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Is it politics
or a real GSIS crisis There are three raging issues that placed Government Service Insurance System (GSIS) in the limelight these days. The first is an accusation that GSIS had been remiss in servicing the salary loans and pension applications of its members. The second has something to do with the supposed failure of GSIS to accurately reflect a deficiency in reserves to meet future liabilities, a so-called actuarial deficit, in its books. And the third one is against GSIS president and general manager Winston Garcia and how he allegedly mismanaged the fund of its 1.5 million members. Uncovered Delinquencies Caused Delays In response to the accusation of failure to process in a timely manner salary loans and pensions, GSIS management explained that the delays were due to the computerization program that GSIS had embarked on and just concluded in the middle of 2003. The new system discovered that some government agencies had not been remitting contributions to the pension fund while some members had not been dutiful in settling previous loans. With this finding, salary loans or pensions of members who belonged to the errant agencies and those who personally were delinquent or remiss in paying their loans were not immediately processed. Apparently, prior to computerization, GSIS had been penalized for giving benefits to members belonging to agencies that were not remitting payments, or granting salary loans to members even if they still had outstanding loan obligations. With computerization, delinquents were uncovered. Receivables To Cover Deficiencies? The second issue is on the actuarial deficit, something that has been hounding the GSIS for some time now. This started when the Commission on Audit (COA) noted that the GSIS’s actuarial reserves in the last 12 years had been below what is required by prudent accounting standards. Worse, according to COA, the GSIS continues to insist on not reflecting the actuarial deficit, estimated at close to P30 billion, in its books. "This practice is a departure from the generally accepted accounting practice in the insurance industry," according to the COA report Actuarial reserves are meant to ensure that funds are available to meet future requirements or liabilities. A deficit meant that the GSIS would have insufficient funds to meet future obligations. Not surprisingly, COA Chairman Guillermo Carague early this year likened GSIS to Enron Corp., one of the world’s biggest energy companies until it filed for bankruptcy in 2001. Carague pointed out that Enron’s collapse was due to the failure of management to recognize real liabilities posed by the failure to book actuarial deficit. GSIS management headed by Garcia, however, quickly rebutted the COA allegation by saying that the gap between reserves and liabilities are not as significant as noted by the government auditors. They cited sufficient assets to cover future liabilities, such as the P30-billion receivables from government agencies representing unpaid premiums and real estate properties booked at acquisition cost but, expectedly, now with higher value. Of course, it remains uncertain whether these government agencies will be able to pay GSIS considering the current unwieldy government deficit. Politics of Garcia in GSIS And the last issue is man himself, having been subjected to a number of investigations by the Department of Finance (DOF) as well as the Presidential Anti-Graft Commission (PAGC) even before he marked his first anniversary in office. Reports have it that the PAGC found that Garcia had made an unauthorized cash advance of P3.4 million from the GSIS, and was also faulted for hiring a law firm as consultant for a P200,000 retainer fee when all government agencies are required to utilize the in-house services of the Office of the Government Corporate Counsel. The graft commission also raised questions on the Garcia-led GSIS acquisition of a Juan Luna painting a year ago as well as the expensive make-over of the GSIS building, including Garcia’s office as president and general manager. But Garcia, being the son of Cebu Province’s Governor Pablo Garcia (who is a good friend of the former Governor Lito Osmeña, reputedly the most influential person in the Visayas if votes are to be considered), continues to remain in the good graces of the current administration. Perhaps he was able to personally account to the President on these questions of irregularities such that the President has spoken and Garcia remains at the helm of GSIS. Politics First, Members’ Angst Later The question in the mind of the 1.5-million GSIS members is whether the institution is really in a financial crisis, and if so, is the current head the right person to lead it to recovery. It looks like these questions will remain unanswered until after the presidential elections. Offhand, it is not good politics to make moves that will prompt PROMDI party members and other Visayan voters to switch camps. In the meantime, it would be best for government employees to believe the messages in the GSIS’s expensive print and broadcast ads if they wish to calm their anxieties. Sigh!
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