House probe sought on HGC bankruptcy due to zero-coupon bonds

FIILE PHOTO

MANILA, Philippines—The House of Representatives is being urged to look into the gross mismanagement of the Home Guaranty Corp. (HGC), which buried the state firm in P13.296 billion in losses over a decade bridging the Arroyo and Aquino administrations.

Abakada party-list Rep. Jonathan de la Cruz filed House Resolution 730 directing the committees on good government and public accountability, housing and urban development and government enterprises and privatization to investigate present and past officials of HGC for driving the firm into bankruptcy with their ill-timed bond flotations dating back to 2002.

De la Cruz said these losses have “hampered HGC’s ability to perform its mandate” to facilitate home lending to socialized and low-cost housing as he echoed a Commission on Audit report noting HGC’s “diminished  capability to provide guarantees for loans supporting a viable shelter program.”

De la Cruz also noted that HGC has further compounded the government’s fiscal problems especially after the government had to pump in P12 billion in emergency funds to HGC to avert a default on its maturing loan, specifically the P12 billion zero-coupon bonds issued by his predecessor, Gonzalo Bongolan.

“There is a need to pinpoint responsibilities for the tottering HGC finances which, if left unresolved, may result in its actual bankruptcy endangering the entire banking and financial system and ultimately burdening the entire Filipino people,” said Dela Cruz.

De la Cruz said that COA has made repeated calls for the HGC to fix its finances, which the company ignored, and collect on its billions in pesos in receivables.

“It really boggles my mind why HGC despite its condition does not want to collect its more than P1 billion from NHA (National Housing Authority) when all it has to do is to submit documents as disclosed by the NHA itself but it has not done so. What is keeping it?” Dela Cruz remarked.

De la Cruz cited COA Supervising Auditor Teodora Lacerna’s report noting that HGC’s deficit operations began when it binged on zero coupon bonds.  “Former and current HGC officials including past president Gonzalo Bongolan and current president Manuel Sanchez had pushed for bond flotation, among other financial practices, despite the risks involved. The bond flotations made its financial standing much worse over the years because of its inability to pay the maturing obligations,” said Dela Cruz.

De la Cruz also noted in his resolution that in the face of its bleak financial stature, “HGC officials still managed to provide themselves with service vehicles amounting to P25.919 million even letting an officer of the Housing and Land Use Regulatory Board (HLURB) avail of its car plan despite being ineligible for the said plan and paying P14.081 million for the officers’ and employees’ Early Separation Incentive Program (ESIP).”

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