Why does it feel like some powerful mafia is going after our hard-earned pension money?
Controversial union leader James Hoffa and the Italian-American Mafia come to mind.
Hoffa, so say the many stories told and retold about him, had ties with the mafia because he loaned workers’ pension to these organized crime bosses who, in turn, used the money to fund their criminal activities – from gambling to prostitution.
But he eventually pissed off the mob because they wanted to use a bigger chunk of union workers’ pension funds. This supposedly caused Hoffa his life, leading to his disappearance on July 30, 1975. It was the last time he was seen.
Now fast forward to today – here we are in third world Manila, a world away from that era of Hoffa and the mafia and yet it feels very much that some mafia bosses want our pension fund, too, through the controversial Maharlika Wealth Fund (MWF).
Perhaps, I’ve been watching too many organized crime movies, with guns, goons and gold.
But actually, the anxiety is real as seen in the debates over the past couple of days. Our chat groups are buzzing with messages on the dangers of the MWF.
Mistrust
The mistrust is understandable and it’s not just because of the term Maharlika although for sure, proponents could have used another name.
Maharlika, or freeman, refers to that feudal warrior class of ancient Tagalog society.
But since the time of Ferdinand Marcos Sr., the term Maharlika has become more closely associated with a fraudulent claim that he made.
Marcos Sr. claimed that he led the Ang Mga Maharlika guerrilla unit against Japanese forces during World War II. However, documents from the US showed that the unit was fictitious, and as Sonny Africa of IBON Foundation said, “it was as fictitious as the World War II heroism that Marcos claimed.”
“Maharlika eventually supersized to become among the key imagery of the dictatorship’s New Society,” Africa said.
The problem of course goes far beyond the proposed fund’s name.
Experts have already pointed out the risks.
In the words of Medalla
But it is Bangko Sentral ng Pilipinas Governor Felipe Medalla’s words that ring the loudest because of the strong points he made.
Gov. Medalla raised the issue of governance and the potential impact the fund would have on the Bangko Sentral ng Pilipinas’ dollar reserves.
“Even if the current guys are OK, will the guys five years from now still be OK? To me, it’s a governance issue,” Medalla said in an interview with Bloomberg TV last week.
Gov. Medalla is very much on point.
“To me the experience of 1MDB Malaysia is the biggest risk, right?” he also said.
He was referring to the 1Malaysia Development Berhad or 1MDB scandal, which was systematically embezzled.
The Central Bank Governor has spoken and we should listen. It is a testament to the BSP’s independence and it is especially important because we cannot expect the same independence from our lawmakers.
After all, this is an issue which will affect not just all of us but succeeding generations of Filipinos.
Sovereign wealth fund
In itself, a sovereign wealth fund is not a bad idea at all. Like individuals or a corporation, investing isn’t bad. In fact, it’s how we build wealth or grow our money faster. But note that we can only usually invest our surplus or excess funds.
What is an SWF?
A sovereign wealth fund, in industry parlance,“is a state-owned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals or alternative investments such as private equity funds or hedge funds.”
This definition from Wikipedia also notes that sovereign wealth funds invest globally.
Success, caution
There are success stories. GIC Private Limited is a sovereign wealth fund in Singapore that manages its foreign reserves.
It was established by the Government of Singapore to preserve and enhance the international purchasing power of its reserves with the aim of achieving good long-term returns.
The US-headquartered Sovereign Wealth Fund Institute (SWFI) had estimated the fund’s assets at $690 billion as of June 2022.
On the other hand, Malaysia’s experience is a cautionary tale for everyone, including us.
In 2015, a document leak showed that Malaysia’s then-prime minister Najib Razak had channeled the equivalent of over $700 million into his personal bank accounts from 1MDB.
He was sentenced to 12 years imprisonment and is currently serving his sentence in a Malaysian jail.
But that’s Malaysia, where the justice system works. What if this happens in the Philippines? How many are there among us powerful convicts who are out and free?
This and several other concerns are some of the reasons why the proposed Maharlika Fund has been met with raised eyebrows.
Of course, nobody wants to see their retirement funds disappear for good.
On the other hand, a former SSS chairman said the SSS Fund is currently cornered by many big, listed companies, anyway.
“The Maharlika Fund could be another placement for the SSS Fund with guaranteed returns half a percent or more than what the big businesses are paying for the use of the funds,” said former SSS chairman Amado Valdez.
He said that a sovereign fund patterned after Singapore is a timely idea and can fund critical infrastructure projects.
“We must not allow the fear of failure to defeat this entrepreneurial initiative,” he added.
Chairman Valdez used the word fear. He is correct that there’s fear. This isn’t surprising. There are more than enough corruption stories in the Philippines that have made us so skeptical when it comes to governance.
It is important for proponents to provide proper safeguards to allay our fears. The burden is on them to prove to us that they aren’t some mob out to get our money.
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Email: eyesgonzales@gmail.com. Follow her on Twitter @eyesgonzales. Column archives at EyesWideOpen on FB.