Following excessive bonuses, rice over-importation

Tough governance standards for 89 GOCCs pushed

Press Release
August 9, 2010

QUEZON CITY  –  Cavite Rep. Elpidio Barzaga Jr. has urged Malacañang to set rigorous governance standards for all 89 state-run firms "in order to promote best practices, full disclosure and spotless transparency in their operations."

Because they ultimately answer to the Filipino people, Barzaga said government-owned and controlled corporations (GOCCs) should be compelled to uphold ethical, accounting and disclosure standards that are equal or superior to those required of private firms listed in Philippine Stock Exchange (PSE).

"Both GOCCs and PSE-listed private firms have to answer to a public. PSE-listed firms have to answer to their shareholders. GOCCs have to answer to Filipino taxpayers," Barzaga pointed out.

He added: "Sound corporate governance will help boost efficiency and enhance profitability in the operations of GOCCs, some of which have become a financial burden to taxpayers."

Securities and Exchange Commission (SEC) rules already require PSE-listed firms to live up to stringent governance manuals drawn up and adopted by their boards.

The SEC mandated the manuals not long after large publicly listed firms in America collapsed as a result of unchecked self-dealing by board members and accounting fraud that shattered investor confidence.

SEC rules also require PSE-listed firms to dutifully disclose all information affecting their operations and profitability, including the compensation received by board members and senior officers, and every transaction with a potential conflict of interest.

Citing the belated discovery of a huge surplus of rice stockpiles at the National Food Authority, Barzaga said all GOCCs should be required to fully disclose all information "of public interest."

"In the past, GOCCs have also had their share of irregularities that, in retrospect, could have been avoided with tighter controls," Barzaga said.

He cited the case of the state-run Land Bank of the Philippines, where a number of officers were implicated in the diversion of large tax payments coursed through the bank, in an apparent breakdown of internal controls.

Malacañang is now reviewing the emoluments of board members and senior executives at GOCCs, toward curbing excessive bonuses.

"Amid the widening gap between government spending and income, we must stress that the productivity of GOCCs directly affects the National Treasury," Barzaga said.

"Since GOCCs are required by law to remit at least 50 percent of their annual net profits as dividends to the state, the less money they make, the less cash goes to the National Treasury," he said.

"Apart from this, the national government continues to spend billions of pesos every year to subsidize the operations of unprofitable GOCCs," Barzaga lamented.