Senate okays GOCC Act

MANILA, Philippines - The Senate moved a step closer to passing the proposed government-owned and controlled corporations (GOCC) governance act with almost all of the senators signing the committee report on the bill the other day.

President Aquino has indicated that the bill would be among the 12 measures he would certify as urgent during the Legislative-Executive Development Advisory Council meeting at the end of the month.

Sen. Franklin Drilon, principal author of the bill, said that he would sponsor the bill on the floor next week and, barring any obstacles, this could be approved on second reading.

“This reform measure is a timely response to widespread criticism over the abuse of public funds by the directors, trustees and even employees of state-owned firms. This landmark legislation is part of our broader effort to put an end to the bleeding of government coffers,” Drilon said.

“It’s very urgent. As we talk today, the GOCC boards have continuing power to appropriate for themselves gargantuan bonuses,” he added.

The President has issued an executive order suspending the grant of these bonuses by the boards of the GOCCs, but Drilon said that the reforms must be institutionalized in order to prevent future abuses.

During the hearings conducted by the Senate committee on finance chaired by Drilon, it was revealed that almost all of the boards of the GOCCs and government financial institutions in the country receive substantial allowances and other benefits, some running to the millions annually.

According to Drilon, a lot of these GOCCs act as independent republics that do not go through the executive branch for approval of their corporate operating budgets.

The trustees or directors took home millions for sitting in a handful of board meetings a year even while some of these GOCCs were losing money.

The bill proposes the creation of a Governance Council for GOCCs (GCG), an advisory, monitoring, recommendatory and policy-enforcing body attached to the Office of the President (OP).

The GCG would be tasked to rationalize the pay structure of the GOCCs by developing a compensation and position classification system that would be approved by the President.

Drilon said that Congress would delegate its power to reorganize the GOCCs to the President for a temporary period.

“They will exercise legislative authority limited in a period of time and only upon certain standards. In other words, under certain jurisprudence, Congress may delegate its authority to amend the GOCC charter to the President, as we have done in this particular case,” Drilon said.

He also noted that his bill would also require the reimbursement of all realized profits and benefits, including the share in the profits and bonuses in excess of what was authorized by the GCG, stock options and dividends and any benefit from the performance of members of the board of a corporation acting in behalf of the GOCC, and these would be held in trust for the GOCC they represent.

This provision was included to address cases similar to that of the Social Security System where its directors were able to earn millions in profit from the exercise of stock options made available to them as representatives of the trust fund in some private corporations.