Maharlika fund prone to money laundering, corruption: tax expert


Posted at Jan 25 2023 10:41 AM

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The Maharlika Investment Fund, in its current state, is prone to corruption and money laundering, Asian Consulting Group Founding Chairman and Chief Tax Advisor Mon Abrea told ANC on Wednesday.

Funding for the MIF was initially supposed to come from pension funds, it was removed following public backlash. It was then revised to come from earnings of financial institutions such as the Bangko Sentral ng Pilipinas, Landbank, and the Development Fund of the Philippines. 

It was allegedly "re-engineered" to drop BSP and others and get funding from the dividends of Government-owned and controlled corporations (GOCCS), which President Ferdinand Bongbong Marcos Jr. thumbed down.

"I honestly believe there are no other people interested to invest here other than those who want to launder money. The fact that it is not clear then it is an opportunity for those who want to take advantage of us to make money and get away with it. That’s exactly what Maharlika is offering," he said.

"It’s not clear, it’s so confusing, there are a lot of immunities or exemptions, who are you exactly attracting? You’re actually attracting those who want to take advantage of it," he added.

Economic managers have said that the fund would be managed by experts in their fields. However, independent economists pointed out that the success of sovereign wealth funds depends on the lack of corruption. The IMDB financial scandal in Malaysia is an example, they said.

"There is an issue on transparency and accountability in our government institutions," Abrea said, citing global studies that placed the country among the laggards in terms of the global corruption index.

Abrea also weighed in on the proposed initial public offering suggested by Albay Rep. Joey Salceda. Once listed in the market, anyone can invest. 

Marcos Jr said he pitched the Maharlika Investment Fund during the World Economic Forum in Davos, Switzerland.

But Abrea said a sovereign wealth fund is supposed to use government money and not foreign investors. He said if foreign investors make more money because they have bigger funds, then that defeats the purpose of creating the fund.

The Philippines clearly has a budget deficit and not surplusses and ballooning debt of over P13 trillion, he said. 

A provision under the law also specified dividends to poor families, which Abrea said should not be passed.

"That provision should not be passed into law, how can you appropriate something which is not even there? We’re not even sure if this will make a profit. Why are you allocating it already," he said.

"I urge the public, the media and everyone who loves the country to make sure that this law, this proposal will not pass into law initially. It may have some good intentions but it need a thorough review and debate," he said.