Prolific Mother of Folly

by Juan L. Mercado

Credit  Senators Franklin  Drilon, Ralph  Recto and Rep. Rufus Rodriguez (Cagayan de Oro). They’re trying to stem  dissipation  of taxpayer funds  by government corporations gone amuck.

The tawdry example is Metropolitan Waterworks and Sewerage  System. Officials, ladled themselves  25 bonuses every year, Drilon showed. Indeed, “greed is a tree that grows on arid soil,” an Ilokano proverb says.

Company officials concocted three types of  Maligayang Pasko bonuses for themselves. But they penny-pinched in  settling  P451 million in IOUs for retired employees, Senator Recto noted. MWSS weaseled in  paying only  half of it’s P741 million debt with the National Treasury.

In Congress, Rep. Rodriguez filed In House Bill No. 2867. This would abolish 36 “underperforming” government-owned and -controlled corporations and government financial institutions Many of  120 GOCCs and GFIs were “unnecessary, underperforming and losing.”

Targeted were agencies we  taxpayers never even heard of: These ranged from Banaue Hotel and Youth Hostel, Batangas Land Co, GY Real Estate Inc, National Precision Cutting Tools Inc. to something called ZNAC Rubber Estate Corp.

On my cluttered work desk are  new  Commission on Audit  reports on 16 of these obscure firms. They include: Masagang Sakahan, Tacoma Bay Shipping Company to Pinagkakaisa  Realty Corporation.

Samples:  Pinagkakaisa closed  shop in 2002. Eight years later, it still untangling  contracts for occupation of its lots with GE  Lighting Philippines. National Slipways Corporation hasn’t finished liquidation since it  was padlocked in 1995. And on. And on. And on.

Rodriguez, meanwhile, notes that “in 2009 the pay of the key officials of all the 36 state firms totaled P57 million.” He is right. And so are Drilon and Recto.  But are they only scratching the surface?

Part of the answer is found in another question: Just how many GOCCs and  CFIs are we saddled with?

In  her article “The Corporate Fat Cats”, the no-nonsense  former  National Treasure Leonor  Briones wrote: This uproar started  after  President Aquino, in his State of the Nation Address, skewered  the salaries of 41 officials from nine corporations..

“The list is incomplete,” Ms Briones  pointed out . An earlier study  reported that there were 163  GOCCs and subsidiaries. “The nine corporations are only the tip of the iceberg”.

In  fact,  “The Department of  Finance estimates there are 736 GOCCs, says Asian Development Bank in  documents that underpin a grant to improve these firms’ oversight ( Project No. 39606).

Definition of  GOCCs is convoluted.  But they boil down to four, namely: (a) those created by judicial decisions, like water districts; (b) assets sequestered during the Marcos regime – which  Senator  Ferdinand  Marcos and sisters are assiduously trying to grab; (c) those acquired by public firms; and (d)  those created by legislative charter.

In theory, the Finance Department  oversees, through it’s Corporate Affairs Group (CAG), performance of the 736. “Effectively, however, only 14 corporations are closely monitored….”

These are firms that depend for equity, subsidy or advances or guarantees from national government.  Aside from MWSS, the 14 include Local Water Utilities, National Food Authority, National Development Corporation  Philippine National Oil Corporation to Philippine Ports Authority

The other  722  pretty much  operate as individual fiefdoms. There is  little done  to stop local satraps from stealing  the taxpayer blind.  And they  do.  Most  GOCCs  are drowning in red ink.

President Gloria Macapagal  Arroyo’s first term (2000 to 2004)  funneled  P80.4 billion into GOCCs. That  windfall  nothwithstanding, “there has been a noticeable increase in the aggregate deficit of the 14 monitored GOCCs,  This brings their financial stability into question,” the ADB note  cautions.

Expenses of  the monitored 14 firms accounted for 6% of GDP. But their income  shrank from 5% to  4.1%.of  GDP.  This torrent  of  red ink saw  consolidated  deficit of  the 14 monitored GOCCs  exceed  four times their  2000 level.

Wait. There’s  more.  In 2004,the  Garci tape controversy erupted. Few noticed then that “the 2004 deficit  was already about the same size as the potential new revenues collected through the expanded value added tax.”   The GOCCs, in short, handcuffed the country to an economic treadmill.

“Debt is a prolific  mother of  folly and crime,” parliamentarian  Benjamin  Disraeli once said. “The significant financial losses of the GOCCs  contribute to the public sector debt,” the ADB paper points out. “National government’s combined  outstanding debt and estimated off-balance-sheet liabilities increased  by nearly P2.4 trillion from  1997  to 2003…Nearly half is attributable to GOCC  activities.”

Could we put in our two cents worth?  . Drilon and Rodriguez should consider asking their committees to direct the Finance  Department to provide a copy of  ADB’s final  report on GOCCs. The bank submitted that  document submitted to Finance on March 13 last year. The hard copy followed on March 27. Published   findings  could be invaluable for policy overhaul.

The “fat cat allowances” in Subic and MWSS  butteresed overwhelming pubic support for overhaul of  GOCCs. .  The President  Drilon, Rodriguez and others should not squander this  window of  opportunity.

Today’s  probe ought to go beyond  just nailing the GOCC piranhas. It should  craft over all reform  policy.  As Mark Twain warned: “ I was seldom able to see an opportunity  until it had  ceased to be one.”

(Email: juanlmercado@gmail.comThis e-mail address is being protected from spambots. You need JavaScript enabled to view it )

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