Almost P300 million worth of bonuses authorized by top officials of the state-owned Development Bank of the Philippines (DBP) to be paid to themselves in 2014 have been disallowed by the Commission on Audit (COA) for being “irregular and excessive” under the agency’s rules.
In its notice of disallowance sent to DBP, COA said the bonuses approved by the Governance Commission on GOCCs (GCG) and implemented by DBP “were far beyond the cap that may be provided” by a government-owned or -controlled corporation under the very same rules of the GCG—an agency created under the Aquino administration to oversee the operations of various state-owned firms.
The COA report was signed by audit team leader Arturo dela Cruz and supervising auditor Emma Moises and sent to DBP president and CEO Gil Buenaventura last month.
The Inquirer sought the side of DBP management on the issue and received an e-mailed statement disputing the findings.
“DBP assails the COA notice of disallowance of its performance-based bonus (PBB) and strongly denies the COA resident auditor’s statement that the authorization of the 2014 PBB ‘was tainted with fraud,’” the statement said.
More importantly, the DBP management hit back at the authors of the report, saying it had already “filed a complaint with the COA commission proper against the resident auditor and team leader for alleging fraud and deliberately omitting DBP’s comments in the said notice of disallowance.”
The COA’s notice of disallowance showed that a total of 2,168 DBP officials of various ranks received P298.4 million in bonuses for the year 2014. The same notice pointed out, however, that the GCG’s own rules mandate a cap of 2.5 times the monthly salary of the top 10 percent of a GOCC’s officials, 1.5 times for the next 25 percent and double the monthly wage of the remaining 65 percent of employees.
The COA notice pointed out that bonuses worth as much as 12 times the monthly wage of a top official were paid that year, while other senior executives received bonuses as high as 7 times their monthly salaries. Other officers received bonuses as high as 4.5 times their monthly wage—all significantly higher than the cap mandated by GCG’s in a Jan. 15, 2015, circular.
The COA report also pointed out that the GCG was not informed about a Jan. 9, 2015, audit observation memorandum about “losses amounting to P717 million that resulted [from] the same day sale and purchase of government securities” as well as subsequent memoranda that followed “which could have influenced the authorization to DBP to grant the PBB to its officers and employees.”
COA “determined to be liable for the assailed transactions” DBP chair Jose Nuñez, its president and CEO Gil Buenaventura, directors Alberto Lim, Cecilio Lorenzo, Vaughn Montes, Reynaldo Geronimo, Lydia Echauz and Daniel Laogan as well as 16 other senior officials.
For its part, the DBP management said its charter authorizes the bank to set its own compensation plan, including the grant of PBB.
“The presidential confirmation of the DBP compensation plan was recognized by the COA commission proper led by former chair Grace Pulido Tan in February 2012,” it added.
“However, on the basis of confidential letters by a disgruntled employee of the bank, COA, in April 2015, unilaterally and without notice to DBP reversed this final and executory COA decision rendered in February 2012,” it said. “DBP received a copy of the COA reversal in its Decision No. 2015-224 on 10 July 2015 only.”
“The bonuses should be taken in the wider context of DBP’s 2014 financial performance where it posted P4.6 billion in profits, P2.53 billion of which were remitted to the national treasury as dividends,” the bank added. “This year, DBP is expected to again remit another P2.34 billion in dividends to the national treasury.”