MANILA – Finance Secretary Carlos Dominguez III has urged the Governance Commission for Government-Owned and -Controlled Corporations (GCG) to incorporate the assessments made by regulatory agencies in evaluating the performance of state-run firms to further improve its oversight functions and avoid errors in the policy-making process of the government.
Dominguez made the call after he observed several instances of “incongruence” between the evaluation done by the GCG on government-owned and -controlled corporations (GOCCs) against those made by agencies regulating these firms.
He said “great strides have been achieved” in improving the performance of GOCCs, which now remit an average of PHP57 billion in dividends annually to the Bureau of the Treasury (BTr), but improvements should still be made on the part of the GCG in its evaluation of these state-run firms.
President Rodrigo Duterte’s policy of instilling fiscal discipline among GOCCs has led to these much-improved dividend collections, which is more than double the average annual collection of the past administration, he added.
As ex-officio member of the GCG, Dominguez called on the Commission to adopt his recommendation in refining its evaluation methods and factoring in the findings of regulators in assessing and rating GOCCs.
“We have GOCCs that are also evaluated by their regulatory agencies. As Secretary of Finance, I happen to be the ex-officio Chairman of eight GOCCs and director of 20 state corporations. Some of these GOCCs are regulated by agencies attached to the Department of Finance (DOF). I have, therefore, noticed the incongruence between the evaluation made by the GCG against those made by regulatory agencies. This should not be the case,” he said during last week's virtual celebration of the GCG’s 10th anniversary.
Dominguez cited the case of the Insurance Commission (IC), whose review of the performance of some government insurance corporations contrasted sharply with the assessment by the GCG.
“The discrepancies could cause confusion among the regulated and reviewed state enterprises. More seriously, they could bring forth errors in policies for the government,” he said. “I therefore call on my colleagues in the Commission to work towards correcting this irregularity.”
Dominguez said the GCG has rated some government insurance companies “very highly” even though they did not adhere to international standards of accounting and reporting.
"This, I think, is a failure not only of COA (Commission on Audit) but also of the GCG. So, I urge you to strengthen your ability to analyze the financial statements of each and every GOCC," he added.
Dominguez said the GCG should make its review methodologies relevant to the industry sectors to help it identify factors peculiar to each GOCC “and, ultimately, come up with a scorecard that accurately measures the achievement of the vision, mission, and mandates of GOCCs.”
He commended the GCG for introducing “valuable governance reforms” in the public corporate sector, which has led the Office of the President (OP) to abolish 29 GOCCs since 2011.
Among the reforms introduced by the GCG were the Corporate Governance Scorecard that assesses state enterprises, and its move to institutionalize the Performance Evaluation System to enable GOCCs to become performance-driven corporations anchored on good corporate governance, he added. (PR)