Democratic Progressive Party (DPP) legislators yesterday accused the Commission of National Corporations (CNC) of favoring CPC Corp, Taiwan (CPC), saying the commission had misinterpreted the Statute Governing Performance Bonuses of State-owned Enterprises under the Ministry of Economic Affairs to give the state-owned oil utility the highest-possible performance bonuses.
The statute, a regulatory framework set up by the ministry to govern bonuses at CPC, Taiwan Power Co (Taipower), Taiwan Sugar Corp, Taiwan Water Corp and Aerospace Industrial Development Corp, states that state-owned enterprises may choose to calculate employee bonuses based either on the company’s net surplus or net profit.
Income loss due to policy factors may be discounted using either of the two methods.
While all other companies opted to distribute bonuses using the net surplus method, CPC chose the net profit system.
However, based on the statute, any state-owned enterprise using the net profit system cannot discount losses due to policy factors unless it is a “newly proposed or implemented” policy, DPP Legislator Gao Jyh-peng (高志鵬) said.
The government has intermittently imposed an “arbitrary freeze” on gasoline prices since 2006, the most recent being last year.
Saying it has suffered losses because of the government’s policies, CPC has consistently applied for subsidies over the years, Gao said.
As an example, of the NT$74 billion (US$2.54 billion) in total subsidies that CPC received in 2011, nearly 99 percent, or NT$73 billion, was for losses due to government policy, he said.
Despite its poor performance, CPC still applied to distribute 2.6 months in bonuses for each employee for that year, Gao said, adding that if it were not for the Legislative Yuan slashing the proposed bonuses to 1.2 months in October, the company would have received the maximum amount it asked for.
While the Budget Act (預算法) requires that the Legislative Yuan finish all budget reviews for the following year before the new year begins, the legislature has been lagging behind schedule. As of October last year, it had only concluded the budget for state-owned businesses for 2011 — 328 days late.
According to Gao, a quick look at other nations’ performance bonus regulations for state-owned enterprises would show that the CPC’s application for “losses incurred due to government policy factors” did not fit the criteria.
Why the commission would misconstrue and misinterpret the statute for the CPC’s benefit, saying that CPC had “just been lazy and had not written its application clearly” is a travesty, Gao said.
“I thought the Ma Ying-jeou (馬英九) administration was all for the rule of law,” Gao said, adding that if government agencies were going to bend the rules for certain corporations, the agency may as well be abolished.
In response, commission chief executive Liu Ming-chung (劉明忠) said that the regulations were “unclear” and that individuals may have different interpretations of the rules.
Liu said there were also fine distinctions in terms of policy setting — eg, arbitrarily freezing gas prices and raising gas prices by half of the target are two different policies.
There is also the question of whether CPC had absorbed the cost of the price hikes or not, he said.
The fluctuation in prices, including international and domestic prices, also differ every month, Lui said, adding that from this point of view, the policy factors affecting CPC’s prices varied every month.
CPC had been lazy in that it had not included a detailed description of these scenarios in its application for bonus payments, Liu said.
Commission spokesman Lee Shao-yi (李紹儀) said that although the “item” under which the CPC applied for subsidies remained the same, the timing of how long the “arbitrary freeze” on gas prices would last, as well as how much it would affect income, varied every year.
The commission felt that it could not take everything at face value and had to verify the facts, or it would be unfair to CPC, Lee said.
However, Lee added that the Control Yuan has already conveyed its dissatisfication with how the commission had chosen the bonus equations for the companies to benefit them.
The commission has already filed a proposal with the Executive Yuan to amend the statute and clarify some items that are either unclear, impractical or unrealistic, Lee said.