MANILA, Philippines?The Manila Economic and Cultural Office (MECO), the de facto ?Philippine Embassy? in Taiwan, appears to have the most generous retirement package among government agencies.

For serving for just two years at MECO, a member of its board can leave the job and be entitled to P600,000 for every year of service, the Senate finance committee hearing on government-owned and -controlled corporations (GOCCs) found Wednesday.

This developed as President Benigno Aquino III ordered the suspension until Dec. 31 of all allowances, bonuses and incentives of board members of GOCCs and government financial institutions (GFIs).

In issuing Executive Order No. 7 Wednesday, Mr. Aquino also stopped increases in the salaries and other benefits of board members, executives and regular employees exempted from the Salary Standardization Law.

?The grant of allowances, bonuses, incentives and other perks to members of the board of directors/trustees of GOCCs and GFIs, except reasonable per diems, is hereby suspended until Dec. 31, 2010, pending the issuance of new policies and guidelines on the compensation of these board members,? the order said.

Presidential spokesperson Edwin Lacierda said EO 7 did not cover the 13th month bonus of executives and the employees.

?It is mandated by law,? Lacierda said.

Scandalous

At the Senate hearing, new MECO Chair Amadeo Perez Jr. described the retirement package at MECO was ?very scandalous.?

Perez, a former mayor and congressman, said the P1.2-million package?which was good for two-year?s work at MECO?easily equalled the amount he had received in his 35 years in government.

?It?s not only scandalous,? Sen. Franklin Drilon, committee chair, told Perez. ?It?s a major, major scandal.?

The unusual retirement package, along with the rest of the compensation scheme, was apparently the result of resolutions by the MECO board through the years?an arrangement the finance committee sought to rectify.

No COA audit

Drilon noted that MECO was clearly a GOCC, but was not the subject of audit by the Commission on Audit (COA) and was not remitting funds to the national government.

Under questioning by the senator, Perez said MECO should have transferred around P100 million to the national treasury in the last five years.

MECO?s Taiwan office remitted to Manila a total of $3.395 million from Feb. 5, 2008 to Nov. 9, 2009, according to Drilon.

?[But] nobody knows what happened to the [amount],? he said, noting that MECO funds were scrutinized only by Taiwan-based auditor KMPG.

Part of the problem can be traced to how MECO officials consider the nature of the company. Its official website describe it as ?a non-profit and non-stock private corporation under Philippine law.?

One-China policy

The company was created in 1975 to facilitate Manila-Taipei relations in the wake of the forging of diplomatic ties between the Philippines and China as part of Manila?s one-China policy.

?MECO promotes trade, investments, tourism, labor, scientific and cultural cooperation with Taiwan,? it says on the website, ?[and] provides assistance to Filipinos in Taiwan and [to go with] visas, legal and consular services.?

?MECO has been operating as a government of its own,? Drilon later told reporters.

Unremitted dividends

?[Its] office would collect public funds. [Its] board of directors would appropriate those funds by preparing an annual budget and [it] would disburse this public fund without the scrutiny of Congress or anyone,? he said.

At least 143 GOCCs owed the national government a minimum of P37 billion in unremitted dividends in 2008, according to a Department of Finance document cited by Sen. Ralph Recto at the hearing.

Last year, the government received only P13.8 billion worth of dividends from 32 GOCCs.

With the hearing completed, Drilon said the committee would present soon a bill compelling GOCCs to remit the right amount of dividends to the national coffers and prevent abuses in setting salaries, bonuses and other forms of compensation.

Exempted

Drilon said the new executive order suspending such perks would not cover at least 27 GOCCs.

Compensation in these firms ?is being fixed and decided by the board of directors by virtue of their charters enacted by Congress,? Drilon said.

He said EO 7 could not deprive the board of directors the power to decide on the compensation scheme of the GOCC.

?So we have to enact legislation where this kind of salary structure of salary-exempt personnel in the GOCCs can be brought into the review process, which will be done by the executive branch,? Drilon said.

Task force

EO 7 created a Task Force on Corporate Compensation that will review all remuneration granted to members of the board, officers and rank-and-file employees of GOCCs and GFIs.

One of the functions of the task force is to recommend measures ?to rationalize the compensation system and the use of discretionary funds in specific GOCCs and GFIs including putting a cap on total compensation.?

?The (task force) shall submit a report on its findings and recommendations to the President within 90 days from issuance of this order,? the order read.

Mr. Aquino ordered all GOCCs and GFIs to submit to the task force information on salaries, allowances, incentives, other benefits and discretionary funds.

Provident fund

The order also covers provident fund benefits and additional health insurance.

The order, ?[directing] the rationalization of the compensation and position classification system in GOCCs and GFIs, and for other purposes,? takes effect immediately upon publication.

The order came after a Senate inquiry into the compensation packages of some GOCCs and GFIs revealed that the salaries, bonuses and other incentives of their executives and employees far exceeded those of other government officials and staff.

The Senate later issued a resolution calling on the President to suspend the payment of huge compensation to GOCC and GFI officials and employees.