House urged to pass law penalizing GSIS non-remittance

MANILA, Philippines – A senior lawmaker said yesterday it’s high time that Congress crafts a law that would penalize government agencies or officials who refuse or fail to remit contributions of members of the Government Service Insurance System (GSIS).

“There is a need for remedial legislation. There is really a need for us to penalize (those who will not remit),” House Majority Leader Arthur Defensor said in light of reports that many government workers, including House employees, cannot avail of loans.

The Iloilo congressman, who was once a victim of such anomaly, pointed out that there is yet no law that punishes any instrumentality of government, including government-owned and controlled corporations, as to non-remittance of premiums.

“They have to be subjected to penal sanctions if they refuse or fail to give the premiums. We can probably come up with a penal statute (on this),” Defensor added. “It happens (non-remittance), but it’s not really widespread. I know this because I was a victim myself.”

The senior House leader could not give an estimate though on how far is the extent of the problem. “I have no idea what is the magnitude. Meron silang violation but I’m not sure what. Frankly, I plead innocence.”

A document provided by the Congressional Planning and Budget Department, which is based on reports of the Commission on Audit, revealed that a total of P4.2 billion have remained unremitted to the GSIS as of December 2006.

More than half of this amount was incurred by the executive branch with P4 billion, and the topnotcher was the Department of Education with P2.8 billion in unremitted premiums followed by the Department of Budget and Management with P906 million.

Third highest was independent offices (P196 million), the bulk of which came from the Autonomous Region in Muslim Mindanao with P199 million.

State workers number around 1.1 million from the executive, legislative, judiciary and other instrumentalities of government, including constitutional bodies like the Civil Service Commission, COA, Ombudsman and the Commission on Elections.

GSIS stake in Indonesian banks questioned

Former senator Ernesto Herrera, who is now secretary-general of the Trade Union Congress of the Philippines, has questioned the equity stakes of the GSIS in at least three Indonesian banks.

He 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, in our own tested lenders such as Metrobank and BPI,” said Herrera.

“This way, the GSIS could have helped further build up our own banks and the local stock market,” he said.

Herrera said the GSIS’s 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 Group 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:$1) Global Investment Program (GIP) portfolio.

In newspaper ads, 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 cited the GIP’s stock investment in Minneapolis, Minnesota-based US Bancorp, the fifth-largest American bank. He said USB used to be the one of the biggest creditors to the Philippines, and probably still has current loans with the state-run National Power Corp.