Trustees abetting SSS anomalies

SSS chairman Bernardino Abes digressed from the agenda of last Wednesday’s regular meeting of trustees. He asked Donald Dee, Teresita Alegre and Efren Aranzamendez if they have contacts in the press. Labor secretary Patricia Sto. Tomas said they must get two or three columnists to "counterattack" Boo Chanco and my pieces on their handling of SSS funds. Sergio Ortiz Luis tried to make light of it by poking fun at our names. Abes then suggested a media budget lest our columns "damage" the institution.

While it would be interesting to find out which columnists they soon will tap with that budget, it is worthwhile to determine who is damaging the SSS in the first place.

On surface, the problem at SSS seems to be a desire for "industrial peace" at any cost. This is seen in the trustees’ treatment of the wildcat strike of Aug. 1 and 2, 2001, the continuing promotions of unqualified executives, and the behest investments during the Estrada administration.

The trustees at first refused to take action against the strikers led by no less than executive vice president Horacio Templo and senior-VP Marla Laurel. But when the Philippine Association of Retired Persons sued the two, along with ten other executives and ten union leaders, the trustees suddenly took interest. They asked the Ombudsman to transfer the case to them; arbor ko na ito, as lawyers would say. They found Templo and Laurel guilty of leading the strike alright – a grave misconduct punishable with dismissal from service. But they lightened the charge to mere neglect of duty. They then suggested a month’s suspension for the two, and acquitted the rest. When trustee Juan Tan objected that the strikers broke the law and must face the consequences, the other trustees did something better. They lightened the penalty to a month’s forfeiture of salary, payable in three installments.

On the unqualified executives, the Government Corporate Counsel had told the trustees as far back as November 2001 that they were breaking the Civil Service Act and the SSS Charter. No way may they retain beyond 12 months the 155 SSS officers without the required Career Executive Service course and exams, much more promote them. Yet the favored execs have been promoted in rank and pay several times over. Their monthly salaries range from P50,000 to P250,000, courtesy of 25 million SSS members. The trustees won’t touch them for fear of another management-led strike. "The problem already existed even before I came into the SSS," president-CEO Corazon dela Paz was reported to have said. Some of the only 29 qualified managers will thus sue the trustees and the 155 execs. Foremost in their list is Laurel who, as senior-VP for administration and personnel, should check the credentials. She, too, has no CES qualification.

Despite a separate OGCC probe, the trustees likewise refused to act on the P7.5-billion behest investment in PCIBank during Estrada’s term. It had to take eight lowly managers to file criminal and administrative suits before the Ombudsman. The cases took several strange twists and turns (Gotcha, 23 April 2003). Five respondent executives led by Templo and nine Estrada trustees led by his SSS chief Carlos Arellano remain untouched.

On deeper scrutiny, the SSS mess is not just a matter of industrial peace. It’s utter lack of good governance – for which the mutual fund is being severely damaged.

The SSS is in hock to the tune of billions of pesos because of faulty investments. Instead of correcting these and punishing the culprits, the Malacañang-appointed trustees are forcing employers to contribute more, soon to be followed by mandatory increases in employees’ shares. Worse, they are themselves into multimillion-peso contracts with no benefit of public bidding.

An external audit had shown as far back as July 2001 what was wrong. Laya-Mananghaya-KPMG reported to then-SSS chief Vitaliano Nañagas that SSS officers and Estrada trustees had suddenly switched investments from government securities and blue-chip stocks to equity in crony firms. The P7.5 billion in PCIBank, along with the same amount from GSIS, was used to help Equitable Bank, in which Estrada had an alias Jose Velarde account, take over. The deal was hatched by then-presidential adviser Mark Jimenez at a P1.2-billion overprice, for which Estrada called him a financial genius. SSS threw in another P8.1 billion during Estrada’s impeachment trial in late 2000, yet never got controlling equity in Equitable.

More money was thrown into other crony firms: P740 million in Belle Corp. shares plus a P400-million loan, P500 million in Waterfront, P167 million in Security Bank, and a share-swap with Pryce Corp. The auditors noted that all this was done when the economy was shaky. The SSS net income thus dropped from P13.4 billion in 1999 to only P4 billion in 2000. SSS executives, on orders of Arellano, even traded stocks beyond the usual rules. And they accredited a very new and inexperienced stock brokerage just because it was owned by Joy Melendrez, one of Estrada’s mistresses.

The audit report remains valid. The present trustees know who did the anomalous deals. The evidentiary documents are in the files. Yet they prefer to sweep the mess under the rug of Gloria Arroyo’s strong Republic.

As if that weren’t bad enough the top executives and present trustees continue to sign intransparent contracts. One such contract is with a DBP Service Corp. that provides clerical and secretarial work for P240 million a year. The DBP-SC original deal in 1994 was valid for only a year. It has been extended year after year thereafter. The latest signatories were Laurel and dela Paz (who was absent again in Wednesday’s meeting since she’s on a three-week binge in Geneva). The Manila-based Congress of Labor Organizations sued them before the Ombudsman in July 2002. It cited a similar labor-only contract, again with no public bidding, with the SSS Retirees Service Corp. For some strange reason, the case was assigned to the Ombudsman’s office in the Visayas, where it still pends.

And that, the SSS trustees should know, is why the SSS is damaged.

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Catch Sapol ni Jarius Bondoc, Saturday, 8 a.m., on DWIZ (882-AM).

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