SSS executives made a killing from sale of mining stocks

MANILA, Philippines - Four board members of state insurer Social Security System (SSS) made a killing from the P78.9-million sale of shares of stock of Philex Mining, all of which were never turned over to the pension fund, it was revealed during yesterday’s Senate hearing on the alleged excessive salaries and perks enjoyed by the officials of the government-owned and controlled corporations (GOCC).

In the hearing, it was discovered that the four SSS executives also received bonuses for sitting as board members of Philex Mining, bringing their total earnings for the period to P113.5 million after taxes.

Social Security Commission chairman Thelmo Cunanan raked in P66.64 million from the sale of shares of the firm from 2007 to March this year.                                                   

Former SSS president and CEO Romulo Neri took in P11.85 million from the sale of Philex shares, while his predecessor Corazon dela Paz-Bernardo gained P9.7 million.

Documents furnished by Senate committee on finance chairman Franklin Drilon showed that Dela Paz-Bernardo exercised her stock option amounting to 1,930,500 shares as a board member of Philex Mining on Aug. 11, 2008, around the time she resigned from SSS. 

Social Security Commission member Sergio Ortiz-Luis Jr. also exercised his stock option in Philex Mining amounting to 495,000 shares last Jan. 4 and took in P4.6 million from the transaction.

It was Cunanan’s transactions that got the attention of Drilon because in a span of three years, he managed to earn P66.6 million for merely exercising his stock option in one company.

The documents showed that Cunanan first exercised his stock option in Philex Mining amounting to 495,000 shares, which carried an exercise price of P3.08 per share and sold at P5.60 per share in August 2007.

In 2009, Cunanan again exercised his stock option of 3.140 million shares, which carried an exercise price of only P1.90 and was sold at P19.50 per share for a total gain of P55,264,000.

Cunanan once again exercised his stock option of 930,625 shares at an exercise price of P1.90, which he sold at P12.79 per share for a total gain of P10.13 million.

Drilon is also demanding the four pension fund executives to return the bonuses they received from sitting as board of Philex Mining.                                                                

Executives sitting in the board are entitled to one and a half percent of the gross profits of Philex Mining.                         

“In my mind, they are not entitled to it because they are there representing the SSS pension fund and if these were not declared as bonuses, it would have been profits. These are profits distributed to them in the form of bonus,” Drilon said.                                                                                             

“The general principle under the Revised Penal Code is that when you are a trustee, you are supposed to turn over the funds that you receive as a trustee to the trust fund. That is the principle and your failure to do so would constitute malversation,” he added.

Apart from Philex, SSS also owns shares in other private firms including PLDT, Union Bank, Security Bank, Metrobank and Globe Telecom.