Controlling the nuts

Trying to make sense of GOCCs (Government Owned and Controlled Corporations) is like eating a bag of mixed nuts. There is too little of the good kind, quite a few rancid ones and too many peanuts. Sifting through the long list of about 156 GOCCs, it’s difficult to come to any other conclusion but that a significant number of plum directorships must have been “spoils of war or loyalty rewards”. It is hard to forget how the Arroyo Strong Republic used the carrot-and-stick-strategy to perfection, in order to coax, corrupt or co-opt concurrence from critics and keep her rapacious lapdogs content, fawning and pliant.

One can count the “performers” on the fingers of his left hand. There is a handful that ought to be immediately spat out for being spoiled rotten. Most are lackluster non-performers that are more likely in the red, or at best, just making peanuts. There is a significant percentage of strange and unheard-of nuts that by the name alone suggests no viable raison d’etre: Philippine Aerospace Development Corporation, PNOC Exploration Corporation and PNOC Alternative Fuels Corporation? Not only are they relatively obscure, but it’s fairly obvious that there has been zero achievement to justify their prolonged existence. There haven’t exactly been giant leaps, let alone baby steps in Philippine aerospace. Nor has any feasible fuel alternative been discovered to mitigate one of the highest-priced gasoline, water and electricity markets in the world.

The root of the problem seems to be ingrained in the very nature of GOCCs. When there’s a hybrid that’s half-government and half private corporation, there is ample room for ambiguity. Where there is vagueness, there is a natural fertile ground for dubious practice. Like a shape shifter that has the power to alter its mandate and ethic according to what is most lucrative for themselves, GOCCs can conveniently choose to be just another mediocre, under-the-radar cog in the bureaucratic machine but pay themselves at par, if not over, their corporate business counterparts.

Supposedly to attract talent and be competitive in the corporate world, their charter excludes them from mandated government salary ranges. But there is no objective performance standard, which is fundamental in business. The officials are their own bosses. Who’s to stop them from giving themselves bonuses and perks even if their “corporation” has incurred big losses? They will never fire themselves for incompetence or non-performance. No wonder there is a tall pile of applications for GOCC positions, while P-Noy has a much smaller field to choose from for Cabinet positions. Truly, GOCCs have managed to have the best of both worlds.

The abundant abuses uncovered during the Senate hearings are enough to make any hardworking Filipino puke! Aside from officials who reportedly made as much as P15M-P26.8M in 2009, there were drivers who were entitled to car loans, board meetings that were conducted twice a day with corresponding per diems, 37 months’ bonus on top of their 12-month salary, discretionary allowances that were 400% bigger than the basic compensation, through-the-roof entertainment and representation allowances. Then to rub salt to the wound, revenues due to the National Treasury were not remitted. The Arroyo government initiated feeble efforts to curb GOCC excesses in her last months in power with no result. Either it was another grandstanding ploy to arrest her own freefalling ratings, or she was the least credible person to pontificate about plunder.

Last September 8, P-Noy issued EO7 freezing compensation and allowances, bonuses, incentives and other perks to members of the board of directors or trustees of GOCCs and GFIs (Government Finance Institutions) until December 31, 2010, “pending issuance of new policies and guidelines”. It also created the Task Force on Corporate Compensation (TFCC) composed of the Office of the President as chairman, with the Department of Budget and Management, Finance and the Civil Service Commission as members. The body will review “all remunerations granted to members of the board, officers and rank-and-file employees, as well as discretionary funds. It directed all GOCCs and GFIs to submit pertinent information.

This was immediately challenged in the Supreme Court by a certain Atty. Jelbert Galicto of Philhealth in Butuan City. He claims that the President was ill-advised in signing EO7 that was “null and void for lack of legal basis”. The Tribunal’s decision on this petition is eagerly awaited. Lately, the High Court, composed of 100% Arroyo appointees, has made a string of controversial decisions that reek of herd voting, vindictiveness and blind protectionism for its own. The Supreme Court’s credibility may have become as questionable as some GOCCs.

The extensive investigations by the Senate Finance Committee led by Senator Frank Drilon uncovered a can of worms. He revealed that GOCCs will use almost 40% of the national budget next year, up from 37%. The big-ticket item is salaries and perks. Yet GOCCs are currently allowed by law to avoid Congress’ scrutiny of their proposed budgets. Indeed they have become more powerful than government agencies, whose finances undergo regular review by lawmakers.

Both the Senate and House have proposed bills to correct the situation. Drilon has filed GOCC Governance Act 2010, Senate Bill No. 2566, described as “an act to promote financial viability and fiscal discipline to strengthen the role of the state in its management and to make them more responsive to the needs of public interest ”.

It is a substantive recommendation that aims to instill a transparent, responsible, accountable, professional and effective management. A reporting system will require the periodic disclosure and examination of the operations and management of GOCC assets and finances, revenues and expenditures. The measure mandates a new remuneration system for directors, trustees and employees that is reasonable, justifiable and appropriate, and prevents excessive compensation.

There is tremendous support for this bill even among government employee unions. The only expected opposition will come from those who are afflicted with disproportionate self-entitlement. Those are the extremely dangerous nuts that should be tossed out. 

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