The need for transparency

LAST Monday’s regular session of the City Council echoed with another call by one of its members, City Councilor Fred Bagbagen for the City’s electricity provider - Benguet Electric Cooperative (BENECO) – to come clean and enlighten its consumers with the truth about its status and operation as an electric cooperative.

The rebuke, as some who listened might have perceived it, actually came in the form of a privilege speech crafted and delivered by Councilor Bagbagen after he came to learn that BENECO on several instances failed to send its appropriate representative to explain and shed light regarding a memorandum issued to it by the National Electrification Administration (NEA) in relation to the latter’s technical and financial audit of the said electric cooperative.

The very first sentences of the speech already revealed consternation of the alderman about the actuations, or the lack of it, of BENECO in responding to the invitation sent out by the City Council. Councilor’ Bagbagen’s conclusion as to the non-appearance of the appropriate representative of BENECO to the said invitation is that the latter “does not want to shed light on important and relevant matters …xxxxxxxxxxx…..so the public will be totally kept in the dark”.

Councilor Bagbagen chided BENECO for not sending a ‘financial and technical person’ to explain the findings of an independent auditor, Odsinada, Rivera & Co., which ostensibly revealed accumulated losses by BENECO amounting to more than half a billion pesos and which may consequently affect the overall operation stability of the said cooperative. The councilor in his speech cited the finding in question portions of which were stated thus: “ Without qualifying our opinion, we draw attention to the Notes to the Financial Statements herein stated, which appropriately described the significant concerns in some operational aspects of BENECO. Accumulated losses already amounted to P528,387,828.00, including the net loss for the year 2012 of P42,996,762. Such operational performance has already impaired total assets by about 24.1% and share by 50.5%. Consequently, this impairment may affect the electric cooperatives financial position, its financial performance, its equities, and cash flows for the years ended December 31, 2010 and 2009”.

Instead of BENECO attempting to clarify the above findings by the independent auditor, Councilor Bagbagen stated that the former’s legal counsel, Atty. Delmar Cariño, simply admitted the more than half a billion loss but reasoned out that it was still business as usual with the said electric utility and that despite such losses it has reaped many awards earning the offer of banks for further bank loans. For his part, the councilor insists that BENECO should explain how the losses came about and how it is being addressed, which apparently the latter’s representative failed to do.

Moreover, further along his speech, Councilor Bagbagen also castigated BENECO’s failure to comply with the recommendations made by NEA through the said memorandum it issued particularly in the grant of per diems and number of meetings conducted by the members of the board. In the said memorandum it appears that BENECO had been granting a per diem of P5,000.00 per meeting to the board members which is in excess of what is supposed to be provided for in the NEA guidelines. The findings in the memorandum further showed that the cooperative has granted per diems during board meetings in excess of the two meetings per month which is again a violation of the said guidelines. As shown in the NEA memorandum, despite the above matter being taken up in previous audit reports and the recommendation that the practice be stopped, the cooperative continues to grant the same.

In fact as further revealed by Councilor Bagbagen, the BENECO board has earned an excess of P1,23,400.00 representing “disallowed board meetings per diems” for the period covering January up to September of 2012, and the question was raised by the alderman whether the said amount has been refunded to BENECO by the concerned Board of Directors. The fear expressed is that if the said illegal per diems continue to be granted then millions of pesos are being illegally disbursed by the cooperative in violation of the said NEA guidelines.

Finally, Councilor Bagbagen expressed his chagrin on the issue of four million pesos of consumer’s money given as attorney’s fees to a former retained lawyer for handling a labor case. Bagbagen feels that the said attorney’s fee is very unethical and without any legal justification considering the ‘success fee agreement’ adopted for the purpose. He further stressed in his speech that the ‘success fee agreement’ is unethical and grossly disadvantageous to the consumers. Councilor Bagbagen concluded his speech by lambasting the BENECO directors in saying that they were never the guardians of the consumers and that if they had been doing their job then there should have been no need for his privilege speech.