GOCC watch | Inquirer Opinion

GOCC watch

/ 08:58 PM June 14, 2011

A “LEGACY legislation” as well as a “quantum leap for corporate governance in our GOCC system.” That was how Francis Lim, former president of the Philippine Stock Exchange, hailed Republic Act 10149,  even before it was passed by Congress. The law is, in fact, the first major piece of legislation successfully pushed by the Aquino administration to support his war on corruption.

Strangely though, in stark contrast to the hailstorm of public anger that prompted its enactment, RA 10149 hardly made a blip on the radar screen of national consciousness when it was signed into law by President Aquino last June 6. Or so it seemed, judging by the tepid reaction it drew from both the media and the public. Which could also be said of the phlegmatic response to President Aquino’s mention of RA 10149 in his Independence Day speech last Sunday in Kawit, Cavite, as he vowed a new era of a graft-free and truly free Philippines.


Rewind to July 2010. Barely a month in power, the Aquino administration uncovered closets of skeletons in government-owned and -controlled corporations (GOCCs), including government financial institutions (GFIs). Directors and other officers of many of these corporations had been privileging themselves, as if the sky was the limit, with fat checks for almost every imaginable perk—extra bonuses ridiculously labeled as “productivity,” “anniversary,” “grocery,” even “privatization,”  to name a few—on top of excessive salaries and extravagant allowances. One GOCC is said to have rewarded its officers and employees with at least 25 bonuses in one year, a number of which were of exactly the same nature, albeit differently named.

These extra benefits  came  in “fantastic amounts,” as Sen. Franklin Drilon, put it, costing Filipinos possibly hundreds of millions of pesos. Worse, many  GOCCs were not earning for the government and were in fact wallowing in debts, and relying solely on government subsidy for operations, if not for survival. Yet, in some cases where profits accrued from their investments, the government got only as much share of the returns as its trustees deemed fit.


Even to a nation long inured to corruption, the revelations came as a shock, perhaps because the abuses, in every instance, were so routinely done like they were the most normal and proper thing in the world. As more irregularities were revealed in the Senate hearings that followed, Filipinos watched in a daze, trying to understand how such blatant, monumental greed, waste and corruption could have escaped the attention of concerned agencies and higher authorities.

Divided as “spoils of war” among a victorious presidential candidate’s supporters and allies regardless of competence and expertise, the GOCCs were easily turned into milking cows. Reports said  36 of the more than 150 GOCCs and GFIs in existence were “underperforming, unnecessary or losing,” their total liabilities amounting to P480 billion.

Precisely meant to restore sanity in the GOCC system, RA 10149, also known as the GOCC Governance Act of 2011, gives the government greater control over GOCCs, promotes transparency in their operations, and puts an end to the culture of patronage that has defined its leadership. For this purpose, the law creates the Governance Commission for Government-Owned and –Controlled Corporations (GCG), with “the power to pursue the reorganization, merger, streamlining, privatization and even the abolition of the agencies,” as the Aquino proposed. With this task comes the power to screen and recommend, for presidential appointment, nominees to GOCC management positions, as well as to monitor and evaluate their performance.

But if the opportunities that the law presents are many, so are its pitfalls. For one, while RA 10149 inspires public confidence in the President’s resolve to live up to his “daang matuwid” standard, it raises the demand for him to prove his ability to deliver on that promise.

Take Sec. 17, on the term of office of GOCC directors. Given one year, unless sooner removed for cause, an “Appointive Director shall continue to hold office until the successor is appointed.” That is an open invitation to keep friends in the post, a practice widely disdained by the public but which the President is, unfortunately, increasingly seen to be doggedly clinging to.

The administration touts RA 10149 as the most important law enacted under the Aquino administration. The public should watch very closely how the administration implements this reform measure.

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