GSIS reviews deals entered into by previous admin

MANILA, Philippines - The Government Service Insurance System (GSIS) is reviewing some equity deals entered into by the previous administration as these are deemed to be disadvantageous to the pension fund, its top official said yesterday.

The pension fund is particularly looking at the sale agreement entered into last year by the Winston Garcia-led GSIS with Hong Kong-based First Pacific Co. for the agency’s stake in Philex Mining Corp. and the sale of its four percent stake in Manila Electric Co.

“We are looking at whether these transactions are fare and see if they can be renegotiated,” GSIS president and general manager Robert Vergara said in a forum at the Philippine Information Agency.

He said that the review is based on the findings of the Commission on Audit (COA), which conducted an audit last year of GSIS’ previous equity transactions.

“GSIS asked COA to conduct a mid-year review last year because we found some transactions which merit further investigation,” Vergara said.

Vergara said GSIS plans to talk to the other parties involved to renegotiate the sale contracts.

 “We’ll see if we can have slightly better terms,” he said, stressing that the issue is not the price but certain provisions of the sale agreement.

The GSIS chief said that under the sale agreement, the buyer has the option to return the stake that it bought from GSIS and get its money back before the end of an agreed upon payment period.

In January 2010, GSIS sold its 5.9 percent interest in Philex to First Pacific affiliate Two Rivers Pacific Holdings Corp.

Also last year, GSIS sold its four percent stake in Manila Electric Co. (Meralco) to pre-need firm PhilPlans Inc. PhilPlans was formerly Philam Plans, Inc. which was among the companies that American International Group’s Philamlife sold last year.

It was acquired by Philippines First Insurance Company, Inc. which is owned by the Eusebio Tanco Group and computer school systems Systems Technology Institute Inc. (STI).