By Atty. Howie Calleja
Similar to the sovereign wealth fund of other countries, the House Committee on Banks and Financial Intermediaries recently approved the proposed law of President Ferdinand Marcos Jr. creating a P250-billion Maharlika Wealth Fund. House Bill 6398 filed by Speaker Martin G. Romualdez was approved, after the panel adopted and passed the proposed amendments of the technical working group headed by Albay Rep. Joey Salceda.
As such, the Government Service Insurance System (GSIS) will provide an initial investment of P125 billion, the Social Security System and Land Bank of the Philippines will each invest P50 billion, and the Development Bank of the Philippines, P25 billion. The national government through the Treasury of the Philippines will likewise provide P25 billion as investment.
As proposed, the Maharlika Fund shall be used to invest on a strategic and commercial basis in a manner designed to promote fiscal stability for economic development, and strengthen the top performing GFIs through additional investment platforms that will help attain the national government’s priority plan. Sounds good, right? Yes of Course, but will this be safe from the inherent abuse of corruption?
The global propagation of Sovereign Wealth Funds (SWFs) has fascinated a great deal of consideration over their investment impetuses vis-à-vis the perceived lack of transparency of their operations. Some scholars argue that the funds could be legitimately disguised as supporting domestic development when in reality it is used to deepen the pockets of the political leaders. In fact, there are professional suggestions that by taking away the direct control of this fund from the hands of the politicians and putting them into the hands of professional funds managers, not only does this ensure that the funds are profit-maximizing to the long-run benefit of the citizens, it also reduces the political temptation for politicians to use the funds to projects for personal gains.
To cite an example, the Malaysia’s state-owned 1MDB investment fund has filed nearly two dozen civil lawsuits seeking $23 billion in assets allegedly looted from the two entities. The Malaysian finance ministry likewise reported that 1MDB has filed six lawsuits against 25 people and nine entities, including two foreign financial institutions. The ministry also accounts that 1MDB’s former subsidiary, SRC International, has filed 16 lawsuits against 15 people and eight entities. Overall, Malaysian authorities allege that at least $4.5 billion was looted from 1MDB as part of a wide-ranging embezzlement scheme involving former Prime Minister Najib Razak, who created the fund in 2009.
Given the many corruption cases involving the sovereign wealth fund, suspicion is a must. Most especially when the nature of such fund should come from the “excess” financial resources a nation-state has (which most countries practice) and not from the “pension fund” of our compatriots (which we are now proposing to do) that for me is TOO RISKY. Again, why not create the Maharlika Fund from the uncollected estate tax? Why gamble on the retirement funds of our “Kababayans” just to create a potential cash cow with the propensity for corruption (a coco levy fund version 2.0) — remember, “Money doesn’t change men, it merely unmasks them. If a man is naturally selfish or arrogant or greedy, the money brings that out, that’s all” (Henry Ford). Please, let’s not play Russian Roulette on the lives of the poor whose pension is their only safety net in their old age just to give another avenue for corruption to take place.
Legally, the SSS and GSIS funds are personal contributions of their respective members who own the funds. Thus, the income of SSS and GSIS investible funds must benefit only their respective members. So, investing the members’ contribution that would benefit non-members as well is clearly illegal. Using private property for a public purpose without just compensation is illegal and unconstitutional.
It is truly necessary to have this fund? I guess not. It is never sound public policy to risk our people’s hard earned pension fund to gamble in the international investment market while you dangle around issues such as the 9 Billion confidential intelligence fund, the 203 Billion estate tax cases of the Marcoses, the 4 convictions of violation of the tax code by Ferdinand Marcos Jr , the unresolved billions of pesos from the coco levy fund, and the pending Marcos Family unexplained wealth still in the PCGG and Sandigan Bayan. Don’t you already have too much fund to spend on corruption? Stay away from people’s pensions please.