COA: Housing agency lost P1.1 billion

MANILA, Philippines - The Home Guaranty Corp. (HGC), an agency under Vice President Jejomar Binay, lost P1.1 billion in 2008, according to the Commission on Audit (COA).

The COA report, submitted to the House of Representatives, said the HGC, headed by its president Gonzalo Bongolan, steadily lost money since 2002, when it reported P204 million in losses.

Auditors discovered that the agency’s payables increased by P22 billion and its financing charges by P10 billion “because it was settling its guarantee obligations through bond flotation, resulting in overlapping of liabilities.”

“HGC’s growing losses and deficits had continuously impaired the corporation’s financial condition, casting doubt on its financial capability to carry out its mandate and operate as a going concern,” COA said.

The COA said despite its losses, HGC gave an early separation incentive package to its employees equivalent to two-month salary for every year of service.

The housing firm paid a total of P224.1 million to early retirees, the COA said.

The COA said part of the firm’s losses was incurred when it sold several lots at low prices. HGCC sold one lot in the port area in Manila at P13,000 per square meter when the market price was at least P25,000 per square meter, the COA added.

The COA recommended that Bongolan and other HGCC officials should “implement stricter fiscal discipline to reduce capital and operating expenses and prioritize scarce financial resources to more compelling expenditures and obligations.”

The COA said HGC should focus on its principal task of providing credit guaranty in support of the government’s program to promote home ownership.        

The COA also asked HGC to coordinate with other government-owned and controlled corporations for the settlement of unpaid guaranty obligations as well as to expedite the sale of foreclosed assets at prices advantageous to the government.

It recommended that the loan-to-collateral ratio of not more than 70 percent be strictly complied with to assure recovery of guaranty exposure in case of default.        

Another housing agency under Binay’s supervision, the Pag-Ibig Fund, has been in the news lately for allegedly allowing a developer to take out nearly P7 billion in loan proceeds of borrowers, many of who were found to be fake.