The prime mover of the Maharlika Investment Fund (MIF) in Congress, House Speaker Martin Romualdez, has explained to businessmen how the misuse or abuse of the proposed Philippine sovereign wealth fund (SWF) will be avoided.
Romualdez did so in a recorded video message sent to the Asia CEO Forum at the Manila Marriott Hotel on Friday, Feb. 24.
“As far as the issue of possible misuse and abuse of the , let me assure everyone that your House of Representatives is keenly aware of your concern. For this reason, we have seen fit to incorporate adequate safeguards in House Bill (HB) No.6608 to ensure that the funds are invested properly. These safeguards are both proactive and punitive,” he said.
Passed by the House on third and final reading on Dec. 15, 2023, HB No.6608 contained the MIF, which essentially seeks to create a new revenue stream for the government on top of, say, the annual tax collection.
Romualdez, the lead author of the bill, enumerated the MIF’s proactive safety checks, including transparency provisions and the requirement to subject the books of accounts of the Maharlika Investment Corp. (MIC), which will manage the fund, to three layers of audit by an internal auditor, an external auditor and the Commission on Audit (COA).
He said the audits shall include an assessment of whether investments are made in compliance with the Santiago principles, a set of guidelines designed to promote good governance, accountability, transparency, prudent investment practices, and a stable and open investment climate.
The MIC’s operations, Romualdez said, will also be monitored by the MIF Joint Congressional Oversight Committee.
The bill also provides that all Maharlika documents will be open to anyone who wishes to review them, including reports from the internal auditor, external auditor, and COA.
"The MIC management will be made up of persons of good moral standing and reputation, of recognized probity and independence, with substantial experience and expertise in corporate governance and administration, investment in financial assets, and management of investments in the local and global markets," Romualdez further told the business executives at the event.
The House leader said that under a MIF, a "small portion" of investible funds of the Landbank of the Philippines (LBP), Development Bank of the Philippines (DBP), and Bangko Sentral ng Pilipinas (BSP) would be pooled and placed under the management of MIC. This will become seed money of the proposed SWF.
The bill also identifies financial instruments where the fund could be used, including foreign currencies, domestic and foreign corporate bonds, Sukuk or Islamic bonds, mutual funds, joint ventures, and commercial real estate and infrastructure projects.
Romualdez underscored that the MIC can only participate in government projects that are approved by the National Economic Development Authority (NEDA).
“If these pro-active provisions are not enough, No. 6608 also provides heavy penal provisions and criminal sanctions to hold accountable and punish any director, trustee, or corporate officer who is proven to have abused the management of the Maharlika Investment Fund,” the Speaker and Leyte 1st district representative said.
He said any erring MIC official can be charged with malversation or plunder, the latter being a non-bailable offense, depending on the amount embezzled.
He stressed that the mission of the House in pushing for the creation of MIF was “to help resuscitate the pandemic-battered economy and make economic transformation the engine that will uplift the lives of our people".
The MIF is currently under consideration in the Senate, which is the other legislative chamber in Congress.