MANILA, Philippines — Opposition senators on Tuesday raised “grave concerns” over the impending passage of the law creating the Maharlika Investment Fund (MIF), alleging that this venture was not driven by the need to pump-prime the economy but by the interest of “crony capitalists.”
In his turno en contra speech, Senate Minority Leader Aquilino Pimentel III detailed 12 grounds on why they should not approve Senate Bill No. 2020 that seeks to put up the MIF, flagging the measure for constitutional and procedural issues.
Pimentel wondered who broached the idea of creating the MIF, as it was never mentioned by then-presidential candidate and now President Ferdinand Marcos Jr. during the campaign and even in his first State of the Nation Address.
“Where did this idea come from? Is it possible that we are doing this as a favor to a businessman who has access to the ears of the powers that be, whose business or bottom line has been hit by the downturn in the world economy and thus would need a new client?” the senator asked.
The MIF was also not cited in the Marcos administration’s Medium-Term Fiscal Framework, or the initial list of the Legislative-Executive Development Advisory Council (Ledac), according to Pimentel.
“We will hopefully know the identity of this big-time influencer in due time,” Pimentel added.
Interpellations on SB 2020 wrapped up past midnight on Tuesday just as Pimentel pressed to continue his questioning on other issues, to which the sponsor, Sen. Mark Villar, objected.
Villar said all issues on the bill that might be raised by Pimentel could be addressed in the period of amendments.
In his speech, Pimentel warned that the MIF, which would be run by a Maharlika Investment Corp. whose board members are handpicked by Malacañang, was prone to the “evil of crony capitalism.”
“Since the MIC can invest in the domestic market, it can therefore choose the ‘winners and losers’ among our domestic industries, enterprises, and business people,” he pointed out.
Pimentel said creating the MIF posed a great risk for the country because of its history of corruption, citing the 2022 Global Corruption Index which ranked the Philippines 105 out of 196 countries.
“It even mentioned that financial aid programs during the pandemic created opportunities for corruption and bribery. Here in the Philippines, the misery and poverty of the people is taken advantage of for profits,” he said.
He also cited the constitutional requirement of a certification on the economic viability of establishing the MIF.
Pimentel also questioned the “clever maneuver” that proponents did when they took out the provision requiring the pension institutions from the original bill but inserted a substitute provision allowing voluntary investment.
“I thought they listened to the concerns of the public, but they executed a clever maneuver and the danger is still there that the conservatively managed pension and retirement funds of our retirees from the government and the private sectors, will be entrusted to the [MIF] for riskier placements, or in other words, for gambling,” he said.
No need to panic
In Malacañang, Finance Secretary Benjamin Diokno on Tuesday dismissed Pimentel’s warning that the failure of the MIF might lead to the collapse of banking institutions, particularly the Land Bank of the Philippines and the Development Bank of the Philippines, “if we lose everything” to the fund.
“That’s just panic. There’s no basis for that,” Diokno told reporters.
He explained that Landbank would invest only 3 percent of its total available fund in the MIF.
“Actually, its investible fund is more than P1 trillion. It will only contribute P50 billion and it will probably get higher returns compared to its current fund. That’s it,” he said.
The finance chief added that board members of the Government Service Insurance System (GSIS) and Social Security System (SSS) should not be “precluded” from investing in the MIF.
“That’s a board decision, right?” Diokno said, referring to the possible decision of GSIS and SSS board members to invest in the MIF.
Not enough safeguards
“It’s a decision of the board, that’s why there are boards, right? While they are presidential appointees, they act in the best interest of the company,” he added.
Pimentel also played down the supposed safeguards that the proponents have set up in the measure against possible fund embezzlement, such as the setting up of external and internal auditors, citing the recent experience of the Philippine Gaming and Amusement Corp., which entered into a P6-billion consultancy contract and tapped a fly-by-night audit firm to check its collection from online gaming operations.
Pimentel also proposed that all current and future lawmakers should be disqualified from taking “direct and indirect” benefits from the MIF.
Despite proponents’ assurance of sufficient safeguards, Pimentel noted that the bill did not impose jail time for any fund misuse by MIF officers, but a fine of only P5 million.
“If we realize that frauds in investment schemes can amount to billions of US dollars, then the amount of our fines now looks puny. Will the possibility of a P5-million fine deter the criminal mind from taking advantage of an illegal payout to the tune of $5 million? How about $50 million?” he said.
Sen. Risa Hontiveros called on her colleagues to carefully study the possible implications of the fund, which would exist for generations.
“Without robust safeguards, there is a risk of mismanagement, corruption, and the misuse of public funds. We must prioritize transparency and accountability in any financial endeavor of this magnitude,” she said.
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