate of President Aquino, said the present administration is trying to maximize the use of funds available to the government rather than passing new tax measures.

“You know, these are funds available to the government and we should augment the income through non-tax measures. That’s the President’s pledge. This is in aid of the policy of raising revenues without new taxes being imposed,” said Drilon, chairman of Liberal Party.

He also suggested to Mr. Aquino to order the suspension of the excessive allowances until Congress comes out with the correct policy on the issue.

Drilon supported the President’s plans to issue an executive order that will put a cap on salaries and benefits of executives of GOCCs.

He said Congress would also have to formulate a law or amendments to the present laws in support of the upcoming executive order.

BSP denies under remittance

The BSP clarified that the agency has been vigilant in remitting 75 percent of its annual income and has in fact infused more than P59 billion worth of dividends to the national coffers over the past 17 years.

In a statement, the central bank said it has remitted more than P59 billion in dividends, over P17 billion in interest rebates, and more than P50 billion since the creation of the BSP under Republic Act 7653 or the New Central Bank Act of 1993.

The BSP has religiously remitted 75 percent of its annual net income as mandated under its charter since 1993 except for 2007 when the central bank posted huge foreign exchange losses.

Preliminary estimates indicated that the BSP generated a net income of P13 billion last year of which it has already remitted P4.475 billion to the national government and would remit another P4 billion once the Commission on Audit (COA) completes the review of the central bank’s financial statement.

BSP official said it has already filed an appeal with COA last May regarding the alleged unpaid dividends for the calendar years 2003 to 2006.

COA advised BSP last March that it has to pay P16 billion in additional dividends to the national government for years 2003 to 2006.

“The issue therefore remains pending and the BSP remittance for this amount cannot be effected,” the BSP said.

The Senate has summoned BSP officials to find out why more than P16 billion in earnings have not yet been remitted to the national government.

Drilon said legislators want to find out whether or not the amount has been remitted to the national government.

“I will ask the BSP to tell us exactly how much [was remitted or not remitted],” Drilon added.

Republic Act 7656 mandates GOCCs to declare and remit at least 50 percent of annual net earnings as cash and stock or property dividends to the national government. However, the BSP mandate under RA 7653 requires the central bank to remit 75 percent of its earnings. – With Lawrence Agcaoili