From the News! – Your Daily News

Michelle Remo
Philippine Daily Inquirer

The Government Service Insurance System (GSIS) and the Social Security System (SSS) have been urged to consider raising the monthly pension received by its retired members as one way to help stimulate household spending given a slowing economy.

Economic Planning Secretary Ralph Recto said the proposal was made at a recent meeting of the Development Budget Coordination Committee (DBCC) to come up with measures to boost the economy next year.

If the GSIS and the SSS would increase the pension for its retired members, Recto said, this would be one form of fiscal stimulus. No specific amount of increase was specified.

Recto said the national government has come up with its own fiscal stimulus package to help pump-prime the economy next year and state-owned firms like the SSS and the GSIS were being asked to do their share.

The country’s chief economist said, however, that the economic team would not force the two pension fund managers to accept the proposal if they felt this would put their financial health at risk.

Finance Secretary Margarito Teves said the SSS and the GSIS were being encouraged to study how increasing the pension would affect the actuarial life of their funds.

“They should, of course, first study this,” Teves told reporters. “But if the proposal proved to be feasible, then they are encouraged to implement it. It is a good proposal.”

In an earlier statement, the GSIS said the actuarial life of its fund was estimated to last until 2055. On the other hand, the actuarial life of the SSS fund is estimated to last until 2036.

At present, pensioners of the GSIS receive an average of P7,800 a month.

Officials said the government was keen on looking for ways to boost the economy next year, when the global economy is seen to slide into a recession.

In its World Economic Outlook, the International Monetary Fund said the global economy would likely grow by 2.2 percent next year. Under its definition, a global growth of less than 3.0 percent constitutes a recession.

The Philippines is not expected to be spared from the ill-effects of the crisis as the United States and Europe are two of its biggest export markets. Many overseas Filipino workers are also in those parts of the world.

Weakening global demand for imports and labor is seen to drag down growth even of emerging economies like the Philippines, which is highly dependent on consumption to drive its economy.

The national government has proposed a P1.4-trillion national budget for 2009, higher than the P1.236 trillion set for this year, to take into account the need to spend more on infrastructure and social services.

Teves said even state-owned firms would be asked to increase spending on programs and projects that help to spur economic activity. If the SSS and the GSIS are being asked to consider raising pensions, government-owned banks are being encouraged to boost lending activities.

Kristine L. Alave
Philippine Daily Inquirer

MANILA, Philippines—Overseas Filipino workers (OFWs) view the government Overseas Workers Welfare Administration (OWWA) with distrust and are largely uninformed about what the agency is supposed to do for them, a survey by a migrant labor group showed.

The findings were released Friday by the Center for Migrant Advocacy (CMA) which conducted the poll over the Internet among 400 OFWs in the Middle East, Asia, Africa, Canada and Europe in both high-skilled and low-skilled job sectors.

The survey report, titled “The Overseas Workers Welfare Administration: From the Eyes of Selected Overseas Filipino,” was supported by the Friedrich Ebert Stiftung Foundation.

The government estimates there are currently some 8 million Filipinos working abroad.

According to the survey, OFWs have conflicting perceptions about the agency’s functions, their membership, and their benefits.

“After more than 31 years of operations, a significant number of OFWs remained either unaware or misinformed about the role of OWWA,” CMA said in its summary.

“This proves OWWA’s failure to adequately inform its clients and maintain an effective communication line with them,” the survey concluded.

A copy of the findings obtained by the Inquirer showed that 87 percent of the OFW respondents perceived OWWA as a membership organization. Around 59 percent said they were not aware that they could voluntarily apply for membership in their job sites.

A significant number of the respondents were also ignorant of how the OWWA board worked, the survey said. About 92 percent of the OFWs thought the OWWA board could alter the benefits and services to OFWs unilaterally.

About 85 percent knew that OWWA was administering a “trust fund.” About 48 percent knew that OWWA provided benefits such as life insurance, repatriation, loans and disability pay to its members.

About 26 respondents or 7 percent, had availed of these benefits. Only 16 respondents said OWWA’s package fulfilled their needs.

Iris C. Gonzales
Philippine Star

Major government financial institutions (GFIs) intend to reinvest the proceeds from the planned sale of their stake in Manila Electric Co. (Meralco) in other stocks, particularly in the geothermal sector, and to fund priority loans, top officials said.

Land Bank of the Philippines, Social Security System (SSS) and the Development Bank of the Philippines (DBP) are coordinating to sell their stakes in Meralco at roughly P90 per share or equal to the price that another GFI, Government Service Insurance System (GSIS), got when it sold its 27 percent stake in the power utility firm.

“We (Landbank, SSS and DBP) are coordinating with each other. What we want is same if not better than what GSIS got. There is an opportunity for us to cash in for profit taking so it’s the right time for us to probably take it,” said Landbank treasurer Reevie Vergara.

Asked who the potential buyer is, Vergara said they are still finalizing the transaction but he said the buyer is likely to be “just one corporate entity.” He said the financial institutions are aiming to close the transaction by yearend.

Another Landbank official said the institution is looking at reinvesting the proceeds of the sale in other stocks.

“It could be EDC Energy Development Corp.) and Manila Water,” the official said.

EDC, controlled by the Lopez Group’s First Gen Corp., is the country’s largest geothermal company. Manila Water, the water distribution firm holding the concession in the east zone of Metro Manila, is owned by the Ayala family.

However, Vergara said Landbank’s priority is to use the proceeds of the planned sale to fund its loans to the agriculture sector.

“We might go into loans. Our priority is small and medium enterprises and agricultural coops,” he said.

SSS president and chief executive officer Romulo Neri, for his part, said the state pension fund decided to sell its stake in Meralco because it got a good price.

“We will make a good profit,” he noted.

Neri said SSS would be using the proceeds to reinvest in other portfolios.

Last October, GSIS sold its remaining 27 percent stake in Meralco to food and beverage conglomerate San Miguel Corp. GSIS expected to raise P30 billion from the transaction.

Early this year, GSIS spent P8.9 billion to acquire the government’s remaining 9.9 percent in Meralco. This raised the pension fund manager’s stake in Meralco to about 27 percent.

Philippine Star

The Trade Union Congress of the Philippines (TUCP) favors the planned P10-billion contribution of the Social Security System (SSS) in the proposed P100-billion public-private crisis fund meant to help stimulate the national economy and keep the country from being dragged down by a menacing global recession.

However, TUCP secretary-general and former Senator Ernesto Herrera stressed the need for the government to fully guarantee the P10-billion that would be contributed by the SSS to the fund, which, as planned, would be invested in new infrastructure projects.

“Besides guaranteeing that the entire P10 billion will be returned to the SSS within a certain period, the government should also ensure the investment a fixed rate of return equal to or slightly higher than prevailing benchmark Treasury bill rates,” Herrera said.

Herrera pointed out that once the SSS takes P10 billion out of its investment portfolio in order to put the cash elsewhere, the pension fund would in effect be waiving any potential income from the money, had it been stashed in fixed-income instruments such as government securities.

“The SSS cannot contribute the money if the government will not vouch for the return of capital and a definite return on investment,” stressed Herrera, former chairman of the Senate labor, employment and human resources development committee

“If the government does not warrant the P10 billion and does not provide a fixed return, then there is absolutely no incentive for the SSS to pitch in,” added Herrera, a former commissioner of the SSS representing the labor sector.

“Without extra incentives, the SSS would be better off keeping its money where it is now stashed — in high-grade, dividend-paying publicly traded shares of stock and interest-paying government securities,” he said.

Herrera said the planned contribution to the crisis fund actually jibed with TUCP’s previous proposal for the SSS as well as the Government Service Insurance System to directly invest in gainful infrastructure projects, provided these are guaranteed by the government, just like private sector ventures in build-operate-transfer contracts.

Herrera said construction activities associated with new projects such as road tollways and mass rail transit systems not only create thousands of new jobs that directly benefit poor families, but are also badly needed to spur new productive investments by manufacturers, corporate farmers and service providers.

The National Economic Development Authority and the Philippine Chamber of Commerce and Industry have agreed to put up a P100-billion crisis fund that would bankroll new infrastructure projects intended to soften the impact of the global economic slump.

Daxim Lucas
Philippine Daily Inquirer

Philippine mutual funds have been pummeled by the global financial crisis, with those of Philam Asset Management Inc. and the Government Service Insurance System (GSIS) among the hardest hit, according to an industry report.

The latest report of the Investment Company Association of the Philippines (ICAP), which tracks the performance of 40 mutual funds operating in the financial system, said the worst performer in the balanced fund category as of Oct. 20 was Philam Fund Inc., which lost 30.63 percent of its value since the start of the year.

This was followed by GSIS Mutual Fund Inc., whose value has declined by 29.66 percent for 2008, the report said.

A balanced fund starts as a pool of cash that clients entrust to fund managers to invest equally between stocks and bonds. Ideally, the nature of balanced funds protects them against sharp declines in either kind of securities.

GSIS Mutual Fund is managed by Philam fund managers according to parameters set by the GSIS, the state-run pension fund for government employees.

On a year-on-year basis, the performance of the Philam Fund and GSIS Mutual Fund are even worse, showing declines of 33.58 percent and 32.88 percent, respectively.

According to the ICAP data, however, mutual funds invested purely in the stock market showed poorer returns in both year-to-date and year-on-year performance reviews, mainly because stocks have taken the brunt of the global market meltdown.

The worst performer in this category is Philippine Stock Index Fund Corp., whose holdings follow closely the performance of the stock market. The ICAP data showed that it was down 43.03 percent since the start of the year and 45.98 percent from a year earlier.

This was followed by another Philam product—Philam Strategic Growth Fund Inc.—which has dropped 35.55 percent since the start of the year, and a total of 39.04 percent from a year earlier.

In general, funds invested in bonds, either peso- or dollar-denominated, performed better, either breaking even or showing only slight declines during the period.

The notable exceptions were Philam Dollar Bond Fund Inc., whose value dropped 10.79 percent since the start of the year, and Grepalife Dollar Bond Fund Corp., which registered a 12.33-percent decline in value.

A mutual fund official who spoke on condition of anonymity said the weak performance of mutual funds could often be aggravated by large client redemption, which forces fund managers to sell their holdings in bonds and stocks.

These “selldowns” to satisfy cash redemption further drive down the prices of remaining assets held by the funds, which in turn, results in a lower net asset value reported to the ICAP.

With editing by INQUIRER.net

Paolo Romero
Philippine Star

Filipinos facing foreclosure can now save their homes through a rational loan restructure and condonation scheme after President Arroyo signed into law the Socialized and Low-Cost Housing Loan Restructuring and Condonation Act of 2008 yesterday.

Mrs. Arroyo signed Republic Act 9507 in Luisiana town, a fifth class municipality and site of the launching of the first local housing project in Laguna.

Mrs. Arroyo arrived at the housing site in Sitio Dapi in Barangay San Jose at 11:35 a.m.

She was welcomed by Vice President Noli de Castro, Laguna Gov. Teresita Lazaro, Rep. Edgar San Luis and Luisiana Mayor Manuel Rondilla.

The signing ceremony was also witnessed by Sen. Juan Miguel Zubiri, the principal author of RA 9507, and National Housing Authority General Manager Federico Laxa.

“Republic Act 9507 offers a rational loan restructuring and condonation program for the underprivileged and homeless Filipinos that takes into consideration the credit worthiness and credit discipline of the borrowers and the financial viability of the lending institutions,” a Malacañang statement said.

The law would save some 360,000 individual delinquent home borrowers from being homeless.

During the program, Mrs. Arroyo also formally launched the 4th district’s local housing project with the lowering of a time capsule containing several coins, newspaper and the housing project’s plan.

The housing project is on a two-hectare lot with an average 40 square meter lot size costing P12,000 per lot to be distributed to 305 families and informal settlers.

At the site, Mrs. Arroyo switched on the rural electrification for the three Laguna municipalities: Sitio San Francisco, Barangay Macatad-Bubucal in Siniloan, Laguna; Sitio Dapi, Sahur-Ulan, Barangay Salang Bato, Famy, Laguna, and Sitio Mayputat, Barangay Libis ng Nayon, Mabitac.

Mrs. Arroyo also handed over a check amounting to P3.135 million to Rondilla as funding for land acquisition to expand the housing project.

De Castro lauded yesterday the signing of RA 9507, which empowers the governing boards of lending institutions to give reasonable discounts on loan interest as an incentive to borrowers who pay their amortizations on time, he added.

Under the program, housing loan borrowers who have at least three months of unpaid monthly amortizations with government financial institutions and housing agencies may apply for loan restructuring and condonation.

The law covers housing loan accounts with the Government Service Insurance System, Social Security System, Pag-Ibig Fund, National Home Mortgage Finance Corp., Social Housing Finance Corp., Home Guaranty Corp. and National Housing Authority, with principal loan amounts not exceeding P2.5 million.

The program is open even to accounts that have already availed of a previous restructuring and condonation program.

All penalties and surcharges of a loan approved for restructuring under this program shall be condoned.

– With Pia Lee-Brago

Ernesto F. Herrera
Manila Times

The Philippine economy is already seeing the effects of a global economic slowdown through a decrease in foreign investments flows.

The Bangko Sentral ng Pili–pinas (BSP) reported that net foreign direct investments from January to July dropped 60.2 percent and was less than half the $2.41 billion generated during the same period last year.

As reported in this paper yesterday, Philippine banks have turned cautious about lending money to the public.

We’re still lucky though. Because of the local focus of a lot of banks here in the Philippines, credit crises conditions felt all over the world are not as severe here.

We’re also lucky to have a capable BSP regulating the banking industry. Over the years we have seen a number of regulatory reforms that have strengthened banks’ risk management, increased transparency and improved capitalization. The BSP has also encouraged consolidation in the banking system.

Recently, the BSP put up a dollar repurchase agreement facility to ease the tightness in the dollar market. It relaxed the rules on the establishment of bank branches, even as they raised the mandatory credit allocation to micro and small enterprises.

After the 1997 Asian financial crisis, banking supervision has been strengthened and prudential regulations are in place to limit banks’ exposures. The BSP also has strict loan classifications and provisioning guidelines. Prudential regulations place conservative limits on the liquidity ratios of banks.

Also, accounting standards have been brought into line with international best practices, with the introduction of the Basel II framework this year.

Again, and most importantly, the level of transparency is very high. This, I think, is the primary reason why banking remains sound and asset quality has been improving in the Philippines.

The country is lucky to have a (I hate to use an overused term but) proactive and competent regulator in the BSP, especially under the helm of Amando Tetangco Jr.

I mentioned transparency. Some people have been asking me, why are you and the Trade Union Congress of the Philippines (TUCP) picking on the Government Service Insurance System (GSIS)?

I didn’t realize we were. In fact, I flatly deny it. Our recent calls for transparency—which we’re favorably considered in the end—were not meant to be a crusade against anyone or against any institution.

People work hard to have a little security in their retirement. Our pension system, as it is, provides an insufficient income for most of our seniors. Only those who work for big corporations are lucky enough to retire comfortably because of their workplace-defined pension plans. Most are not so lucky. And few are able to save enough money to secure a decent retirement.

So what little they have in pensions coming their way, we ought to protect. What’s wrong with asking for a good accounting of where workers’ money goes?

Like I said, in the end, our pra-yers were answered, and we even lauded the GSIS when it finally bared the details of its P26.54-billion ($565 million at P47: $1) worth of foreign investments.

In two-page paid newspaper advertisements Friday, the GSIS listed the details of its GIP, to include P10.456 billion of investments in “global fixed income” instruments, P4.127 billion in “global equities,” P3.08 billion in “global property securities” and P8.875 billion in “cash, short-term notes and other investments.”

While the GSIS did not provide the exact amounts that it invested in every type of instrument, we nonetheless welcomed the listing. The GSIS should later on post the same list on its website, to include the exact amounts invested in every bond, note, common stock and currency swap, at cost.

Based on our cursory review of the stated investments, we consider the pension fund’s overseas portfolio to be generally safe, balanced and sound.

The GIP appears to be fairly balanced in terms of exposure, with 40 percent of the portfolio in fixed-income instruments, mainly in absolutely safe sovereign bonds or treasury notes issued by the governments of the United States, Germany, Canada, France, Japan, Italy, Spain and the United Kingdom.

Around 15 percent of the GIP is invested in common stocks of publicly traded foreign equities, 11 percent in property securities and 34 percent in cash, short-term notes and other investments, including currency swaps.

The GSIS reported owning common stocks in at least four American banks—Bank of America Corp., Citigroup Inc., Fifth Third Bancorp and US Bancorp.

The pension fund also reported fixed-income investments in notes (corporate IOUs) issued by three US investment banks or banks—The Goldman Sachs Group Inc., JP Morgan Chase & Co. and Merrill Lynch & Co. Inc.

None of the banks listed are particularly at risk of collapsing. The GSIS may have suffered temporary losses on account of the sharp decline in the prices of these bank stocks due to the worsening global financial crisis, but these losses are temporary. Once the prices of these bank stocks recover, the portfolio should also recover.

Again, we are not out to make things difficult for the GSIS. We just wanted absolute transparency and full disclosure that are consistent with good governance and public accountability. And now we have it. This is good that the GSIS has finally decided to come clean.

GSIS members and pensioners can now sleep better at night.

ernestboyherrera@yahoo.com

Philippine Star

The country’s largest labor group yesterday questioned the equity stakes of the Government Service Insurance System (GSIS) in at least three Indonesian banks, which should have been invested in the country.

The Trade Union Congress of the Philippines (TUCP) also cited the pension fund’s acquisition of shares in the fifth-largest US bank.

“We have nothing against Indonesian banks. But if this is the case – that the GSIS is investing in the banks of our next-door neighbor, then it should have just invested here at home and could have helped further build up our own banks and the local stock market,” TUCP secretary-general and former senator Ernesto Herrera said.

He said the GSIS investment in Indonesian banks could be due to the bias of its foreign fund manager, ING Investment Management, a unit of the Dutch global financial services giant ING Groep NV. A group of Dutch corporations once ruled Indonesia, which was part of the Dutch empire for almost 350 years.

ING and France’s Credit Agricole Asset Management Ltd. manage the GSIS’s P26.54-billion ($565 million at P47 to $1) Global Investment Program (GIP) portfolio.

The GSIS listed a total of P4.13-billion worth of investments in “global equities” or the common stocks of 123 foreign firms, including 26 banks and financial institutions.

It reported owning shares in three Indonesian lenders – Bank International Indonesia, Bank Negara, and Bank Rakyat.

Herrera named the GIP’s stock investment in Minneapolis, Minnesota-based US Bancorp (USB), the fifth-largest American bank.

He said USB used to be one of the biggest creditors to the Philippines, and probably still has current loans with the state-run National Power Corp.

Like JP Morgan Chase & Co., USB has been largely unaffected by the global financial turmoil because of its limited sub-prime debt exposure.

The world’s wealthiest man, Warren Buffett, has also been building up his equity stake in USB.

USB’s stock has outperformed those of Citigroup Inc., Bank of America Corp., and Fifth Third Bancorp, three other American lenders in which the GSIS also owns stock.

Financial analysts also expect Buffett to persuade the Goldman Sachs Group Inc., where he also has a stake, to eventually acquire USB at a premium.

After the collapse of the Bear Stearns Companies Inc. and Lehman Brothers Holdings Inc., the two remaining large US investment banks – Goldman Sachs and Morgan Stanley – converted themselves into full-fledged deposit-taking banks to enjoy access to US government liquidity channels.

The Bank of America is acquiring the third surviving large US investment bank, Merrill Lynch & Co. Inc.

The GSIS also reported stock investments in Spain’s Banco Santander, France’s BNP Paribas, Italy’s Intesa San Paolo and UniCredit Group, Ireland’s Allied Irish Bank and Irish Life and Permanent PLC, Denmark’s Danske Bank;

Sweden’s ForeningsSparbanken AB, Britain’s Cattles PLC and Aviva PLC, Israel’s Bank Hapoalim, and Singapore’s DBS Group Holdings Ltd. and United Overseas Bank, among other financial firms.

The GSIS’s P4.13-billion investment in “global equities” accounts for 15 percent of its GIP.

Meanwhile, the TUCP said the planned nationalization of US and UK banks will hurt the investments of the GSIS.

Herrera said the plan of the governments of the US and the UK to acquire large equity stakes in their respective banks “does not bode well with GSIS investments in the common stocks of foreign lenders.”

“This will definitely dilute the foreign bank stocks held by the GSIS. The banks will have to issue new shares to the US and UK governments in exchange for large amounts of fresh capital,” he noted.

Herrera claimed as a result of this, “there will be far greater supply of bank shares. And the more the supply, the greater the downward pressure on bank stock prices for an extended period.”

Last Friday, Treasury Secretary Henry Paulson said the US government intends to buy an ownership stake in a broad array of American banks for the first time since the Great Depression.

Earlier, Britain had announced that it would pour cash into its troubled banks in exchange for stakes in them – a partial nationalization.

“While this initiative will save US and UK banks from outright collapse, it will be achieved at the expense of common shareholders such as the GSIS,” Herrera said.

– Mayen Jaymalin, Sheila Crisostomo

Fel V. Maragay
Manila Standard

Isn’t it odd that former Senator Ernesto Herrera, secretary general of the Trade Union Congress of the Philippines, is so outspoken and persistent in compelling the Government Service Insurance System to make a full disclosure of the overseas investment of the pension fund of state workers when this hardly falls under the domain of his labor group? Herrera should be more concerned with the investments of the Social Security System since it administers the pension fund of workers in the private sector, a huge fraction of whom belongs to labor unions affiliated with the TUCP.

For his self-appointed role as prober and watchdog of the pension fund of civil servants, Herrera has incurred the ire of GSIS officials for putting them in hot waters. A media critic sympathetic with the GSIS rebuked the inquisitive ex-senator for allegedly acting more like a fault-finder than a guardian of workers’ interest. Sounding irreverent, he even advised Herrera, a paraplegic who walks with a cane, to hang up his gloves and fade out of the political scene.

But if you ask this journalist, Herrera is doing the millions of civil servants a great service by his perseverance and no-nonsense attempt to make the GSIS account for its $1-billion Global Investment Program in the face of the collapse of leading banks and investment houses in the United States and Europe. To a great extent, he is doing what the docile pseudo-labor leaders should be doing but have shamelessly failed to do as representatives of government employees in the GSIS board of trustees.

To douse the suspicion that the pension has incurred losses from its global investments, GSIS president and general manager Winston Garcia reported a week ago that the System’s GIP “bucked all odds and posted an impressive growth in the total value of investment of five percent to P1.245 billion as of Sept. 30. Garcia also reported that the GSIS has deployed only $600 million of the $1-billion investible fund.

Senator Edgardo Angara, chairman of the committee on banks, currencies and financial institutions, said he did not think there was any window-dressing in the GSIS report. Thus is should be accepted as factual. But Herrera, along with incumbent Senators Francis Escudero and Juan Miguel Zubiri, were not satisfied and urged Mr. Garcia to make public the details of the GIP, including the banks, investment houses, together with the stocks and bonds where the pension fund was invested. Herrera called on the GSIS to fully reveal terms of its contracts with Credit Agricole Asset Management Ltd. and ING Investment Management, the designated fund managers of the GIP.

In response to calls by Herrera and other individuals and other groups, the GSIS, in a two-page newspaper advertisement Friday, bared details of the GIP, to include P10.127 billion “in global equities.” P3.08 billion in “global property securities” and P8.875 billion in “cash, short term notes and other investments.” The system also reported fixed-income investments in notes (corporate IOUs) issued by three US banks or investment banks—the Goldman Sachs Group, Inc. JP Morgan Chase & Co. and Merrill Lynch and Co. Inc. It also reported holding common stocks in four banks in the United Kingdom—Barclays, PLC, Lloyds TSB Group, Royal Bank of Scotland PLC and HSBC Holdings PLC.

After the publication of the ad, Herrera commended the GSIS for heeding the call for transparency. However, this did not mean that his scrutiny of the state pension fund has come to an end. Over the weekend, he issued another statement, this time warning that the plan of the US and UK to acquire large equity stakes in American and British banks does not bode well for the GSIS investments in common stocks of foreign lenders.

“This will definitely dilute the foreign bank stocks held by the GSIS. The banks will have to issue new shares to the US and UK government in exchange for large amounts of fresh capital,” the TUCP secretary general said.

***

While it is often said that “justice needs to be blind,” does the same principle mean that justice secretaries should play deaf or dumb, especially to the sensibilities of victims of heinous crimes who are deeply hurt by government actions? In this country, that seems to be the case.

In what can only be described as an appalling display of insensitivity, Secretary Raul Gonzalez has once again outdone himself by launching a verbal assault on the parents of slain teenager Maureen Hultman. Let’s not even discuss the issue of whether or not the 17 years, two months and nine days behind bars was enough penance for Claudio Teehankee Jr. who was convicted for the senseless killing of Maureen and her friend, John Chapman, and the wounding of another. What boggles the mind is how the justice czar spewed the harshest remarks against the Hultmans in the wake of criticisms of the executive clemency granted to Teehankee.

It seemed that Gonzalez was impervious to the agony of Anders and Vivian Hultman who lost a daughter—an innocent girl whose life was cut short under the most dreadful and irrational of circumstances. What kind of reaction was he expecting from any parent upon learning that their daughter’s killer was now a free man? Was he expecting the Hultmans, now living in Sweden, to keep silent in the face of this heart-breaking turn of events? In this case, a sober-minded individual would have anticipated their hostile response and would have been circumspect and subdued in making his reaction. Instead, we heard the justice secretary ranting that “they (the Hultmans) are hypocrites, and if they can’t accept (the decision), they can jump into the lake.” Showing that he was equally confused with the body of water as he is with the rules of decorum in tense situations like this, Gonzalez further said that “very wide naman ang North Sea.”

He also called the Hultmans “liars” because according to him, they “already knew that Teehankee would one day be paroled or pardoned.” To back up this diatribe, he showed newsmen a copy of the signed civil-liability settlement between the couple and Teehankee.

Now, wait a minute. Let’s say your child goes on a field trip to the zoo, and you sigh the parental consent and waiver form. Later on you find out that your child was eaten by a lion. Following Gonzalez’s line of thinking, you would be a “hypocrite and a liar” if you expressed anger and disbelief, because after all you had signed the waiver. “You should have expected it,” he would probably say.

Much to the consternation of Christians and non-Christians alike, Gonzalez has also advised all those who are against the Teehankee pardon and release “to file an appeal before Jesus Christ.” This journalist, though, is not sure how the Son of God fits into this whole episode, but I am often guilty of taking His name in vain whenever people like the justice chief talks like this.

Dan Mariano
Manila Times

Winston Garcia, president and general manager of the Government Service Insurance System (GSIS), seems to have finally bowed to public pressure for him to disclose details of the state pension fund’s $1-billion Global Investment Program (GIP). The operative word here is “seems.”

Garcia did so by placing expensive, double-spread newspaper ads—paid for with money from the contributions of the 1.4 million or so GSIS members. It was a huge expense that could have been avoided had, in the first place, top officials of the state pension fund only exercised candor from the very start.

But how candid was GSIS when it revealed where $600 million from its $1 billion GIP went?

Then, there is the matter of the remaining $400 million.

Garcia said the GSIS has yet to entrust the balance of its GIP to a fund manager. In that case, where was the $400 million kept?

If the $400-million balance of the GIP was parked in the Philippine Stock Exchange (PSE), then it has surely lost at least $118 million of its value, market analysts say. The local stock market retreated by almost 30 percent from January to September.

Like other markets, the Manila stock market has been badly shaken—and continues to be badly shaken—by the Wall Street meltdown. But even before the implosion of US banks and investment houses, the value of GSIS placements in the local bourse had already begun to decline—thanks to Garcia’s ill-advised bid to grab total control of Manila Electric Company (Meralco).

As for the $600 million, people still recall that shortly after the collapse of Lehman Brothers and American Insurance Group, Garcia repeatedly said that the state pension fund’s foreign fund managers, Credit Agricole Asset Management Ltd. and ING Investment Management, did not invest GIP funds in the United States.

Last week, however, the GSIS boss acknowledged that the state pension fund owned common stocks in at least four American banks: Bank of America based in Charlotte, North Carolina; Citi-group in New York City; Fifth Third Bancorp in Cincinnati, Ohio; and US Bancorp in Min-neapolis, Minnesota.

The GSIS likewise reported fixed-income investments in notes, or corporate IOUs, issued by three other US financial institutions: Goldman Sachs, JP Morgan Chase and Merrill Lynch.

The GSIS reported a total of P4.13-billion worth of investments in common stock of 123 publicly traded foreign corporations, including 22 banks and other financial institutions.

The state pension fund also reported holding common stock in four banks in the United Kingdom: Barclays, Lloyds TSB, Royal Bank of Scotland and HSBC.

Just weeks ago, Garcia repeatedly said that the GSIS was not affected by the collapse of Lehman Brothers and AIG, “because the funds have been oriented more toward Europe than the US.” It was probably his way of assuring pension fund members that the GIP—their GIP—was safe from the US financial turmoil.

That “assurance” now sounds more like a subterfuge that, in turn, should make GSIS members seriously doubt the trustworthiness of Garcia’s “disclosure” last week.

Crumbs for GSIS

Meanwhile, the Trade Union Congress of the Philippines has pointed out that the plan of the US and UK governments to acquire large equity stakes in American and British banks does not bode well for the investments of the GSIS in the common stocks of foreign lenders.

“This will definitely dilute the foreign bank stocks held by the GSIS,” said TUCP Secretary General and former senator Ernesto Herrera in a press statement issued Saturday. “The banks will have to issue new shares to the US and UK governments in exchange for large amounts of fresh capital.”

Herrera warned, “As a result, there will be far greater supply of bank shares. And the more the supply, the greater the downward pressure on bank stock prices for an extended period.”

Last Friday, US Treasury Secretary Henry Paulson said the US federal government intends to buy ownership stakes in a broad array of American banks for the first time since the Great Depression. This followed the British government’s announcement that it would pour cash into its troubled banks in exchange for shares—in effect, partial nationalization.

“While this initiative will save US and UK banks from outright collapse, it will be achieved at the expense of common shareholders such as the GSIS,” Herrera said.

Using pizza as an analogy—with the GSIS holding a bite size—for the banks’ capital structure, Herrera explained: “Once the US and UK governments come in, they will surely grab most of the slices in exchange for massive capital injections of taxpayer money.”

Concluded Herrera, “Thus, the GSIS and other common shareholders will be left with crumbs.”

dansoy26@yahoo.com