Senate bars investment of state pension funds in Maharlika, okays key changes in bill's final version

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Metro Manila (CNN Philippines, May 31) — The Senate swiftly approved on Wednesday its version of the controversial Maharlika fund bill that President Ferdinand Marcos Jr. certified as urgent, with lawmakers agreeing to ban the use of government pension money to bankroll the proposed sovereign wealth account.

The previous plan to get initial investments from the Government Service Insurance System (GSIS) and Social Security System (SSS) for the proposed Maharlika Fund was abandoned after earning the ire of several groups who argued that doing so may put Filipinos’ pension funds at risk.

Under Senate Bill No. 2020, the final version, lawmakers accepted Sen. Raffy Tulfo's proposal to prohibit the GSIS, SSS, the Philippine Health Insurance Corporation (PhilHealth), the Overseas Workers Welfare Administration (OWWA), and the Philippine Veterans Affairs Office (PVAO) from investing in the proposed fund.

READ: Senate approves Maharlika Investment Fund Bill

Sen. Pia Cayetano said this move would secure the pension funds of Filipinos, which would not be vulnerable to risks linked to investments.

“We would like to ensure that the pension funds and the aforementioned funds will not be touched…" she said. "We had experiences in the past where the hard-earned money of the people was lost. This is the amendment."

“Those funds are doing well and we don't want to risk it any further,” Cayetano added.

To support the Maharlika Investment Corporation (MIC), the Land Bank of the Philippines will invest ₱50 billion; the Development Bank of the Philippines, ₱25 billion; and the national government, ₱50 billion.

Other changes, safeguards

The MIC will also undergo a "special audit" by the Commission on Audit every five years. This is on top of the processes to be conducted by internal and external auditors.

Meanwhile, the number of board of directors was also cut to nine from Senate Bill No. 1814’s 15. Three independent directors would also come from the private sector.

Penalties to be imposed for a director or officer who willfully holds office while concealing a ground for disqualification also increased from the previous Senate version and now ranges from ₱5 million to ₱7 million. The person would also face perpetual disqualification from holding public office.

If the violation is detrimental to the public, the person would be slapped with a fine ranging from ₱10 million to ₱15 million.

For persons engaged in graft and corruption practices involving the Maharlika fund, the Senate bill imposed stiffer penalties.

Those who allow themselves to be used for corrupt practices by directors and employees of the MIC would be penalized with ₱1 million to ₱5 million and imprisonment of six years.

A director or officer of the MIC who fails to report any corrupt practices would likewise face a fine of ₱5 million to ₱10 million, with imprisonment of 20 years and perpetual disqualification from holding public office.

The Senate version also noted that the MIC cannot invest in “areas” that are explicitly prohibited under existing laws and conventions to which the Philippines is a party.

Some provisions in the Senate version differ from those in the version of the House of Representatives. The House may adopt the Senate version.

Lawmakers convened a bicameral conference committee hearing on Wednesday to reconcile conflicting provisions of the versions of the two chambers before the measure is ratified and submitted to Malacañang

The bicameral conference committee meeting is set for 11 a.m. on Wednesday.