PSALM chief Ledesma on 90-day preventive suspension

MANILA, Philippines – Power Sector Assets and Liabilities Management Corporation (PSALM) President and Chief Executive Officer (CEO) Emmanuel R. Ledesma has been placed on a 90-day preventive suspended by the state firm’s board of directors.

“Following the deliberations during the principals board meeting of PSALM held May 5, the board resolved to place President and CEO Emmanuel R. Ledesma under preventive suspension for 90 days, effective immediately after the said board meeting,” the Department of Finance (DOF) said in statement on Wednesday, May, 6.

The PSALM board is chaired by DOF Secretary Cesar V. Purisima.

The Board said Lourdes S. Alzona, vice president for finance, will be officer-in-charge of the Office of the President of PSALM. No reason was provided for Ledesma’s suspension.

Ledesma said that though he respects the decision of the PSALM board, he has “reservations as to the legal justification for the board’s action.”

Ledesma did not reply if the suspension order was due to the corruption complaint filed by some PSALM employees but said he serves at the pleasure of President Benigno Aquino III, who appointed him on September 6, 2010.

“I will have to clarify matters with the appointing authority. I am a presidential appointee, and I ultimately serve at the pleasure of the President,” the former investment banker said in a text message.

Corruption woes

It was reported that the Governance Commission for GOCCs (Government-Owned and Controlled Corporations; GCG) recommended Ledesma’s ouster to the board.

The recommendation stemmed from a a complaint similar to the one filed last year by PSALM employees who accused Ledesma of being involved in corruption.

In September 2014, more than 100 of the state firm’s employees said that Ledesma failed to take immediate action against a winning bidder who submitted fake documents.

The employees said JP Morgan Chase Bank informed PSALM in a letter that it did not issue a standby letter of credit to Genetron International Marketing (GIM), a local firm which submitted the winning bid price of P602 million ($13.51 million) for the decommissioned 850-megawatt (MW) Sucat thermal power plant held in April 2014.

GIM was required to submit a P301-million ($6.76 million) performance bond after PSALM issued it a certificate of effectivity. On May 5, 2014, GIM submitted a stand-by letter of credit supposedly issued by JP Morgan, but the bank denied this.

In their petition, the employees alleged that Ledesma failed to take immediate action against the winning bidder, and withheld critical information from the PSALM Board in relation to the issuance of a fraudulent performance bond.

More than two months after the alleged fraud was committed, Ledesma sent a notice of termination of the asset purchase agreement to GIM. The sale of the decommissioned power plant has been delayed since.

“We strongly believe, however, that Mr Ledesma has been and is grossly remiss in his fiduciary duties and obligations as PSALM’s CEO by not delivering on his duties of due diligence and loyalty, and duty of confidentiality,” the employees said in their petition.

Allegations

Department of Energy Secretary Carlos Jericho Petilla, PSALM’s vice-chairman of the board, had earlier said the recommendation that was based on a complaint does not necessarily mean a conviction. He added it is Aquino’s prerogative if Ledesma will be removed from office.

The Sucat privatization is only one of the many issues that PSALM employees have hurled against Ledesma since he assumed his post in September 2010.

In their petition, the employees asked the board to sack Ledesma and disqualify him from reappointment.

They cited Ledesma’s “transactions which are grossly disadvantageous to the government; lack of sound business principles and judgment; non-compliance with PSALM’s Manual of Approvals and established rules and regulation; and alarming governance issues such as inefficiency, poor leadership skills, abuse of discretion, distrust on employees, and unethical behavior.” – Rappler.com