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THE
Trade Union Congress of the Philippines on Sunday
slammed the Government Service Insurance System (GSIS)
for its alleged “absolute lack of transparency with
respect to its investments overseas.”
“GSIS pensioners and members are
entitled to know how much of their money has actually
been stashed overseas, and in what financial products
the money has been invested,” said former senator
Ernesto Herrera, TUCP secretary-general.
“Retired and active government
employees, as well as their dependents, have the right
to be informed as to how their hard-earned contributions
are being managed here and overseas. GSIS officials have
a duty to fully disclose the manner by which the funds
are being invested,” Herrera said.
Last year the GSIS said it would invest
up to $1 billion, or P47 billion, abroad under a new
global investment program. Recently, however, senators
have called into question the program’s wisdom, amid the
worsening global financial crisis set off by the
subprime mortgage meltdown in the US.
The crisis has taken its toll on at
least seven large Philippine commercial banks that have
so far reported $386 million (P18.1 billion) in losses
on account of their exposures to Lehman Brothers
Holdings Inc.
The 158-year-old US investment bank
sought bankruptcy protection on September 15 owing to
staggering losses brought about by spoiled investments
in housing mortgages. The investments failed as a result
of surging foreclosures and plunging home prices in the
US.
Herrera, former chairman of the Senate
labor, employment and human resources development
committee, assailed the GSIS for treating the funds that
it holds in trust “as if these are private funds for
which its officials are not directly accountable.”
He added: “Why is the GSIS being so
secretive? Why can’t its executives just come clean and
tell us where the money has been parked so that
pensioners and members can sleep better at night?”
“Right now, the only thing we know about
the $1 billion is that it is supposedly being managed by
Credit Agricole Asset Management Ltd. and ING Investment
Management, and that Citibank NA is the fund custodian,”
Herrera added.
This means that New York-based Citibank
has custody of the funds, but moves the money as
instructed by managers at Paris-based Credit Agricole
and Amsterdam-based ING.
The GSIS earlier said the money it has
hoarded overseas has not been affected by the financial
distress “because the funds have been oriented more
toward Europe than the US.”
“That is a lame excuse for the
continuing secrecy and utter lack of transparency. The
truth is, Europe has been among the hardest hit by the
global financial crunch sparked by widespread defaults
on low-grade home mortgages in the US,” Herrera pointed
out.
He added that several banks and
investment funds in the United Kingdom, Germany, France
and Switzerland have either collapsed or have been
bailed out by their governments.
“No financial instrument is absolutely
safe nowadays—not even traditional money market funds
that had to be backed with $50 billion by the US
government a few days ago just so [fund] managers can
service withdrawals at face value,” Herrera said. --F.
Marasigan |
