Press Release
January 26, 2011

Drilon urges passage of GOCC bill

Senate Franklin Drilon Wednesday urged the immediate passage of a bill that will reform the structure and operations of Government-Owned and Controlled Corporations.

Drilon, principal author of SB 2640 or the proposed GOCC Governance Act of 2011, said the bill aims to improve the governance of GOCCs and to exact from them efficient and effective public service. "The need for much-needed reforms in the government corporate sector to make it an effective vehicle in achieving social and economic progress becomes more apparent once we take into account the role that GOCCs play in our economy," Drilon said during his sponsorship speech.

"The days when the GOCC boards can act independently of the national government are over. We are confident that once this bill becomes a law, the excesses and abuses we saw in the operation of the GOCCs will be a thing of the past," he added.

The bill proposes the creation of the Governance Commission for GOCCs (GCG) whose main task will be to conduct regular assessments and evaluations of the state firm's performance.

The GCG will also recommend to the President whether a GOCC should be reorganized, merged, streamlined, abolished or privatized.

Drilon said the GCG will develop a new compensation and position classification system for all officers and employees of the GOCC. It will put a limit on the compensation of directors who had enjoyed excessive bonuses in the past, he added.

"The bill makes it clear that directors are not entitled to compensation as directors but may be entitled to reasonable per diems only. We must emphasize that directors are not entitled to retirement pay as we have seen in other GOCCs," he stressed.

Drilon said the GCG will review the qualifications of individuals appointed as directors or elected as chief executive officer of the GOCC and disqualify those found unfit.

He cited a study which showed that the patronage system practiced by GOCCs by granting senior managerial positions to retired military and high level civil servants or relatives and friends of powerful politicians has led to inefficiency, low levels of productivity and financial losses.

"In 2009, total expenditures of GOCCs are equivalent to 28% of the total expenditures for the national government. GOCC assets, at P5.557 trillion in 2009, also exceed National Government Assets at P2.879 trillion," Drilon revealed.

A 2009 Annual Financial Report of the Commission on Audit showed that out of the P475.296 billion Inter-Agency Receivables of the National Government, 91% or P433.383 billion are due from GOCCs.

Drilon said that as mere trustees, GOCC directors and officers who breach their fiduciary duty will be made liable for any profits they will misappropriate to themselves. They will also be required to remit to the GOCC any such benefit or profit, he said.

"If they fail to do so, they shall be required to restitute such amounts without prejudice to any administrative, civil or criminal action filed against them. The penalty of imprisonment and a fine twice the amount will be imposed on them," he said.

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