HGC mismanagement sinks firm in big losses
HAVE PITY!: The government probably thinks the motoring public is so gullible that it would rejoice with its plan to rush the repair of rutted streets in Metro Manila before the Yule holidays.
With horrendous traffic snarls already being experienced with the pre-Christmas shopping rush, a frenzy of digging up and repaving roads at this late date would just worsen the dreadful situation.
Drop the plan! We hardy denizens of Metro Manila are used to bad roads and chaotic traffic anyway. We can survive another three weeks of them.
Officials should not use rush road repair as cover for greed. The real motive behind the plan is to give favored contractors, and themselves, a Merry Christmas before unused funds revert to the treasury by yearend.
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PAGIBIG MESS: After the financing mess at the Home Development Mutual Fund (PAG-Ibig) linking some developers suspected of using fictitious borrowers, comes now a disturbing audit report on the Home Guaranty Corp.
Linked to an earlier housing scandal is Xevera Homes in Pampanga of the Globe Asiatique Realty Holdings Corp. Its president Delfin Lee has denied the alleged irregularities in the granting of loans to his buyers amounting to more than P6 billion.
Now the Home Guaranty Corp., a state-controlled firm operating a credit guaranty program to support government housing projects, is being cited for mismanagement and excessive spending.
The Commission on Audit said the mismanagement by HGC officials led by its former president Gonzalo Bongolan has brought it to financial ruin. From P1 billion in 2008, the firm has increased its net loss to P9.850 billion in 2009.
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RISING LOSSES: Bongolan headed HGC from 2001 to recently this year. The firm started to post big losses in 2002, when losses amounted to P204 million. They grew to P1.069 billion by the end of 2008, and to almost P10 billion in 2009.
The CoA report belied a claim of Bongolan that they were able to slash net losses from P1.1 billion in 2008 to only P572 billion last year.
The audit report showed the huge losses resulted from the maturing zero coupon bonds that the HGC was not able to pay. The losses are expected to increase by next year since the HGC is scheduled to redeem P3 billion worth of zero coupon bonds by next yearend — and P12 billion in 2013.
Given the grim financial scenario, the CoA said the HGC has no choice but to borrow some more through bond flotation to settle its obligations.
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FAT BONUSES: The CoA report showed that HGC overstated its net assets and under-declared its losses in violation of Philippine Accounting Standards.
The CoA said, “The acquired assets were recorded at the call amounts totaling P2.682 billion, inclusive of capitalized expenses, instead of the appraised values of P793 million, resulting in the overstatement by at least P1.889 billion of total assets and the understatement of net loss.”
Despite the huge losses, HGC officials were found to have given themselves fat bonuses amounting to almost P10 million in violation of government circulars and orders for austerity.
The law, specifically CSC Resolution No. 010112, mandates that incentives to employees must not exceed 20 percent of savings generated. If HGC had posted huge losses in 2009, how come it still disbursed incentive awards?
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DISSIPATION: In 2008, the CoA also found HGC to have given an early separation incentive package (ESIP) to employees equivalent to two months’ pay per year of service, totaling P224.140 million.
The CoA said the ESIP should stop, because it is not in accordance with RA 6656 and EO 336, which authorize only one-month salary per every year of service.
The HGC also bought motor vehicles costing P22.287 million for its officials and directors. The CoA said this violated the laws on excessive expenditures and the austerity program.
Despite its huge losses, the HGC invested a big portion of its funds in private stocks despite an existing prohibition under RA 8763 and the General Appropriations Act of 2009. From P3 million, the HGC had invested P734.646 million as of Dec. 31, 2009.
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STRIKE VOTE: Philippine Airlines’ ground crew union reportedly received an affirmative nod from majority of its 3,700 members to go on strike in protest over management’s alleged move to negotiate individually with the employees.
The union held the strike vote despite the ongoing review by Malacañang of the union’s appeal for the government to reverse the labor department’s order allowing the airline to outsource its non-core businesses.
Was the exercise credible? No representative from the Department of Labor and Employment was present to oversee the referendum. The DoLE distanced itself from the strike vote in deference to President Aquino’s review of the case.
The affair was supervised instead by union leaders who presumably would only settle for a “Yes” vote to pressure management and the Palace with threats of a strike.
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UNION THREAT: Will DoLE certify that the strike vote was legal considering that Labor Secretary Rosalinda Baldoz herself had asked the Philippine Airlines Employees Association (Palea) to submit the result of its strike vote to Malacañang?
The labor conflict was elevated to the Palace after Palea appealed DoLE’s decision allowing PAL to spin off its in-flight catering, airport services and call center reservations.
What if President Aquino decides in favor of the union? Will Palea still mount a work stoppage over a labor issue that could be moot and academic by then?
The vote may erode union officials’ credibility. They appear using the strike threat to get a favorable ruling from the Palace. The union president had said that an unfavorable review on the spin-off program would force them to cripple the flag carrier’s operations this Christmas season.