‘People Power’ spelled the difference in CalPERS decision

"People Power" made the difference in the precedent-setting decision of the California Public Employees Retirement System (CalPERS) to keep its investments in the Philippines.

In the board meeting that decided the retention of the Philippines in its permissive markets list, about 600 members of the Filipino-American community in California were present to witness the presentation of Calpers consultant, Wilshire Associates.

According to the Investor Relations Office of the Bangko Sentral ng Pilipinas (BSP), the presence of Filipino Americans in the gallery surprised CalPERS when they held their meeting in February.

"I don’t think they anticipated the people-power and it was a vibrant crowd," said IRO managing head Corazon Guidote. "The people-power concept was completely foreign to them and it drove the point home that the fund itself has a significant Filipino-American constituency."

Guidote said the CalPERS decision was a diplomatic coup for Philippine ambassador to the US Albert Del Rosario who went as far as to talk with every member of the CalPERS board of directors.

"The effort went to both ends – the top and the bottom," Guidote explained. "We talked to the directors to reconsider and we went to Wilshire’s third party sources because we knew they gave us good ratings."

Guidote declined to reveal the details of the meetings, but according to a source privy to the discussions, Wilshire had to adjust its ratings on technical merits.

The source said that although Wilshire’s third party consultants gave favorable ratings, it still became necessary to convince Wilshire to reconsider its final rating on the Philippines.

"We knew that even if we got good ratings from the third party sources, they won’t be worth much unless Wilshire realized that we knew about it and that they had to consider these ratings objectively," the source said.

The animosity between Wilshire and Philippine officials stemmed from an incident three years ago when Wilshire reported that the Philippine stock market was so backward, it was still using the "outcry" method with chalks, pencils and paper to undertake stock transactions.

CalPERS is known as an activist investor, meticulously picking its investments based on a strict set of criteria, building a strong reputation as an influential market watchdog advocating good corporate governance to the point of wielding its holdings to influence corporate management reforms.

Its earlier decision to exclude the Philippines from its emerging markets list was spurred by Wilshire’s conclusion that the country has failed to address critical issues in the judiciary, labor sector and market transparency.

According to CalPERS, however, its decision was the "right decision" after hearing recent reforms that had been undertaken and were not considered by Wilshire in its evaluation.

CalPERS has about $65-million worth of investments on Philippine stocks estimated to represent at least 2.8 percent of the entire Philippine stock market.

Reports coming from the Philippine embassy in Washington DC revealed that the CalPERS board meeting was witnessed by about 600 members of the Filipino-American community who came to the meeting by the busload.

"The people who turned out to hear the proceedings greeted CalPERS’ decision with a roaring standing ovation," said Philippine ambassador to the US, Albert del Rosario. "This decision recognized the economic reforms we have undertaken."