Can Diokno's 'ex officio' position safeguard Maharlika from political influence?
MANILA, Philippines — Government officials have reiterated that the Maharlika Investment Fund will remain free from political interference as the finance chief would only serve as chairperson of the Maharlika Investment Corporation in an "ex officio" capacity.
"Ex officio" in government refers to an individual who sits on a board of members by virtue of their title to another office.
Confusion arose over the role of the Department of Finance secretary in the MIC when President Ferdinand Marcos Jr. said during the signing of the bill on Tuesday that the president and the finance chief should not manage the fund to avoid its politicization.
This was contrary to the final text of the Maharlika Investment Fund Act — or Republic Act 11954 — which states that the DOF secretary is part of the MIC’s board of directors and “shall sit as the chairperson in an ex officio capacity.”
Both he and Department of Finance Secretary (DOF) Benjamin Diokno later clarified that the MIC would be chaired by a non-politician or “independent director,” with the finance chief merely named as “ex officio” chairperson.
What are the powers of an “ex officio” chairperson, and to what extent can they call the shots on the MIF?
Ex officio chair as 'fiscal safety valve'
Rep. Joey Salceda (Albay), who led the Technical Working Group for the House version of the MIF bill, said in a message to Philstar.com that the MIC Chairperson — or the finance chief — is “envisioned to be basically the fiscal safety valve” of the fund.
“As with other Boards, the Chairperson can also call for and chair the Board meetings, and will likely have (an) outsize say on oversight of the MIF,” Salceda said.
Salceda added that for the MIC, the positions of “CEO and Chairperson” are “made deliberately separate.”
“While a CEO can focus on day-to-day functions, the Chair can hold her to account,” Salceda added.
Most functions related to the investment fund are assigned to the CEO while the chair is "given limited operational functions to ensure that the MIF is sufficiently independent from the Philippine government,” he said.
According to the MIF Act, the CEO is considered the "Vice-Chairperson" of the board, which in total will consist of nine members.
Of the nine board members, two will be appointed by the president "upon recommendation of the Advisory Board for a term of three years."
Why install the DOF chief there in the first place? Salceda explained: “But at the same time, we need the SOF to ensure that decisions such as whether to exempt MIF from remitting dividends during certain years, or when to infuse government assets, are in line with the MIF’s growth strategy.”
MIF is ‘political by nature’
There is still some element of politics in the management of the MIF due to its management structure, which is “political in nature,” said Enrico Patiga Villanueva, senior lecturer of economics at the University of the Philippines Los Baños.
“The MIC board is politicized because its chair and regular directors are ex officio, i.e. political appointees who are either cabinet heads or appointed heads of Government Financial Institutions,” Villanueva said.
“Even the independent directors become politicized because their appointments are approved by the president,” he added.
The “ex officio label” merely states that the MIC chairperson got that role by virtue of being secretary of the finance department, Villanueva said.
The MIC chairperson is also “the most powerful person on the board” as they set the board agenda and steer discussion during meetings, the economics professor explained.
The governance structure of the MIF also violates the Santiago Principles of the International Working Group of Sovereign Wealth Funds, Villanueva said, referring to a list of transparency and accountability principles that MIF proponents have sworn the fund would abide by.
The MIF “can be prone to political interests and instability” as a result, Villanueva said.
On Tuesday, Marcos said: “If you put me or the secretary of Finance in a decision-making loop, those decisions will be colored by political considerations.”
This was later clarified by Diokno, saying that the president was just “stating his preference.”
“Even at the early stage of the formulation of the sovereign investment fund, the president was clear: he didn’t want to politicize the fund,” Diokno added.
Sen. Ralph Recto said on Wednesday that the reputation of the economic managers who supported the passage of Maharlika has put their "professional reputation" on the line.
The next move for Maharlika's managers should be "to prove their critics wrong" and deliver its promised benefits, Recto said.
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