Maharlika talks: Economist claims House’s SWF proposal lacks safeguards

Batasang Pambansa plenary. —MALACAÑANG FILE PHOTO

MANILA, Philippines — The proposed sovereign wealth fund (SWF), approved recently by the House of Representatives, lacks several safety measures and other provisions that would specifically detail how it would operate, an economist said on Monday.

In the Laging Handa public briefing, economist and University of the Fraser Valley Associate Professor Michael Batu explained that he wanted to see more safeguards placed on House Bill (HB) No. 6608 or the Maharlika Investment Fund (MIF) bill, which was passed by the House on third reading last Thursday.

One of the questions Batu raised is why the law does not explicitly state how long the tenure of the members of the Maharlika Investment Corporation (MIC) Board.

“First of all, although it was specified who would be part of the Board […] so this is okay and it is clear what their roles are, but what is vague in this version of the law is their tenure.  For example, how long would they stay in their positions?  Six years?  Or for three years?” Batu asked, speaking in Filipino.

“Although it was stated there in the proposed law that there would be an implementing rules and regulations, if you’re gonna ask me, it should be stated already in the law what their term lengths are.  For example, if a Board member gets sick or dies, how do you replace that?  Do they get appointed by the President?  How long is the term, would it cover the unexpired term?” he added.

Batu also believes that the penalties for Board members and officials who would lead the MIF into malicious investments is light, because the fine is only at P2 million when the funds that the MIC would manage is a the billions-level.

“The latest version of the Maharlika, it has penal provisions […] there are penalties if the corporation is involved in or was responsible for fraud, fraudulent transactions.  There are fines and penalties.  But my issue with this is that the fine is too small,” he said.

“On the latest version, the highest penalty I think was at P2 million.  But if you would take a look at the potential of this fund, it can generate well over P2 million.  If you’re going to ask me, the penalty threshold should be high also, because it should be in accordance with the potential that the Maharlika can generate, so P2 million is small,” he explained.

Lawmakers from the Makabayan bloc tried to amend the provisions under HB No. 6608 last Thursday by placing stiffer penalties like life imprisonment and the treatment of MIF-related malicious investments as plunder cases, but they were turned down by the sponsors of the bill and the Majority floor.

READ: What’s in, what’s out: Maharlika Fund bill gets amended again before approval 

After some amendments were either accepted or rejected, the bill was then approved on second reading.  It was also approved on third reading on the same day, thanks to President Ferdinand Marcos Jr.’s certification of the bill as urgent.

READ: Marcos Jr. certifies as urgent Maharlika Investment Fund bill 

READ: House passes Maharlika Investment Fund bill 

Aside from these observations, Batu said that a detailed system of reporting should be set in place to avoid the same pitfalls that 1Malaysia Development Berhad (1MDB) had.

The 1MBD is the SWF of Malaysia, which was embroiled in controversy due to its use in a multibillion-dollar corruption scheme by its founder, former prime minister Najib Razak, who was convicted of corruption and money laundering.

“With the reporting, because in the case of the 1MDB in Malaysia, the failure was they did not adhere to the Santiago Principles and there was failure of reporting.  For us to trace if corruption happened with the SWF, where the invested funds went, we should be able to see documents,” Batu said.

“So that we can see what companies they invested in, we need to know the name of the companies invovled.  Is the Maharlika Investment Corporation willing to disclose what are the companies they invested in using people’s money?” he asked.

JPV