MANILA –– A lawmaker on Thursday sought the inclusion of a penalty clause to make erring managers accountable in the proposed Maharlika Wealth Fund (MWF).
During the deliberation for the proposal at the House Committee on Banks and Financial Intermediaries, House Deputy Minority Leader France Castro cited cases of nepotism and corruption in other countries' sovereign wealth funds such as the 1Malaysia Development Berhad (1MDB).
Former Malaysian Prime Minister Najib Razak is serving a 12-year prison sentence over the 1MDB scandal that allegedly saw top officials loot billions from state coffers.
Castro also flagged a provision empowering the President of the Philippines to chair the governing board of the proposed Maharlika fund.
"Dahil kayo rin po nag-decide na ilagak itong pondo natin dito sana makapaglagay tayo ng penalty clause sakaling magkapalpak ito dahil alam naman natin yung mga karanasan po diyan sa Malaysia," said the ACT Teachers party-list representative.
(Because you decided to channel our funds here, I hope we could also include a penalty clause in case this leads to problems because we already know the experience there in Malaysia. )
Castro also suggested consultations with workers whose pension fund contributions would be used.
"Ang takot po dito ay gagamitin natin as investments etong mga pera ng mga government employees at saka nitong ating mga private sector workers na medyo malaki. Alam naman natin ang investment, merong nanalo merong natatalo so we have to look at that perspective," she said.
(My fear here is that we will use as investments the money of government employees and private sector workers, which would amount to a huge sum. We know that with investments, some win and some lose.)
According to Government Service Insurance System (GSIS) President Wick Veloso, the agency has P1.49 trillion in assets under its management. The Social Security System, meanwhile, has P700 billion.
Castro said there were more urgent uses for the funds aside from risky investments.
"Yun po ang hinanakit ng puso ko dahil pwede tayo magtapon ng ganito bibigay natin sa risk yung pondo ng ating mga members and yet di mabigyan ng pension itong mga nakatatanda natin, additional na pension," Castro said.
(That's what I resent, we'll put the funds of our members at risk, and yet, we cannot even give additional pension to the elderly.)
But House Ways and Means Committee Chair and Albay Second District Rep. Joey Salceda said the government would issue a guarantee for all funds coming from the GSIS and other institutions.
"Kung ito'y kumita ng mas malaki kaysa 7.7 or sa 14 percent, mas makikinabang po ang GSIS members dahil mas lalago pera niya, pero yung kapital na nilagak niya sa MWF ay sinisiguro po ng national government. Protected na po yung capital niyo pero mayroon kayo partisipasyon sa upside. Mukha naman pong kikita itong MWF," Salceda said.
(If this earns more than 7.7 or 14 percent, GSIS members would benefit because their money would grow, while the national government guarantees the capital that they put into the MWF. Your capital is protected but you have participation in the upside. And it seems that this MWF would earn.)
When asked whether the country's elevated debt would be a concern, Salceda said, "Konserbatibo lang po ang Pilipinas. Huwag po natin gagawin para scare natin ang sarili natin."
(The Philippines is conservative. Let us not use that to scare ourselves.)
As of the end of September, the national government's total outstanding debt reached P13.52 trillion, data showed.
The country's debt-to-GDP ratio was at 62.1 percent as of the end of June, President Ferdinand "Bongbong" Marcos Jr. told investors during a visit to the New York Stock Exchange. It ballooned to as high as 63.5 percent earlier this year.
Before the pandemic, a 60 percent debt-to-GDP ratio is considered high by global standards. But Philippine economic managers believe that settling in within the current rate is still manageable given the increased borrowings during the COVID-19 pandemic.
Salceda and Marikina Second District Rep. Stella Quimbo also raised concerns on the proposed provision exempting the fund's investments from injunctions from lower courts.
Salceda said there were rumors circulating about the purpose of the bill.
"Nakakanerbiyos yan. Para tayong ano may itatago, may itatakbo tayo," Salceda said.
(That's worrying. It seems like we are hiding something, we are running off with something.)
Quimbo said "to eliminate such fears, we cannot adopt itong (this) prohibition against the injunction."
WHAT WE KNOW ABOUT MAHARLIKA FUND
Marcos' cousin House Speaker Martin Romualdez and the President's son Senior Deputy Majority Leader Sandro Marcos were among the authors of the bill creating the fund.
In its current form, the proposed fund will be managed by the Maharlika Wealth Fund Corporation (MWFC).
Here are other details from the proposed bill:
- It will be funded by government financial institutions (GFI) such as the Government Service Insurance System (GSIS), the Social Security System (SSS), the Landbank of the Philippines and the Development Bank of the Philippines, which shall contribute investible funds along with the Bangko Sentral ng Pilipinas (BSP) and the national government.
- The founding GFI's will contribute the following proposed capital:
- P125 billion from the GSIS
- P50 each from the SSS and LBP
- P25 billion from the DBP
- The BSP, Philippine Amusements and Gaming Corporation and the annual national budget will be mandated to contribute annually.
- The MWFC shall have a 15-man governing board to be led by the President of the Philippines as chairman.
- The MWFC shall be exempt from the GOCC Governance Act of 2011 which regulates the bonuses and salaries of workers and officials of state companies.
- The bill would also prohibit injunctions from lower courts against investments and activities of the company. Only the Supreme Court and the Court of Appeals may issue such injunctions.
Finance Secretary Benjamin Diokno earlier said the Philippines has money to back the sovereign wealth fund.
–– With reports from RG Cruz and Warren De Guzman, ABS-CBN News