Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla has expressed concerns over the proposed Maharlika Wealth Fund (MWF)--concerns that Albay 2nd district Rep. Joey Salceda, a proponent of the controversial measure, wants to chase away.
Medalla is reportedly worried that the MWF--which would essentially be the Philippines' version of a sovereign wealth fund--might go the way of 1Malaysia Development Berhad (1MDB).
"As for the risk of a 1MDB repeat, the BSP has more powers over this fund than Malaysia's monetary authorities had over 1MDB," Salceda said on Friday afternoon, Dec. 2, in reaction to the BSP chief's fears.
"The BSP can sanction both the GFIs (government financial institutions) and the fund itself, and even order the unwinding of the involved financial institutions themselves as the BSP's supervisory enforcement policy allows," Salceda, chairman of the House Committee on Ways and Means, said.
Described as “one of the world’s greatest financial scandals”, the 2016 1MDB scandal was a corruption, bribery and money laundering conspiracy wherein the Malaysian sovereign wealth fund (1MDB) was systematically embezzled, with assets diverted globally by the perpetrators of the scheme.
According to Salceda, the Malaysian central bank warned its central government about the risks 1MDB was taking as early as 2014.
"It couldn't do much on its own. In sharp contrast, the BSP does not need to warn the government. The BSP can conduct enforcement action on its own," he said.
"I am also open to an amendment that spells out that the fund will remain a BSP-Supervised Financial Institution (BSFI), just to ensure that BSP oversight will continue to apply," the Bicolano said, referring to House Bill (HB) No.6398.
"Apart from this, the TWG (technical working group) introduced several layers of governance checks, audits, risk management, and accountability mechanisms to prevent a 1MDB scenario," Salceda said.
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He headed the TWG that introduced amendments to the original bill before it was passed by the Committee on Banks and Financial Intermediaries Thursday.
"Governor Medalla's proposals and suggestions are welcome because robust discussion is needed for a proposal of such importance. And, of course, the independence of the Central Bank's operations must be respected," Salceda added.
The involved GFIs in raising the P275-billion start up fund or seed money of the MWF are the Government Service Insurance System (GSIS), Social Security System (SSS), Land Bank of the Philippines (Landbank), and the Development Bank of the Philippines (DBP).