GSIS president defends stock market pick

MANILA, Philippines — Government Service Insurance System (GSIS) President and General Manager Jose Arnulfo “Wick” Veloso on Thursday defended the pension fund’s alleged risky investment in renewable energy company Alternergy, saying the P1.45-billion deal complied with all applicable rules and regulations.

Veloso issued the statement after being placed under a six-month preventive suspension by the Ombudsman, which he said was imposed without considering the counteraffidavit he submitted in response to an anonymous complaint.

The complaint also implicated six other GSIS officials and triggered a probe into the due diligence, risk exposure and the use of pension funds in the controversial stock investment.

The transaction was flagged earlier by the Commission on Audit (COA), saying that the GSIS invested a total of P2.3 billion in the stocks of three companies that “have no proven track record of profitability over the last three years.”

State auditors warned that the transactions—including the deal with Alternergy—exposed a “significant amount of members’ contributions to high risk” and may harm the financial health and stability of the pension fund. As of March 2025, the GSIS has a total of 2.74 million members and pensioners. Its total assets amount to P1.83 trillion.

‘Unverified complaint’

Veloso maintained that the deal with Alternergy “underwent rigorous evaluation and endorsement by the GSIS investment team.”

“Without waiting for my counteraffidavit, which was timely filed, the Ombudsman decided to rely solely on the bare allegations contained in the anonymous and unverified complaint in preventively suspending me and other hardworking officers of GSIS,” Veloso said.

“Certainly, the professional judgment of these experts holds significantly greater credibility than the unverified assertions of an anonymous source,” he added.

Ombudsman Samuel Martires, in an order signed on July 11, suspended the GSIS officials without pay to prevent any potential interference with the ongoing investigation. The probe centers on administrative charges they face for grave misconduct, gross neglect of duty, and violation of reasonable office rules and regulations.

Aside from Veloso, the order covers Executive Vice Presidents Michael Praxedes and Jason Teng; Vice Presidents Aaron Samuel Chan and Mary Abigail Cruz-Francisco; officer Jaime Leon Warren and acting officer Alfredo Pablo.

Alleged violations

According to the Ombudsman’s resolution, an investigation launched in January revealed that the GSIS acquired 100 million perpetual preferred shares in Alternergy at P14.50 each, under a subscription agreement signed on Nov. 7, 2023. The total transaction amounted to P1.45 billion.

The Ombudsman found that the deal violated the GSIS’ own 2022 Investment Policy Guidelines. Specifically, the probe found that the purchase was made without the required approvals from the GSIS Assets and Liabilities Committee, the Risk Oversight Committee, and the Board of Trustees.

The resolution also noted that the investment breached key GSIS investment rules, as the shares were not listed on the Philippine Stock Exchange (PSE) at the time of the agreement and payment. Moreover, Alternergy failed to meet the minimum market capitalization requirement and exceeded the cap on the allowable public float.

No need for board nod

Makati-based Alternergy, which was incorporated in June 2009, is chaired by former Energy Secretary Vicente Perez Jr. With a market capitalization of P4 billion, the company is into wind solar, run-of-river hydro power, as well as battery storage.

Veloso argued that the Alternergy deal did not require board approval under existing GSIS policies.

“Under GSIS policy, board approval is required only for investments exceeding P1.5 billion,” he said. “The Alternergy investment—P1.45 billion for 100 million preferred shares—was well within the authority delegated to the president and general manager.”

Veloso also cited Republic Act No. 8291, which allows the GSIS to invest in preferred or common shares of listed corporations. The law, he said, “does not require that the specific shares be listed at the time of purchase-only that the issuing company be listed and regulated.”

Early returns

Alternergy, he noted, has been listed on the Philippine Stock Exchange (PSE) since March 2023 and “remains under full regulatory oversight.”

Veloso said the rules on market capitalization and public float do not apply in this case, saying those standards were designed for investments in publicly traded common shares, where liquidity concerns are a factor.

“The Alternergy investment was not for common shares. GSIS subscribed to non-traded preferred shares, which are fixed-income instruments designed for yield, not for trading,” he said, “Applying market capitalization and public float criteria here reflects a failure to understand both the nature of the instrument and the purpose of the policy.”

Ultimately, Veloso cited the early returns as proof of the deal’s merits, saying the GSIS had already earned P117.9 million in cash dividends from Alternergy less than a year after the investment.

“This is a concrete return that strengthens the GSIS fund and directly benefits our members and pensioners—clearly disproving any suggestion of financial loss or mismanagement,” he said.

 

 

(2025/07/25-05:30)

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