Pork mess toll: 5 state firms, 283 civil servants

IT SEEMS the heads of five government corporations would not be the only ones on the chopping board for implementing the anomalous pork barrel projects recently reported by the Commission on Audit (COA). Now it looks like the state firms in question may themselves disappear while their combined 283 employees may go jobless.

The Governance Commission for Government-Owned or -Controlled Corporations (GCG) has recommended to President Benigno S. Aquino III the abolition of Zamboanga del Norte College Rubber Estate Corporation (ZREC) and National Agribusiness Corporation (NABCOR). In a speech last Aug. 23, Aquino himself said that the ZREC and NABCOR would be abolished because they had become “notorious for anomalies” and “instruments of corruption.”

Also under evaluation by GCG for possible abolition are the Philippine Forest Corporation (PhilForest), National Livelihood Development Corporation (NLDC), and the Technology Resources Center (TRC).

In the last quarter of 2012, Aquino had directed the commission to focus its review on several GOCCs. GCG, after its initial study, singled out these five corporations as candidates for abolition.

All five acted as implementing agencies of the projects supported by the Priority Development Assistance Fund (PDAF) for the years 2007 to 2009, covered in COA’s Special Audit Report. The alleged failure of several state agencies to follow the rules when dealing with non-governmental organizations led to the irregular transfer of millions worth of PDAF to questionable entities.

But the issues with PDAF are not the only reasons why GOCCs are being reviewed, said lawyer Paolo Salvosa of GCG. In the case of the five state firms that may be closed down, Salvosa confirmed that their role in the recent controversy played a part in the review. But, he told PCIJ, this was not the only factor that led to their being scrutinized.

He added, “If there is corruption, it doesn’t necessarily always mean that (the GOCC) should be abolished or scrapped, it could just mean that there should be a change of management. So, it is a factor but we have to take other things into consideration.”

“At the end of the day, the question is: Is it still needed by the public?” Salvosa said. “Because the government is not really supposed to be going into business.”

GCG is the central oversight and policy-making body for GOCCs. Under Republic Act No. 10149 or the GOCC Governance Act of 2011, GOCCs may be evaluated based on the following:

  1. The functions or purposes for which the GOCC was created are no longer relevant to the State or no longer consistent with the national development policy of the State;
  2. The GOCC’s functions or purposes duplicate or unnecessarily overlap with functions, programs, activities or projects already provided by a government agency;
  3. The GOCC is not producing the desired outcomes, or no longer achieving the objectives and purposes for which it was originally designed and implemented, and/or not cost efficient and does not generate the level of social, physical and economic returns vis-à-vis the resource inputs;
  4. The GOCC is in fact dormant or non-operational;
  5. The GOCC is involved in an activity best carried out by the private sector; and
  6. The function, purpose or nature of operations of any group of GOCCs requires consolidation under a holding company.

ZREC and NABCOR, according to Salvosa, are no longer performing the primary purpose for which they are created and are no longer financially viable.

Created in 1984, ZREC engages in the commercial production of rubber and maintains its operation in Zamboanga del Norte. It is a subsidiary of Human Settlements Development Corporation under the Department of Agriculture (DA). In its audit, COA noted that ZREC’s sales revenue decreased by 40 percent between 2011 and 2012, or from P21.3 million to P12.9 million. COA said the drop “might affect the agency’s continuing operations if management would not institute measures that would immediately address the declining sales.”

NABCOR, another corporation attached to the DA, was established in 1982 to develop agribusiness enterprises in the countryside to improve the productivity and income of small farmers and fisherfolk. COA data show that NABCOR had a net loss of P28.7 million in 2012.

As for NLDC, PhilForest, and TRC, GCG said it has accelerated its review on them as part of its target to make recommendations on 25 GOCCs for this year. Salvosa said the commission will review more GOCCs next year.

NLDC acts as the organizational machinery of the Land Bank of the Philippines. It takes charge of the generation and promotion of livelihood and agribusiness activities in rural areas. According to Salvosa, GCG is examining ways to improve the microfinance and livelihood services that NLDC provides and their similarity with those offered by other agencies.

PhilForest, for its part, was created in 2006 to manage the government’s agro-forestry programs. The Department of Environment and Natural Resources (DENR), the agency under which PhilForest operates, itself recommended the firm’s abolition. DENR Undersecretary and PhilForest OIC Analiza Teh said PhilForest’s functions could just be duplicating those of DENR’s Forest Management Bureau and the Natural Resources Development Corporation (NRDC).

PhilForest is also struggling financially. It does not even have its own office and instead occupies a small space at the Bureau of Animal Industry, another DENR agency. Currently, it has P12 million cash available for its operation — an amount that will most likely be deficient since in 2012, the corporation’s total operating expenses amounted to P13 million.

Interestingly, TRC Director General Dennis Cunanan has said his firm would support the government should the body be abolished. Yet, he also said that its abolition would be a great loss to the country’s technology industry.

TRC is the corporate arm of the Department of Science and Technology (DOST). It supports research and technology by providing investments in innovations and rolling out or marketing the products of these studies. TRC has been suffering losses since 2009, according to a GCG report. In 2011, its losses reached P108.2 million. From 2005 to 2010, the state firm had also reduced its workforce to rationalize operations.

Cunanan currently faces charges of either plunder or malversation, and graft and corrupt practices for his alleged involvement in the PDAF scam during his service as TRC’s deputy director general. He has denied involvement in the PDAF projects and expressed willingness to become a state witness in the pork barrel cases, saying that he had blacklisted the dubious NGOs dealing with TRC, even before the COA special report came out.

“I told the employees here… let’s keep on working, making a difference, showing these people that you shouldn’t close us down because we are no longer doing whatever took place in 2007 to 2009,” Cunanan said. “So that, I think, is the premise of where the employees of TRC are now.”

“Now you can see we’ve refocused our thrust, we’re directed toward technology livelihood information dissemination, and toward technology utilization and commercialization, and livelihood and entrepreneurial development,” he also said. “And no other agency in the country can do that than the TRC and we’re in the position also to introduce technological application and innovation for anything that is happening right now in the entrepreneurial field.”

Should President Aquino approve the abolition of these five GOCCs, 283 employees are bound to lose their jobs as a result.

In the case of PhilForest, though, its suddenly unemployed personnel may be offered assistance to find new jobs or contractual positions within DENR. For the personnel in other state firms, separation benefits could be the only thing that they will be leaving with.

PCIJ Sidebar Table 1. GOING, GOING, GONE

GCG will head the state firms’ abolition once it receives Aquino’s green light — which is all that’s needed for the action, even for GOCCs created by law. Technical working groups will be created to study and undertake the transfer of assets, as well as the functions and projects of the company to be dissolved. Supervising agencies and other attached institutions will similarly be involved in the process. For subsidiaries, assets and projects will most likely be transferred to their parent corporations.

Other state firms under evaluation may not necessarily suffer a similar fate. Instead, Salvosa said, GCG may propose rationalization or the reduction in the number of personnel, merger with other corporations, or privatization. — With additional research by Karol Ilagan, Rowena Caronan, Fernando Cabigao Jr., Rosemarie Corpin, and Charmaine Manay, PCIJ, October 2013