GSIS has P3.5 billion in 12 losing firms

MANILA, Philippines – Senators were shocked over revelations that the Government Service Insurance System (GSIS) has P3.5 billion in investments in 12 losing companies even as it earned P96 billion last year and handed out P6 million in salaries and perks to each member of its board.

GSIS executive vice president for finance Benedicto Arcinas said that while investments would be worth around P3.5 billion, the actual rate of return would only be one percent or less.

Arcinas made the revelation during last Thursday’s Senate committee on finance hearing on the alleged excessive salaries and perks being received by officials of government-owned and controlled corporations, including the GSIS and the Social Security System.

Arcinas said the firms were GSIS Family Bank, GSIS Mutual Fund, GSIS Properties, Manila Hotel Corp., Philippine Aerospace Development Corp., Philippine Machineries Services Corp., Philippine Stock Exchange, Philippine National Construction Corp., National Reinsurance Corp. of the Philippines, GSIS-SMPI Joint Venture Corp., Center for International Trade Expositions and Missions, and Asian Forum Inc.

He said some of the investments were products of bad loans, most of which were inherited from his predecessors.

The biggest investment – at P3 billion – was in GSIS Family Bank, but its net worth is now just around P700 million.

Former central bank governor and now president of Philippine American Life and General Insurance Corp. Jose Cuisia Jr. urged the Senate to look into GSIS Family Bank because he knew that the pension fund “poured in a lot of money to try to save that bank.”

“They lost a lot of money in that bank and I think they continue to support that bank,” Cuisia said.

Arcinas said there is a proposal for the new board of GSIS to try to sell the bank again after two failed bids in the past.

Sen. Edgardo Angara noted that even the GSIS-SMPI (San Miguel Properties Inc.) joint venture did not appear to be that profitable, considering that the P300-million value of investment of the pension fund would only realize a P410-million profit after 10 years.

He lamented that some of the corporations are now defunct, such as GSIS Properties and the Philippine Aerospace Development Corp. so it made no sense for the pension fund to keep these investments in its books.

“Whether you inherited it or not, whether you made the investment decision or not, you must make some money out of this and if you cannot make money, then by all means take it off your books,” Angara said.

“Maybe you should not be getting fat per diems if you are draining pensioners’ money every year,” he added.

Senate committee on finance chairman Franklin Drilon said he was outraged by the fact that the trustees received so much money when all they had to do was sit in two board meetings a month.

Drilon, citing a document submitted by GSIS, said each board member receives P600,000 in mid-year financial allowance, 15th month pay of P600,000, productivity bonus equivalent to four months at P600,000 per month or a total of P2.4 million, Christmas representation allowance of P250,000 and P40,000 transportation allowance.

This was confirmed by Consuelo Manansala, officer-in-charge and executive vice president for operations of the GSIS.

The amount also covers P130,000 representation allowance, P5,000 allowance for every board meeting and P5,000 cash gift, and other privileges such as annual check-up worth P50,000 and car loan, among others.

GSIS justified the grant of these amounts to the trustees, saying these were well within the provisions of its charter, which allows it to use up to 12 percent of what it earns in a year for administrative and operating expenses.

According to GSIS, it had utilized only 5.79 percent of its earnings for such purpose in 2009.

GSIS perks deplored

Meanwhile, the Alliance of Concerned Teachers (ACT) scored the GSIS for giving “scandalously exorbitant salaries and allowances” to its officials but denying teachers of their benefits.

“It is deplorable that these GSIS officials are paid as much as P6 million a year, while their members – mostly teachers – are being cheated of their just benefits,” ACT secretary-general France Castro said.

“Teachers are angered that their contributions have been used to line the pockets of GSIS officials who each received P6 million in 2009 alone,” she said.

“Only P25.2 billion or 29 percent of the total 2009 GSIS earnings came from investments,” she said.

“This is infuriating as the GSIS shaves off a huge chunk from the salaries of its members as part of its oppressive policies such as the so-called premium-based policy and the loans and interdependency policy that hiked its income,” she added.

Castro said GSIS officials “should be made accountable for these excesses which were given to them, at the expense of the members.”

ACT called on Congress to “enact laws that will enable the scrapping of GSIS policies which are inimical to its members, and to prevent similar policies to be implemented.”

“We do not want mere reforms in the GSIS policies, we want justice,” Castro said. –Marvin Sy (The Philippine Star) with Ding Cervantes