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By Karl B. Kaufman, Reporter
(Last of two parts)
NEWLY installed Defense Secretary Avelino Cruz
Jr. has vowed to “civilianize” and “professionalize” the
controversial Armed Forces of the Philippines’ Retirement and
Separation Benefit System (RSBS) in order to save it from further
sliding to financial woes.
Cruz’s pledge was made after RSBS officials
had warned at a Senate hearing of “early warning signals” that
the government could no longer sustain the payment of pension
benefits of military retirees and that RSBS at present could not
follow the mandate of the law to take over from the government the
pension obligations of former servicemen.
“I want a new military insurance and benefit
system that is handled by financial and insurance experts and guided
by the Insurance Commission and the Central Bank for it to be able
to make money,” Cruz, a lawyer, said.
Cruz’s recommendation had already reached the
Senate Committee on National Defense, headed by Sen. Rodolfo Biazon,
and its counterpart in the House of Representatives, headed by Rep.
Prospero Pichay of Surigao.
“They agreed with my recommendation,” Cruz
said, adding that he had started a series of meetings with RSBS
officials about the issue.
Cruz’s recommendation has been warmly
welcomed; after all, many believe that the current financial problem
of RSBS could be traced to the days when the system was headed by
military officers.
“The RSBS story is scarred by sordid
sellouts and dubious deals. Thus it will surely go down in history
as an institution that was run either by the most sophisticated
swindlers or by the most naive and willing swindling victims in the
country. So naive that they allowed the most blatantly injurious
ventures to be funded by the system. And so willing that they could
actually be thieving coconspirators of those who had drained the
system’s resources to the edge of collapse,” was how a Senate
blue-ribbon committee report describes the RSBS controversy.
The report said manipulations in and outside the
RSBS cost the agency some P3.3 billion of lost or mismanaged funds.
A bulk of this amount was found to be either lent to or invested in
business ventures with questionable or failing financial status.
At present two retired military officers and two
former RSBS staff members are facing estafa and graft charges before
the Office of the Ombudsman for an alleged misuse of some P168
million of RSBS funds, which come from monthly contributions of all
active military personnel.
Charged with 148 counts of estafa through
falsification of public documents and one count of graft were
retired Brig. Gen. Jose Ramiscal Jr., former RSBS president; and
RSBS executives Capt. Perfecto Quilicot, Atty. Meinrado Enrique and
Manuel Satuito. The former AFP chief of staff, Gen. Lizandro Abadia,
was also charged but was acquitted by the Ombudsman for lack of
evidence.
Ombudsman Simeon Marcelo was quoted as saying
that the accused allegedly used “devious” gimmickry to buy 148
parcels of land in Calamba in Laguna; Tanauan in Batangas; and in
Iloilo City in 1996.
The RSBS, created in December 1973 through
Presidential Decree 1656, invests its funds in the stock market,
money market, corporate loans, real estate and long-term equities.
“The modus operandi in the buying of the lots
was to cover the same transactions with two deeds of sale. One deed
of sale would be signed only by the seller or sellers, which is the
unilateral deed. Another deed of sale would be signed by the
seller or sellers and the buyer, the RSBS, and this becomes the
bilateral deed,” said Sen. Aquilino Pimentel Jr., head of the
Senate blue-ribbon committee that investigated the RSBS during the
Eleventh Congress.
The unilateral deeds of sale in real-estate
purchases made by RSBS officials enabled the sellers to evade the
taxes due to the government. It also gave unscrupulous persons
in or out of the RSBS an opportunity to access the hundreds of
millions in the price differences, Pimentel said.
The bilateral deeds were “cleverly” kept
from the public and were unearthed only during the Senate
investigation.
As for Abadia, Pimentel said he was found to
have committed corrupt practices when he granted and gave special
favors to Antipolo Properties Inc. and Marilaque Corp. stockholders,
which included himself. AFP chiefs of staffs are concurrent chairs
of the RSBS board.
The Senate report said most transactions the
RSBS entered into on Abadia’s watch could be considered
“behest” loans because they are made by and between companies
with interlocking directorates or major stockholders. The issue of
behest loans, however, did not stop with Abadia, because many other
RSBS officials were discovered to have positions in companies that
the RSBS was dealing with.
Pimentel recalled how shocked the senators were
when they learned that the RSBS invested millions of pesos in
“some virtually unknowns,” or companies with questionable
corporate records. These businesses include Vetronics, Goodfit,
Fashion Link, Inglenook, Zenco Sales Corp., China Steel Towers and
Centennial Savings Bank.
“In these instances, the RSBS threw all
caution to the wind by sinking in good money into the bottomless
pits of these corporations,” Pimentel said.
The Senate report noted that although the RSBS
has invested in a few companies, it has “failed dismally” to
comply with its solemn mandate to avoid
speculative securities in order to protect the interest of the
soldiers for whose benefit the system was organized.
The embattled Ramiscal had questioned the
jurisdiction of the Ombudsman in handling the case, saying the RSBS
is not a government institution. He pleaded not guilty to the case
and insisted that the RSBS mess was the result of the 1997 East
Asian financial crisis.
Pimentel said he doesn’t believe Ramiscal’s
claim. “This mess was brought about by what Ramiscal did, and what
he and other RSBS officials did was to indulge in
reckless investment that created new positions for
them in the beneficiary corporations,” he
said.
Pimentel added that the rash investments gave
Ramiscal and company vast opportunities to hold multiple corporate
positions and earn additional income.
Current officers of the RSBS refused to talk
about the cases of Abadia, Ramiscal and others, saying they are
concentrating their efforts on how to prevent the system from
sinking. Last Friday, RSBS officials and Cruz began a series of
meetings aimed at devising new plans to revive the financial status
of the RSBS.
“We are all for his proposal to put civilians
in the RSBS. We are determined to cooperate with him,” said Cleofe
Melchor, RSBS assistant vice president and head of the RSBS
legislative reform office.
The Department of Finance has also joined the
fray in saving the troubled RSBS by inquiring into the management
and financial performance of the system after its failure to
shoulder pension payments for retired military personnel.
Secretary Juanita Amatong said the Department of
Finance would initiate the evaluation of the RSBS to look into the
weaknesses in its administration and recommend possible ways to
improve its functions.
“We want to find out the causes of the
perceived mismanagement of the RSBS funds,” Amatong said.
She added that the inquiry into the RSBS would
be similar to the study conducted earlier on the financial standing
of the Social Security System and the Government Service Insurance
System and will have a $100,000 grant from the Asia-Europe Meeting
Trust Fund in coordination with the World Bank.
Sen. Rodolfo Biazon expressed optimism that
neophyte senators who are members of the Senate Committee on
National Defense and Security would help him unearth the anomalies
in the RSBS and find a solution to remedy the long delayed benefits
of the retirees.
Biazon said his committee, which conducted the
first Senate hearing in the Thirteenth Congress, expects that
neophyte senators will lead the investigation as they had said
before when they were still debating the legislative calendar.
“If you might remember, they [the neophyte
senators] are the ones who told us during the debate in the plenary
session that they are eager to participate in and start the hearings
to make the Senate productive. But I must admit that I was dismayed
in the last hearing when they failed to show up on time,” Biazon
told The Times.
At Tuesday’s hearing Biazon invited Finance
Secretary Juanita Amatong, Defense Undersecretaries Cesar Bello and
Feliciano Gasis, SSS President Corazon de la Paz, GSIS Senior Vice
President Leticia Sagcal, RSBS President Cesar Jayme and Bangko
Sentral ng Pilipinas Assistant Governor Nestor Espenilla.
Jayme admitted that the RSBS would face a
serious financial problem if it stopped receiving monthly
contributions from the 115,000-man AFP.
AFP-RSBS, according to Jayme, has a total
backlog of some P45 billion, which includes the P22 billion needed
to adjust the retirees’ monthly pay and the P19 billion pension
fund of retired military personnel.
Biazon listed three “shocking” findings that
his committee unearthed during the hearing.
The AFP-RSBS cannot and will never maintain its
mandate of taking over from the government the payment of the
pension of military retirees at the present scale.
Ten years from now, the payment of the pensions
of retirees will surpass the amount of the salaries being paid to
those in the active service, assuming that the number of active
soldiers will not increase.
The AFP-RSBS, through the years since 1973, has
been losing money instead of being able to build up its fund.
Instead of building its assets, Biazon said, it
had lost through the years although the AFP active service personnel
continue to contribute 5 percent of their basic monthly salary,
which amounts to P803 million a year. 
--With Sammy Martin, Correspondent
Part 1 |
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