FORMER Senate minority leader Franklin Drilon yesterday dissuaded the country’s economic managers from issuing statements that contradict the “crystal clear” prohibition in the Maharlika Investment Fund (MIF) bill against pension fund investments in the sovereign wealth fund.
Drilon, who was also a former Senate president and secretary of the Department of Justice, said the MIF bill clearly states and explicitly disallows state-run pension and insurance funds from pouring funds into the sovereign wealth fund.
“In clear and explicit terms, Congress expressly prohibits the Social Security System (SSS), Government Service Insurance System (GSIS), Philippine Health Insurance Corporation (PhilHealth), Home Development Mutual Fund (Pag-IBIG), Overseas Workers Welfare Administration (OWWA), and Philippine Veteran Affairs Office (PVAO) Pension Fund from investing in the MIF…The intention is crystal clear. Funds held in trust by the government, through these GOCCs, cannot be invested in the MIF,” Drilon stressed in a statement.
“The prohibition is absolute and leaves no room for ambiguity,” he added.
National Treasurer Rosalia de Leon and Finance Secretary Benjamin Diokno have insisted that while pension funds like the SSS and the GSIS are banned from investing in the Maharlika Investment Corporation (MIC), the corporation that will be created to handle and manage the MIF, they can still invest in its projects.
They both said that while state pension funds cannot “directly and indirectly” invest or subscribe even in MIC bonds, the SSS and GSIS may still invest in the project level on the recommendation of a yet-to-be created risk management unit that will be tasked to assess and determine what projects pension funds can finance.
But Drilon insisted Paragraph 2, Section 6 and Section 12 of the proposed legislation “explicitly prohibits” government agencies, government-owned and controlled corporations, and pension funds from investing in the MIF in whatever level.
Drilon pointed out that Paragraph 2, Section 6 of the bill states that the seed money for the MIF will come from “preferred shares of two hundred fifty million equivalent to one hundred twenty-five billions pesos (125,000,000,000.00) to be made available for subscription by the National Government, its agencies or instrumentalities, GOCCs or GFIs, except Social Security System (SSS), Government Service Insurance System (GSIS), Philippine Health Insurance Corporation (PhilHealth), Home Development Mutual Fund (Pag-IBIG), Overseas Workers Welfare Administration (OWWA), and Philippine Veteran Affairs Office (PVAO) Pension Fund.”
Drilon also cited Section 12 which states that “government agencies and GOCCs providing for the social security and public health insurance of government employees, private sector workers and employees, and other sectors and subsectors, such as but not limited to the SSS, GSIS, PhilHealth, Pag-IBIG Fund, OWWA, and PVAO Pension Fund shall be absolutely prohibited whether mandatory or voluntary, to invest in the MIF.”
“What the Congress directly prohibits cannot be done indirectly. Let’s avoid making pronouncements that undermine this prohibition and sidestep the intent of Congress,” Drilon said.
Drilon said funds held in trust by the government are distinct from the dividends generated by the Bangko Sentral ng Pilipinas and other state-owned banks, which will serve as major sources of capitalization for the MIF.
“It is important to note that the funds held in trust by the government, through these GOCCs, are not of the same nature as the funds of the Bangko Sentral ng Pilipinas and other state-run banks. These funds held in trust are not dividends. They are funds from private contributions,” he said.
“The prohibition against state pension funds’ investment in the MIF is there precisely to safeguard the integrity of the funds and protect the pension of the retirees,” he added.
Drilon said the government should respect the boundaries and legislative intent established by Congress regarding the prohibition.
He warned that the Board of Directors of these GOCCs can be held liable if they invest in the MIF or in any of its activities.
“The provisions would protect public funds held in trust from undue exposure or risks associated with the establishments of a state-owned investment fund,” Drilon said.
