Multiple safety nets
Such clarity contributes to accountability in the home country and is often required under the recipient countries’ regulations.
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Such clarity contributes to accountability in the home country and is often required under the recipient countries’ regulations.
The best argument that the reviled Maharlika Wealth Fund will have enough safeguards is that aside from the multiple layers of good governance protection, a strict international norm was created by an association of nations with sovereign capital.
They have agreed on international rules called the Santiago Principles in a covenant in Chile to specifically address the concerns of those opposed to the proposal.
Among the noise being spread is that the MWF will become the new pork barrel which is pure nonsense.
The bill seeking to create the MWF is headed to the House plenary for approval.
Speaker Martin Romualdez and Deputy Speaker Sandro Marcos spearheaded the measure that breezed through the House committee on banks and financial intermediaries.
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It's a different story at the Senate which has yet to draft a counterpart bill.
Among the safeguards provided under House Bill 6398 are three layers of audit which are the examinations from internal and external accountants, aside from the Commission on Audit inspection.
The fund will also be supervised by four bodies, the board of directors, the advisory council, the risk management unit, and the congressional oversight committee.
Independent directors and National Treasurer get seats on the board of the proposed Maharlika Investment Corp. that will administer the MWF.
In 2008, 26 International Monetary Fund member countries with sovereign wealth funds met on three occasions, in Washington, D.C., Singapore and Santiago, Chile, to identify and draft generally accepted principles and practices that guide investment practices and objectives that became the Santiago Principles.
Among the provisions in the tough international guidelines on sovereign wealth funds is that the establishment of the SWF should be authorized under domestic law.
The legal structure should include a clear mandate for the manager to invest the SWF's assets and conduct all related transactions and that, irrespective of the particular legal structure of an SWF, the beneficial and legal owners of the SWF's assets should be legally clear.
According to the proponents of the Santiago Principles, such clarity contributes to accountability in the home country and is often required under the recipient countries' regulations.
Funds allowed to be pooled are "commonly established out of balance of payments surpluses, official foreign currency operations, the proceeds of privatizations, fiscal surpluses, and/or receipts resulting from commodity exports."
The traditional background to the creation of SWFs was that these were built up from the revenues received from mineral wealth.
It would be belaboring the obvious that if the MWF breaches any of the 24 provisions of the Santiago Principles, the Philippines becomes a pariah in the global community.
With neighbors such as East Timor and Vietnam, developing countries like the Philippines, making the move to pool their money for investments that will help stabilize their fiscal state, the Philippines is eating the dust from Asian rivals due to political wrangling.
Partisan politics is indeed the biggest form of business in the country, an enterprise where only a select few benefit at the expense of the nation.
