Reputational damage

For someone who works in the financial or banking sector, a good reputation is the cornerstone of one’s career, and more so if the individual works in government.

Thus, any allegation of misconduct, violation of laws or regulations and neglect of duty is a serious matter that cannot be easily dismissed or ignored.

The ripple effect of such an accusation can even affect entities and individuals who may have been involved in the questioned transaction, thus resulting in some degree of reputational damage.

This is what is now happening to Government Service Insurance System president and general manager Jose Arnulfo “Wick” Veloso who has built a notable banking career that saw him rise from a hotshot Treasury trader in HSBC to eventually become its first Filipino country manager, and then on to become president of Philippine National Bank, one of the country’s biggest commercial banks, and to be eventually appointed as PGM of GSIS under the term of President Marcos.

GSIS PGM Veloso was basically caught unaware by the July 11, 2025 order of retiring Ombudsman Samuel Martires that suspended Veloso for a six-month period while the Office of the Ombudsman investigates the stock purchase of 100 million preferred shares in Alternergy Holdings Corp. for P1.45 billion.

The suspension move against Veloso, however, also cast a shadow over Alternergy with the implication that the deal may not have been as beneficial to the GSIS as it was to the renewable energy firm.

Thus, by association, some reputational damage is also being experienced by Alternergy, as well as its financial advisor — the Investment & Capital Corp. of the Philippines or ICCP, which has defended the transaction.

According to PGM Veloso, the preventive suspension is based solely on an anonymous and unverified complaint without the Office of the Ombudsman first securing a counter affidavit from him. The request for Veloso’s counter affidavit was made only on June 20, 2025, with the request received by Veloso only on June 30, which allowed the filing to be extended up to July 21.

Unfortunately, Veloso said, “without waiting for my counter affidavit, 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.”

“Second, based on the records of GSIS, and narrated under oath in my counter affidavit, the investment of GSIS in Alternergy underwent rigorous evaluation and endorsement by the GSIS investment team, whose technical expertise in financial instruments and risk assessment confirmed that the Alternergy investment fell squarely within established parameters. Certainly, the professional judgment of these experts holds significantly greater credibility than the unverified assertions of an anonymous source.

“Third, and more importantly, the Alternergy investment complied with all applicable investment rules and regulations of GSIS. Under GSIS policy, board approval is required only for investments exceeding P1.5 billion. The Alternergy investment — P1.45 billion for 100 million preferred shares — was well within the authority delegated to the PGM. No board approval was legally required. Republic Act 8291, on the other hand, allows GSIS to invest in preferred or common shares of listed corporations. It does not require that the specific shares be listed at the time of purchase — only that the issuing company be listed and regulated. Alternergy has been listed on the Philippine Stock Exchange since March 2023 and remains under full regulatory oversight.

“As to the market capitalization and free-float thresholds, these are intended for investments in publicly traded common shares, where liquidity risk must be managed. 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. 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.

“Fourth, in 2024, barely a year after the investment was made, GSIS earned P117.9 million in cash dividends from Alternergy. 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.

“Finally, to allay any misconception as to the financial status and sustainability of the GSIS fund, I am proud to share that since I assumed office as PGM, the fund has grown from approximately P1.54 trillion by end of 2021 to around P1.88 trillion as of June 2025 — an increase of over P300 billion, or roughly 20 percent over three years. As of June 2025, approximately 72 percent of the GSIS investment portfolio is allocated to relatively risk-free assets such as government securities, loans to members and real estate, reflecting a cautious and stability-focused strategy, 19 percent in equities, five percent in private equity funds invested in infrastructure and four percent in cash and near-cash items.

“Preliminary financial figures as of June 30, 2025, show that the total income stood at P172.7 billion, reflecting a year-on-year growth of P21.67 billion or 14.35 percent, while net income surged to P77 billion, marking a significant P18 billion (or 31 percent) rise from June 2024. With these figures, the GSIS has extended its fund life up to 2058 or for 33 more years, enabling us to fulfill our responsibility of delivering benefits to our members and retirees on time.

“With decades of experience in finance and investments, I have always been mindful of the boundaries of my authority, and have consistently ensured that all investment decisions remain well within those limits. As PGM of GSIS, my mandate has always been to protect and grow the GSIS fund through prudent, opportunity-driven strategies, for the benefit of government workers and pensioners. I have responded to the proceedings before the Office of the Ombudsman, and I remain confident that a full and fair review of the facts will affirm the integrity of the Alternergy investment, that it was conducted within legal bounds, policy limits and fiduciary standards — and was made solely with the best interests of GSIS members in mind.”

With Martires set to retire, what will happen to the investigation? Who takes over? The Department of Finance also wants to get in on the investigation. Is there more to this investigation?

Finance Secretary Ralph Recto has indicated that the DOF also wants to look into the acquisition of shares in DigiPlus, which some quarters admit may have been inappropriate since it involves online gambling, an activity that the government now wants to discourage.