Senator Risa Hontiveros on Tuesday criticized the Government Service Insurance System (GSIS) for failing to proactively evaluate the social costs of its investments, particularly in online gambling, before committing funds.
This developed after Hontiveros, during a Senate panel hearing, asked the GSIS if it included the social costs of online gambling in calculating risks before investing P1 billion in the online gambling platform DigiPlus.
GSIS President Jose Arnulfo ‘Wick’ Veloso, for his part, responded that the agency considered DigiPlus to be a legal and listed corporation under the Philippine Stock Exchange.
‘We can see that this qualifies under the three points of our management: profitability, safety, and liquidity. So we saw that it meets the requirements, and that’s why we invested,’ Veloso explained.
Hontiveros then asked Veloso if the GSIS was ‘completely agnostic’ to the documented social costs of online gambling.
But Veloso maintained that the GSIS bases its investment decisions primarily on financial factors unless the Congress or a law specifically mandates otherwise.
Further stressed if this meant the GSIS did not, in fact, consider social costs as one of the qualifications before investing, Veloso responded:
‘The social costs you’re referring to are something we also want to learn how to integrate into our analysis of these kinds of businesses,’ said Veloso. ‘.That is why, Your Honor, we would like to seek the wise guidance of this committee and your chamber. Because we are merely following, and if this is the will of the people, then let us amend the law so that we may be properly guided,’ he added.
Senator Mark Villar, who chaired the hearing, acknowledged the concerns, but pointed out that while externalities like social costs are ‘not easily quantifiable,’ they should still be considered in government investments.
‘Perhaps when we talk about government money, we should be more diligent with learning about these externalities that are associated with these investments, be it in whatever sectors,’ said Villar.
‘It’s not easily quantifiable, but I hope this is something we can discuss in this committee and maybe make a part of the GSIS’ decision-making process,’ he added.
Hontiveros then pointed out that public health professionals could easily quantify the social costs, if need be.
She also pointed out that the social costs of online gambling have been documented well before the GSIS made the investment.
‘Our society and certain sectors of it-including the GOCCs-already recognize this, even in the case of online gambling. And yet, with all due respect, it seems too easy to simply say, ‘Let Congress first tell us what to do.’ You should be able to factor this in more quickly, because in truth, you can act much faster than we can,’ she said.
The senator then asked if GSIS would support the crafting of a legislation that would require government financial institutions to factor in social impacts before investing, to which Veloso answered in the affirmative.
Yet Hontiveros expressed disappointment that the GSIS was unwilling to take a more proactive stance.
‘You don’t have to wait until a new committee report or a new law is approved to take action,’ she said, noting that the pension fund made its P1-billion DigiPlus investment without congressional instruction.
‘You could very well be more proactive, and in fact show a good practice . guiding us in showing how our GOCCs can, over time, become increasingly selective in placing funds, especially when these involve the contributions of our public sector unions.,’ she added.
Hontiveros then said that she wishes they could have gone farther in this direction.
‘But if that is all the GSIS can say to the public, then I won’t be the only one disappointed,’ she said. /cb