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In a
society teeter-tottering on the brink from the decay of
institutions that would have pulled it back to firmer
ground and a safer distance from the precipice, the
onslaught of deliberately distorted information and the
consequent lack of understanding from a public
distressed as it is from economic adversities can push
remnant institutions over the edge.
This
time it is the Government Service Insurance System (GSIS)
that finds itself a defenseless victim of misconceptions
that threaten institutional integrity, cause panic and
unnecessarily alarm and agitate.
Recently, from underneath the woodwork, a self-styled
whistle blower accused the GSIS of releasing P1 billion
to the office of the President on the year the incumbent
sought reelection.
Two
separate complaints were filed by three entities. Both
accuse the GSIS trustees of illegally passing GSIS Board
Resolution 255 on December 6, 2004, remitting P1 billion
to Gloria Arroyo. The complainants assert that these are
violations of Republic Act 8291, or the GSIS Act of
1997, and Article 239 of the Revised Penal Code. Not
quite the kitchen sink but close to it, they’ve also
thrown in charges based on RA 6713, or the Code of
Conduct and Ethical Standards for Public Officials and
Employees.
The
accusation is serious as it portends, if not brazenly
pretends, expertise and access to documentation, data
and dubious defaults unseen from bystander view.
According to the complainants, “This scheme and practice
of the accused in delivering monies of the GSIS to the
Office of the President is illegal, unlawful and
immoral.”
By its
proposition alone, such attacks are damaging because the
accuser is a former GSIS employee, and the other
accusers drawn into the complaint are representatives of
parents and school teachers, the largest and most
affected constituencies of the GSIS.
For
many, including those whose brick-and-mortar assets
found government balance sheets and, consequently, the
financial health of state infrastructure, the GSIS is a
critical lynchpin. Not merely a pension fund, it is the
insurer of all state assets, from the National Power
Corp.’s high-cost plants, to the government printing
office that churns out ballots, to military equipment
that eavesdrop on incriminating phone calls.
While
the GSIS is many things to many individuals, it is
singularly the bedrock of the government’s
infrastructure and economics. Standing side by side the
National Treasury, when viewed from a higher perch, the
GSIS might have greater societal impact. The GSIS is a
social-insurance institution. Consistent with the
nature of insurance, it provides protection to members
and their families against the occurrence of certain
contingencies.
The
State Treasury might be the government’s virtual money
vault, but the GSIS—as a pension backstop for civil
servants, a revenue-generating entity, as well as a
self-recapitalizing money machine—actually functions in
a manner more complex than we might imagine.
It is
the repository of pension funds and the insurer of
assets, providing an institutional backbone that spans
from the present, as current assets and liabilities, to
the future, prospectively, as found in the GSIS’s
pension and fiduciary functions. It is this complexity
of responsibilities that necessitate Chinese walls
within its innards and organs; the same complexity
misconstrued by those prone to propaganda from all
sides, legitimate or spurious, whistle blowers or
armchair critics.
Because
of the diversity of its charges and the different
requisites demanded by its constituencies, the GSIS
prudently operates two distinct and separate funds. One
is the General Insurance Fund (GIF) established from the
property-insurance operations mandated by RA 8291. The
wall between this and its pension operations is high and
nonporous. Cash flows in one do not diminish the other.
The
other fund, which applies closely to the concerns of
teachers and parents drawn in by the recent complaint,
is the Social Insurance Fund, the repository of the
contributions of GSIS members. Because these are
premium-based, the GSIS-protection mandate is
indispensably linked with premium obligations. Benefits
correspond only to the contributions. None are a
function of the GIF, and vice versa. Against the GIF,
both do not mix, save for their capitalization effect
that substantiates the GSIS’s financial foundations.
Because
there is a risk-versus-return tradeoff, increasing
dividend payouts reduce the stock of internal financial
capital and cash available for both capital expenditures
and investments. Hence, the GSIS’s two separate and
mutually isolated funds and a residual dividend
strategy.
Understanding the nature of each fund and the source
from which cash flows are derived is important in
comprehending dividend policies. The GSIS likely follows
the residual dividend theory where policy is influenced
by investment opportunities and the availability of
internally generated capital where dividends are paid
only after all acceptable investments have been
financed.
This
accounts for the rather rare occasion of dividend
payouts to the Treasury having occurred only three times
in the recent past: one for P100 million in 1991,
another for P200 million in 1997 and, lately, in 2004
for P1 billion. In each instance, then as it is today,
the payee was the National Treasury, not the Office of
the President.
The
facts speak for themselves. The 2004 remittance was on
December that year, long after 2004’s election spending.
The accountable form 51-W is an official receipt whose
number is 4197509, dated December 9, 2004, signifying it
as one among the series issued to the National Treasury.
In other words, only the National Treasury is authorized
to use this document.
The
identified payor is the GSIS and the nature of
collection signified as “Payment of dividends out of GIF
unassigned surplus as of December 31, 2003, per Board
Resolution 255, adopted by the GSIS Board of Trustees in
its meeting on 12-6-04.”
The
manner of payment was via a check drawn on “12-08” and
numbered 645566. The payee is the National Treasury. It
is not Gloria Arroyo. This is an important distinction
as only the stated payee can monetize a check. As such,
what monies were remitted commingle with state funds.
Res ipsa loquitur. |
