MANILA, Philippines (Mindanao Examiner / September 22, 2008) - The Trade Union Congress of the Philippines (TUCP) on Sunday slammed the Government Service Insurance System (GSIS) for its "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 Ernesto Herrera, TUCP secretary-general.
"Retired and active government employees as well as their dependents have a right to be informed as to how our hard-earned contributions are being managed here and overseas. And GSIS officials have a duty to fully disclose the manner by which the funds are being invested," Herrera, a former senator, 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 sub prime 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 Sept. 15 due 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 they are not directly accountable."
He added: "Why is the GSIS being so secretive? Why can't they 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 N.A. is the fund custodian," Herrera said.
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.
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